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AMG Beats Views; Calamos Misses

AMG pulls in new money from institutions; Calamos' expenses rise.

Affiliated Managers Group's (AMG) - Get Report third-quarter cash earnings rose more than 16% on increased investment from its institutional clients.

The Boston money manager persevered through market volatility in the third quarter, pulling in $4.3 billion in new money from investors. AMG was powered by strong growth from its growth equity managers, international equities and alternative investment products, said CEO Sean M. Healey.

Net income rose 28.7% to $42.6 million for the quarter ended Sept. 30, compared with $33.1 million in the same period last year.

Cash net income, which the company defines as net income plus amortization and deferred taxes related to intangible assets, plus affiliate depreciation, rose 20.9% to $61.3 million from $50.7 million.

Cash earnings per share -- cash net income divided by the adjusted diluted average shares -- increased to $1.56 per share, compared with $1.34 a share in the year-ago period.

The results exceeded expectations for cash earnings of $1.55 per share, according to analysts polled by Thomson Financial.

Revenue increased to $345.6 million in the third quarter from $280.4 million a year earlier.

AMG closed the third quarter with $276.8 billion in assets under management, an increase of more than $10.2 billion, or 3.84%, over the second quarter and $66.1 billion, or 31.4%, over the year-ago period.

Healey said that the firm's growth equity managers Friess Associates, TimesSquare, Renaissance and Frontier enjoyed "exceptional" returns.

Investors added nearly $4.3 billion of new money into AMG's investment vehicles during the quarter. Institutional investors accounted for a net $4.56 billion, although this was partially offset by mutual fund clients pulling out $296 million and wealthy individuals redeeming $10 million.

Market appreciation accounted for $5.99 billion in growth over the quarter.

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Healey also announced the acquisition of a majority equity interest in Cooke & Bieler, a Philadelphia-based equity manager with more than $9 billion in assets under management. Upon the close of the transaction, AMG will hold a 70% interest in C&B.

"C&B has a strong track record of performance and growth, with assets under management increasing at a compound annual rate of 35% since 2002," Healey said.

He added that the firm is in "advanced discussions" about acquiring other traditional and alternative asset management boutiques.

Elsewhere in the industry,

Calamos Asset Management

(CLMS)

late Tuesday reported an 11% decrease in earnings as a result of higher employee compensation and benefits expenses.

Net income dropped to $7.1 million, or 32 cents per share, from $8.0 million, or 34 cents a share, for the same period in 2006.

The results trailed the 33 cents a share that analysts polled by Thomson Financial anticipated.

Assets under management rose nearly 7% to $46.7 billion on Sept. 30 from $43.8 billion at the end of the second quarter. The company attributed $2.6 billion of the total $2.9 billion increase to market appreciation.

Third-quarter revenue of $118.5 million was unchanged year over year.

In August, Calamos completed its share repurchase program after buying back more than 1.21 million shares, about 5.4% of shares outstanding. The company also announced that it had authorized the repurchase of up to two million additional shares outstanding, a plan intended to enhance shareholder value and offset share issuances under its incentive compensation plan.