Assets Rise at Waddell & Reed
A market-timing settlement took a bite out of Waddell & Reed's (WDR) second-quarter results, leading to a wider loss for the period.
Still, shares of the Kansas-based mutual fund manager moved higher Tuesday as the company managed to eke out gains in assets under management, despite a volatile equities market.
For the second quarter, Waddell & Reed posted a loss of $33 million, or 40 cents a share, for the second quarter, widened from a loss of $7.1 million, or 9 cents a share, a year earlier.
The latest quarter's results included a pretax charge of $55 million, or 48 cents a share, to settle market-timing investigations with regulators, as well as a goodwill impairment charge of $20 million, or 24 cents a share, related to its Austin Calvert & Flavin unit.Excluding the one-time charges, the company's second-quarter profit would have been $26.4 million, or 32 cents a share, matching Thomson First Call's average analyst estimate. "Although the market provided a challenging environment, sales in both retail distribution channels exceeded those of a seasonally strong first quarter, and year-to-date sales continue their robust pace," Chief Executive Hank Herrmann said in a statement. Waddell's assets under management at the end of the quarter totaled $45 billion, up from $44.85 billion at March 31 and $39.07 billion a year earlier. The company said in a statement that "strong mutual fund sales and improving institutional sales" helped it have its best quarter to date. Operating revenue for the quarter jumped by 20% to $181.3 million, just shy of Wall Street's expectation of $181.6 million. Waddell announced Monday that it settled charges with the Securities and Exchange Commission and state regulators, including the New York Attorney General's office that it allowed some investors to time the markets and improperly trade in shares of its mutual funds. Under the terms of the settlements, the company neither admitted nor denied any of the allegations. The investigation alleged that the company's fund managers cut secret deals with market timers in exchange for extra fees. "These settlements have been in process for some time and relate to matters well in our past. Their completion is a positive event," Herrmann said in a statement. Waddell shares recently were trading at $21.27, up 87 cents, or 4.3%.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV