What happened
The share price of Affiliated Managers Group (NYSE: AMG) shot up 27.6% this week from last Friday's close as of 11 a.m. ET today, according to S&P Global Market Intelligence. It had been up as much as 28.6% during the week. As of 11 a.m. ET on Friday, AMGʻs stock price was only down 4% year to date.
It bested the weekly gains for the major indexes, as the Dow Jones Industrial Average was up 3.6%, the S&P 500 was up 5.4%, and the Nasdaq gained 7.6% as of 11:15 a.m. ET on Friday.
So what
Affiliated Managers Group is an investment management company that owns stakes in a variety of boutique asset managers, including Frontier Capital Management and Beutel Goodman, and offers the AMG family of funds.
Affiliated Managers Group, which goes by AMG, posted solid third-quarter earnings on Monday, Nov. 7, which was a major catalyst for its move this week. Revenue was up about 1% to $579 million in the quarter year over year, while earnings per share was down 5% to $2.95 per share. However, both numbers topped estimates by significant margins.
While assets under management were down about 13% to $645 billion at the end of the quarter due to market depreciation, revenue was boosted by inflows into alternative investments.
AMG also got a sizable boost on Thursday, as did the rest of the market, as the Dow climbed 1,201 points and the Nasdaq was up 7.4% on the October Consumer Price Index (CPI) report, which saw the inflation rate drop to 7.7%. This is down from the previous month and lower than expected.
Now what
Looking ahead, AMG should have a much better fourth quarter, as the market had a strong October and is off to a good start in November.
Jay Horgen, president and CEO of AMG, said the market presents some opportunities for the company due to the diversity of its assets and strong capital position, which will be enhanced with the sale of its minority interest in Baring Private Equity Asia.
Horgen said in a press release that the proceeds will "significantly enhance our financial flexibility to allocate capital across AMG's unique opportunity set to the areas of highest growth and return."
AMG has been very resilient through this bear market due to its diversity of assets and efficiency. It has an operating margin of about 37% and a return on equity of 20.7% It also is fairly valued, with a forward price-to-earnings ratio of 8.5%. It is still a difficult market for asset managers, given the market uncertainty, but this is not a bad stock to consider if the market shifts.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool recommends Affiliated Managers Group. The Motley Fool has a disclosure policy.
