8/26/2023 0 Comments Artisan partners asset management![]() ![]() Though, seasonal expenses are always highest in the first quarter of each year. Daley had the following to say, “Just operating expenses for the quarter increased 6% sequentially due to an increase in certain compensation-related costs, including those that are impacted by seasonality. In the last earnings call the management had some good reflections on the operating expenses, CFO C.J. As the company themselves mentions often, the priority lies in the long-term and achieving strong average yields and margins rather than the fluctuating short-term results. I think this highlights the opportunity you have with APAM looking beyond just that of current quarterly results. With an 11x multiple which is the 5-year average for APAM, we land at a price target of $46 per share, above the current levels. That would yield an EPS of $4.23 as the revenues estimates for 2023 are $982 million and I am basing the EPS on that APAM will have 65 million shares outstanding. I don’t find it unlikely that we won't return to similar margins as in 2022 where net margins were above 28%. The EPS growth will come from increasing margins as the company is rebounding from the slump the margins have had in the last few quarters. Besides that, the growth rate of the dividend is quite low and for the model, I haven't based any significant growth on the average AUM. This number does take into account the dividend for the company. Looking at the chart above one might wonder why ever to buy APAM right now when the price target for 2023 is below what it's currently trading a. Valuation ProfileĪs for the valuation of APAM, I am primarily looking at how they might be able to grow their AUM and how that could reflect on growing Net Income. For the fixed income portfolio of the company they primarily invest the funds in non-investment grade corporate bonds but also secured and unsecured loans. With a payout ratio of nearly 80% the priority for APAM lies with its shareholders and ensuring ample returns for them over the long term. The company prides itself on maintaining strong FCF margins and a robust balance sheet that can weather through times of lower growth and activity in the border economy. Something I think they have been very successful with so far as the ROE sits at near 72%.Ĭompany Overview (Investor Presentation May 2023) The philosophy of the business as per their own accord is to act as a “High-Value Added Investment Firm”. The broad set of offerings the company has is helping them grow quickly and now has an AUM of over $138 billion. Company StructureĪrtisan Partners Asset Management operates as an investment manager but also provides services to pension and profit-sharing plans as well as aiding with foundations and mutual funds and collective trusts. The premium which investors have to pay for APAM right now seems justified given these statistics and I will be rating APAM a buy. APAM does boast a strong balance sheet and a TTM Return on Common Equity of 71.92%, far above the sector's average of 11.1%. On top of an already near $3 per share dividend. 2022 was such a year for example, with an additional $0.72 dividend distributed during the year. The yield for APAM currently sits at 5.07% which doesn't seem unreasonably high, and with the payout ratio at just under 80%, I think there is room for a continued increase in the dividend.ĪPAM does distribute a special dividend now and again when some years generate substantial returns. ![]() They can do this as they are efficiently increasing the AUM they have, which in Q1 FY2023 grew by $10 billion. ![]() The company distributes a majority of all the cash flows generated to its shareholders. The priority of shareholders is held high within Artisan Partners Asset Management ( NYSE: APAM). ![]()
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