Calamos Asset Management, Inc. (CLMS)

Q1 2010 Earnings Call

May 4, 2010 5:00 pm ET


John P. Calamos, Sr. – Chairman of the Board, Chief Executive Officer & Co-Chief Investment Officer

Cristina Wasiask – Chief Financial Officer & Senior Vice President

James J. Boyne – President Distribution and Operations & Secretary

Mark Infanger – Controller


Alexander Blostein – Goldman Sachs

Robert Lee – Keefe, Bruyette & Woods

Cynthia Mayer – Bank of America Merrill Lynch



This presentation may contain certain forward-looking statements relating to future events, future financial performance, strategies, expectations, the competitive environment and regulations. Forward-looking statements are based on information available at that time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Such risks and uncertainties include but are not limited to loss of revenues due to contract terminations and redemptions, our ownership structure, changes in market conditions and the economy, catastrophic or unpredictable events, unavailability of third party retail distribution channels, damage to our reputation, competitive conditions and poor performance of our investment strategy. For a discussion concerning some of these risks and other factors, uncertainties and other important factors that could affect future results see forward-looking information in management’s discussion and analysis of financial condition and results of operations and for applicable risk factors in the company’s annual and quarterly reports filed with the US Securities & Exchange Commission.

Welcome everyone to today’s CLMS first quarter 2010 earnings call. At this time, all lines have been placed on mute to prevent any background noise. After our speakers’ remarks, there will be a question and answer session. (Operator Instructions) Now, ladies and gentlemen without further delay, it is with great pleasure that I introduce the host of today’s conference Mr. John Calamos.

John P. Calamos, Sr.

Thank you for joining us on the Calamos Asset management first quarter 2010 earnings call. We appreciate your interest in our company and for taking the time to be with us today. Participating with me today is Chris Wasiak, our Chief Financial Officer. Also joining us are Jim Boyne, our President of Distribution and Operations and Mark Infanger, our Controller, who are here available to answer any questions.

Today I will be providing an update on our business, I’ll discuss our recent efforts and some of the progress we made during the recent quarter. Chris will then provide greater detail on our financial results. Before we open the call up for Q&A I will recap our investment performance and provide a brief marketing outlook.

On Slide Four, we show some highlighted central themes that we believe define success for our company. Our financial results for the quarter were positive. Even though our AUM was relatively flat during the quarter, we delivered solid operating results. Our operating income more than doubled over the prior year while our operating margin increased to nearly 38% which is on the high end of our peers. We also generated strong gains for our shareholders through our non-operating activities where our corporate investment portfolio returned more than 2% for the first three months of the year.

As we have reiterated over the years, our success is driven by delivering excellence service to our clients. There’s no better way to do that than providing outstanding long term investment performance and we believe that we have done that. I’ll speak to some specifics following Chris’ detailed review of the financial results but I want to highlight our international growth fund which recently received a critical five year milestone with both exceptional short term and long term investment results representing again that we have delivered for our clients. We are further encouraged by the future opportunity that this presents for our growth.

Our growth is also dependent on establishing superior distribution relationships. We have been recently focused on expanding our capabilities to better serve institutional clients. During the first quarter we have completed the additional investment in to this area and are already beginning to see results where we were successful in generating more than $250 million in new client assets during the first quarter.

On the following slide, Slide Five, we’ll look at some of the industry trends that are impacting our business. One of the debates out there is active management versus asset management. This continues as to whether investors should use active or passive funds. We’re an active manager and we feel that active management will continue to add value as it has for many years. In the current environment we feel it’s even more important to actively manage portfolios. There was a lot of talk about the lost decade of equity investing and our performance supports that view that active management works.

All our funds over 10 years had positive returns while the S&P 500 had a negative performance over that period. Of course, flows are important, last year and continuing in to the first quarter of this year flows industry wide have been for the most part in fixed income. Since we’re primarily an equity manager this has not helped us. However, global international flows are trending more positive for the first quarter. Within this volatile environment, we are seeing investors seeking low volatility strategies. This continues to be a strong wind at our back.

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