AMG Tops Forecasts

Affiliated Managers Group (AMG) posted better-than-expected second-quarter earnings Wednesday, despite a hairy quarter for equities markets that weighed on asset inflows.

The Boston-based asset management holding company also announced a share buyback plan of up to 5% of its outstanding common stock, a move that other money managers have been reluctant to make.

AMG's net income rose to $78.1 million, or 86 cents a share, from $26.2 million, or 63 cents a share, a year earlier.

Cash earnings, which exclude items such as amortization, rose to $1.30 a share from $1.13 in the same period last year. Analysts polled by Thomson Financial were expecting cash earnings per share of $1.28.

Revenue hit $283.1 million, up 36% from $208.3 million a year ago.

"AMG produced solid earnings growth in the second quarter of 2006, notwithstanding a challenging equity market environment. Our organic growth remains strong, as net client cash flows during the quarter were $2.9 billion, driven by the strength and diversity of our Affiliates' product offerings," Sean M. Healey, the company's president and chief executive, said in a statement.

Of the asset managers that have reported earnings, none have escaped the effects of a second-quarter stock slide that spurred investors to withdraw money from funds. At AMG, assets under management, a key driver of profits at money management firms, hit $202.26 billion at the end of the second quarter. That was up from roughly $138 billion a year ago but down from the $202.85 billion logged at the end of March.

Of the $2.9 billion in second-quarter net cash flows, $2.2 billion went into the company's institutional, mutual fund and high-net-worth channels. AMG has investments in more than two dozen midsized money managers.

The company also said it will use cash on its books to buy back shares.

"AMG is committed to maximizing returns for our shareholders through the disciplined allocation of the strong cash flow generated by our business, including our long-standing practice of opportunistically repurchasing our shares, as appropriate," Healey said in a statement.

Other asset managers with lots of cash in hand, including Calamos ( CLMS) and Legg Mason ( LM), whose stock has been falling for months, have said they will not buy back stock in the near term.

Shares of AMG recently were trading at $89.50, up $2.73, or 3.2%.

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