Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps investors identify effective metrics for assessing stock momentum [2] Group 2: Affiliated Managers Group (AMG) Performance - Affiliated Managers Group currently holds a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy) [3][4] - AMG shares have increased by 1.36% over the past week, outperforming the Zacks Financial - Investment Management industry, which rose by 0.82% [6] - Over the last quarter, AMG shares have risen by 9.18%, and by 14.91% over the past year, compared to the S&P 500's increases of 6.75% and 11.69%, respectively [7] Group 3: Trading Volume and Earnings Outlook - AMG's average 20-day trading volume is 202,473 shares, indicating a bullish sign if the stock is rising with above-average volume [8] - In the past two months, five earnings estimates for AMG have been revised upwards, increasing the consensus estimate from $22.02 to $23.01 [10] - The positive earnings revisions suggest a promising outlook for AMG, reinforcing its status as a 1 (Strong Buy) stock with a Momentum Score of B [12]

Group 1 - ESCO Technologies Inc. has seen a 6.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - KLA Corporation has experienced a 2.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Balfour Beatty PLC Sponsored ADR has also seen a 2.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Affiliated Managers Group, Inc. has recorded a 4.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3] - Comfort Systems USA, Inc. has experienced a 7.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Group 1 - The stock of Affiliated Managers Group, Inc. (AMG) is experiencing significant attention due to high implied volatility in the options market, particularly the June 20, 2025 $110 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - Affiliated Managers Group holds a Zacks Rank 1 (Strong Buy) in the Financial - Investment Management industry, which is in the bottom 39% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, three analysts have raised their earnings estimates for Affiliated Managers Group for the current quarter, increasing the Zacks Consensus Estimate from $5.04 to $5.19 per share [3] - The high implied volatility may indicate a trading opportunity, as options traders often seek to sell premium on options with elevated implied volatility, aiming to benefit from time decay [4]

Core Viewpoint - Investors in the Financial - Investment Management sector should consider Affiliated Managers Group (AMG) and Carlyle Group (CG) for potential undervalued stock opportunities [1] Group 1: Company Rankings and Performance - AMG has a Zacks Rank of 1 (Strong Buy), while CG has a Zacks Rank of 3 (Hold), indicating a more favorable earnings estimate revision trend for AMG [3] - AMG's improving analyst outlook suggests a stronger performance compared to CG [3] Group 2: Valuation Metrics - AMG has a forward P/E ratio of 7.95, significantly lower than CG's forward P/E of 11.48 [5] - AMG's PEG ratio is 0.61, while CG's PEG ratio is 1, indicating AMG's better valuation relative to its expected earnings growth [5] - AMG's P/B ratio is 1.28, compared to CG's P/B of 2.63, further highlighting AMG's superior valuation metrics [6] Group 3: Value Grades - AMG has earned a Value grade of A, while CG has a Value grade of C, reflecting AMG's stronger position as a value investment [6] - Based on the solid earnings outlook and favorable valuation figures, AMG is considered the superior value option at this time [7]

Group 1 - AMG Critical Materials N.V. has appointed Mr. Thomas Swoboda as the new global Head of Investor Relations, succeeding Ms. Michele Fischer who has transitioned to Head of Human Resources [1] - Mr. Swoboda brings over 18 years of international capital market experience, previously serving as Director of Equity Research at Société Generale/Bernstein and as a Senior Equity Analyst at MainFirst Bank/Stifel [2] - He holds a degree in Business Administration from Mannheim University and is multilingual, proficient in German, English, and Portuguese [2] Group 2 - AMG's mission focuses on providing critical materials and related process technologies to promote a less carbon-intensive world, emphasizing energy storage materials like lithium, vanadium, and tantalum [4] - The company is a market leader in recycling vanadium from oil refining residues and operates in advanced metallurgy, serving the aerospace engine sector globally [5] - AMG has approximately 3,600 employees and operates production facilities in multiple countries including Germany, the UK, France, the US, China, Mexico, Brazil, India, and Sri Lanka [6]

Group 1 - AMG announced the appointment of Thomas M. Wojcik as President, effective June 3, 2025, while he continues as Chief Operating Officer [1] - Jay C. Horgen remains as Chief Executive Officer, and both executives will collaborate on AMG's growth strategy [1] - Wojcik joined AMG in 2019, previously serving as Chief Financial Officer and has played a significant role in the company's strategic development [2] Group 2 - AMG focuses on expanding its participation in secular growth areas, increasing exposure to private markets and liquid alternative strategies, which now contribute half of its earnings [2] - As of March 31, 2025, AMG's aggregate assets under management were approximately $712 billion across various investment strategies [3] - AMG's strategy aims to generate long-term value by investing in high-quality independent partner-owned firms and supporting their independence and ownership culture [3]

Industry Overview - The Zacks Investment Management industry is experiencing a shift towards passive investing, which is pressuring margins due to lower fees compared to active strategies [1][4] - Tighter regulations and rising compliance costs, along with technology upgrades, are expected to strain profitability for industry players [1][5] - Despite these challenges, the industry is likely to benefit from a shift towards higher-yielding investment vehicles, supported by sustained economic growth and falling interest rates [2][6] Key Themes Influencing the Industry - The ongoing shift towards passive investing is expected to continue, with investors reassessing risk levels and increasing inflows into equities and alternative investments [4] - Rising compliance costs due to tighter regulations and the need for technology upgrades are mounting expenses for investment managers [5] - The global equity markets have performed well, leading to significant growth in assets under management (AUM), with a rotation expected from money market funds to higher-yielding assets [6][7] Industry Performance and Valuation - The Zacks Investment Management industry has outperformed the S&P 500 Index over the past two years, with a collective increase of 53.4% compared to 41.4% for the S&P 500 [12] - The industry currently has a trailing 12-month price-to-tangible book (P/TB) ratio of 4.66X, which is significantly lower than the S&P 500's ratio of 12.64X, indicating a discount compared to the broader market [15][18] Notable Companies in the Industry - **Franklin Resources, Inc. (BEN)**: As of March 31, 2025, BEN has an AUM of $1.54 trillion and has been growing through acquisitions, enhancing its investment capabilities [20][21][22] - **Affiliated Managers Group, Inc. (AMG)**: With an AUM of $712.2 billion as of March 31, 2025, AMG is focusing on alternative investments, which constitute 41.4% of its total AUM [25][27] - **Federated Hermes, Inc. (FHI)**: FHI has an AUM of $839.8 billion as of March 31, 2025, and is expanding its operations through strategic alliances and acquisitions [29][31]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1] - The Zacks Style Scores are designed to help investors identify stocks with the potential to outperform the market within a 30-day timeframe [2] Zacks Style Scores Overview - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score identifies undervalued stocks using financial ratios [3] - Growth Score assesses a company's future earnings and financial health [4] - Momentum Score capitalizes on price trends and earnings outlook changes [5] - VGM Score combines all three styles to provide a comprehensive evaluation of stocks [6] Zacks Rank and Style Scores Interaction - The Zacks Rank is a proprietary model that uses earnings estimate revisions to assist in portfolio building [7] - Stocks rated 1 (Strong Buy) have historically achieved an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [9] - Stocks with lower ranks but high Style Scores may still carry risks due to declining earnings forecasts [10] Company Spotlight: Affiliated Managers Group (AMG) - Affiliated Managers Group is a global asset manager with a Zacks Rank of 3 (Hold) and a VGM Score of A [11] - AMG's shares have increased by 17.5% over the past four weeks, indicating strong momentum [11] - Recent earnings estimates for fiscal 2025 have been revised upward, with the consensus estimate rising to $22.78 per share [12] - AMG's average earnings surprise stands at 3%, making it a noteworthy option for investors [12]

Assets Under Management - As of March 31, 2025, the company's aggregate assets under management were approximately $712.2 billion, representing a 2% increase from $699.4 billion as of March 31, 2024[141]. - Average assets under management increased by 5% to $712.1 billion in Q1 2025, compared to $680.0 billion in Q1 2024[141]. - The company anticipates that approximately 28% of total assets under management could potentially earn performance-based fees[149]. - As of March 31, 2025, 42% of equity assets under management outperformed their benchmarks over a 10-year period[146]. Revenue and Fees - Aggregate fees for the three months ended March 31, 2025, were $1,270.4 million, a decrease of 14% from $1,471.6 million in the same period of 2024[150]. - Performance-based fees decreased by $213.4 million or 15% in Q1 2025, primarily due to declines in liquid alternative strategies[150]. - The company reported a 1% increase in asset-based fees, attributed to an increase in average assets under management in private markets and liquid alternative strategies[150]. - Consolidated revenue decreased by $3.3 million or 1% for the three months ended March 31, 2025, due to a $10.9 million or 3% decrease from asset-based fees[156]. - Equity method revenue decreased by $197.9 million or 20%, primarily due to a $221.0 million or 22% decrease from performance-based fees[166]. Income and Expenses - Net income (controlling interest) decreased by $77.4 million or 52% for the three months ended March 31, 2025, primarily due to a $62.4 million increase in intangible amortization and impairments[151]. - Adjusted EBITDA (controlling interest) decreased by $31.6 million or 12% for the same period, primarily due to a $201.2 million or 14% decrease in aggregate fees[153]. - Economic net income (controlling interest) decreased by $28.0 million or 15%, primarily due to a $31.6 million decrease in Adjusted EBITDA[154]. - Total consolidated expenses increased by $75.6 million or 20%, with significant increases in intangible amortization and impairments, which rose by $76.0 million[157]. - Investment and other income decreased by $6.4 million or 36%, primarily due to a $6.3 million decrease in net realized and unrealized gains on investments[170]. Cash Flow and Financing - Cash and cash equivalents as of March 31, 2025, were $816.5 million, primarily generated from operating activities[7]. - Operating cash flow for Q1 2025 was $208.9 million, slightly down from $209.2 million in Q1 2024[8]. - Cash flows used in investing activities for Q1 2025 were $35.6 million, primarily due to $49.5 million in investments in Affiliates[9]. - Cash flows used in financing activities for Q1 2025 totaled $316.9 million, mainly due to $176.2 million in common stock repurchases[10]. - The company has a $1.25 billion revolver maturing on November 15, 2029, with no outstanding borrowings as of March 31, 2025[12]. Share Repurchase and Equity - The company authorized a share repurchase program in July 2024 for up to 5.4 million shares, with 1.0 million shares repurchased at an average price of $171.00 during Q1 2025[14]. - The company entered into an equity distribution program allowing for the issuance and sale of shares of common stock with an aggregate sales price of up to $500.0 million[206]. - No sales had occurred under the equity distribution program as of March 31, 2025[206]. Impairments and Projections - The company recorded an impairment expense of $59.2 million attributable to the controlling interest for indefinite-lived acquired client relationships due to a decline in fair value[212]. - Revenue growth rates over the next five years are projected to range from (21)% to 0%, with long-term revenue growth rates of 0% and a discount rate of 11% used in impairment assessments[212]. - A decrease in revenue growth rates by 200 basis points could result in an additional impairment of approximately $49 million, while a 100 basis point increase in the discount rate could lead to an additional impairment of approximately $91 million[213].

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $228 million, a decline of 12% year over year, primarily due to lower performance fees and a comparison to a one-time private market catch-up fee from the previous year [20][21] - Economic earnings per share were $5.2, reflecting a 3% year-over-year decline, influenced by a $77 million write-down on certain mutual fund assets [21][22] - The company expects adjusted EBITDA for the second quarter to be between $210 million and $225 million, based on current AUM levels [22] Business Line Data and Key Metrics Changes - The private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions [13] - Liquid alternatives saw record net inflows of $10 billion, driven mainly by tax-aware solutions, marking the strongest quarterly flow number in liquid alternatives in the company's history [14][15] - The company experienced net outflows of approximately $14 billion in equities, reflecting industry headwinds [15] Market Data and Key Metrics Changes - The company generated a record $14 billion in net client cash inflows into alternative strategies, which offset outflows from the long-only business [5][6] - The ongoing market volatility has created opportunities for high-quality investment teams to differentiate themselves, particularly in equities [44] Company Strategy and Development Direction - The company is focusing on strategic capital allocation towards areas of secular growth, particularly in private markets and liquid alternatives [5][6] - Three new partnerships were announced in 2025, with a total commitment of approximately $700 million, expected to be accretive to earnings and improve organic growth [6][10] - The company aims to evolve its business mix towards alternatives, anticipating that alternatives will represent over 50% of earnings in the future [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate incremental shareholder value over time, supported by a strong capital position and a diverse business model [11][25] - The company remains committed to disciplined capital allocation, with plans to repurchase approximately $400 million in shares for the full year, subject to market conditions [25] - Management highlighted the importance of the U.S. Wealth channel and the ongoing demand for alternative products, which is expected to drive future growth [66] Other Important Information - The company has a strong liquidity position and a long-dated capital structure, enabling it to execute its growth strategy effectively [23] - The expected proceeds from the Peppertree transaction are approximately $240 million, which will enhance the company's ability to continue capital allocation towards strategic growth areas [24] Q&A Session Summary Question: What drives the decision to part with one of the affiliates, especially in private markets? - Management stated that the partnership model is centered around supporting affiliates' independence, and any strategic decisions are mutually agreed upon. The recent liquidity events highlight the underlying business value of affiliates [30][34] Question: Can you discuss the diversity of flows in liquid alternatives and the outlook? - Management noted that liquid alternatives had a standout quarter with $10 billion in net inflows, driven by tax-aware solutions, and emphasized the strong positioning of high-quality liquid alternative firms to deliver excellent risk-adjusted returns [39][41] Question: What are the dynamics in the equity market regarding investor allocations? - Management acknowledged headwinds in equities but noted opportunities for high-quality investment teams to differentiate themselves, particularly with a focus on quality-oriented and defensive approaches [44][46] Question: Can you clarify the 8% accretion from new investments? - Management confirmed that the 8% accretion is based on economic earnings per share and is expected to begin in 2026, following the completion of the Peppertree and Qualitas transactions [50][51] Question: How is the distribution expansion for existing products going? - Management highlighted the growth of alternatives AUM on the U.S. Wealth platform and the successful launch of new products, indicating a strong pipeline for future product development [63][67]