AssetMark Financial Holdings (AMK) went public in July 2019, selling ordinary shares at $22.00 and raising $275 million in its IPO.

The firm has created a wealth management platform for independent financial advisors and their clients.

AMK has grown impressively but the effects of the Covid19 pandemic on its operations aren’t known yet.

My bias on the stock is Neutral until we gain visibility into its forward outlook.


Concord, California-based AssetMark was founded in 1996 to provide financial advisers with wealth management and client engagement software solutions.

Management is headed by President and CEO Charles Goldman, who has been with the firm since 2013 was previously Senior Advisor at Bain & Company.

AssetMark has developed a platform that provides an end-to-end experience through nearly all parts of independent financial advisers’ engagement with their clients while enabling the outsourcing of high-cost and specialty services that would otherwise require significant investments of time and money.

Various aspects of an adviser’s engagement cycle that the company’s platform facilitates include initial client conversation, ongoing financial planning discussions, as well as performance reporting and billing.

Additionally, the company’s platform provides advisers with solutions that help them manage and optimize their day-to-day business activities.

Below is a brief overview video of the company’s offerings:

Source: AssetMark

According to management, from December 31, 2014 to March 31, 2019, the company’s platform assets grew from $25 billion to $50 billion, growing at a CAGR of 17% during the period, while more recent data suggest that rose to 45% from March 31, 2017 to March 31, 2019.

Additionally, company net flow grew from about $2.4 billion in 2016 to $5.9 billion in 2018, which represents 8% and 14% of beginning platform assets, respectively.

The company markets its products through a sales force of over 100 employees.

According to a 2019 market research report by Grand View Research, the global wealth management software market is projected to reach $5.8 billion by 2025, growing at a CAGR of 15.3% between 2019 and 2025.

The main factor driving market growth is the growing need for digital tools that can automate the wealth management process.

The financial advice and management segment is anticipated to grow at the fastest CAGR of 16.0% during the period due to growing demand for tools to manage finances.

Major competitors that provide or are developing wealth management solutions include:

  • Fiserv
  • Temenos Headquarters
  • Fidelity National Information Services
  • Profile Software
  • SS&C Technologies
  • SEI Investment
  • Finantix
  • Comarch

AMK’s topline revenue by quarter has grown notably in the past five quarters, with Q1 2020’s results a full 24% higher than the same period in 2019:

Source: Company Financials

Source: Company Financials

Gross profit by quarter has spiked considerably in the two most recent quarters:

Source: Company Financials

Source: Company Financials

Operating income by quarter has been highly variable and produced its lowest result for the past five quarters in Q1 2020:

Source: Company Financials

Source: Company Financials

Earnings per share (Diluted) has been variable since its flotation, but has most recently produced the best result as a public company:

Source: Company Financials

Source: Company Financials

Since its IPO, AssetMark’s stock price has risen 9.1 percent vs. the U.S. Capital Markets index’ drop of 6.2 percent and the overall U.S. market’s drop of 2.7 percent, as the chart below indicates:

Source: Simply Wall Street

Source: Simply Wall Street


In its last earnings call, for Q4 2019, management’s presentation highlighted the significant addressable asset markets still untapped, as the chart shows here:

Source: AssetMark Financial

Source: AssetMark Financial

The firm has generated strong asset growth, at a CAGR of 21.4% for the five year period from Q4 2014 to Q4 2019, finishing off 2019 with $61.6 billion in assets.

Management targets annual net flows of platform assets of 10% and achieved a 12% net flow in 2019.

As to its expected financial results for 2020, the firm is projecting to invest significantly in back office technology and scalability while still generating adjusted EBITDA margin expansion of 100 basis points.

Notably, however, these guidance expectations were provided on February 26, 2020, before the effects of the U.S. economic shutdown from the Covid19 pandemic.

Also, the overall stock market suffered significant volatility after the earnings release, although the market has since risen due to enormous federal government liquidity and stimulus programs.

It is too early to tell the net effects on AssetMark’s business as the initial effects of the pandemic wear off and we are left with severe economic damage.

My own estimate is that the stock market is overvalued compared to the level of recession the U.S. is facing, and investors are due for a rude shock as the earnings realities sink in for Q2 2020’s results.

As for AMK, my DCF indicates the stock may be slightly undervalued based on a generous forward earnings estimate. That estimate may not hold up due to investor and market turmoil.

Although I’m impressed by AMK’s growth, how it will be affected by the pandemic is an unknown at this point as management has provided no communication on the subject.

Perhaps AMK will be unaffected as the U.S. stock market is apparently considered ‘too big to fail’ by the Federal Reserve, although I suspect its new business operations may be impacted by no in-person contact and other direct effects.

In any event, my bias on the stock at its current level is Neutral until we get more visibility into its Q2 2020 results.


(I have no positions in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)