Calamos Asset Management Inc (CLMS)

Q2 2010 Earnings Conference Call

August 5, 2010, 5:00 PM ET

Executives

John Calamos - Chairman, CEO, Co-chief Investment Officer

Cris Wasiak - CFO

Jim Boyne - President of Distribution and Operations and Securities

Analysts

Alex Blostein - Goldman Sachs

[Adam Beatty] - Bank of America Merrill Lynch

Robert Lee - Keefe, Bruyette & Woods

Presentation

Operator

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 the 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 core performance of our investment strategies.

For a discussion concerning some of these and other risks, uncertainties and other important factors that could effect future results, the forward-looking information and management's discussion and analysis of financial condition and results of operations and, where applicable, risk factors in the company's annual and quarterly reports filed with the US Securities and Exchange Commission.

Good afternoon. My name is [Arona] and I will be your conference operator today. At this time, I would like to welcome everyone to the CLMS second quarter 2010 earnings call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. John Calamos, you may begin your conference.

John Calamos

Thank you and thank you all for joining us for the Calamos Asset Management second 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 are Cris Wasiak, our Chief Financial Officer, and Jim Boyne, our President of Distribution and Operations. Also joining us are Jennifer McGuffin, our Director of Investor Relations, and Mark Infanger, our Controller. All will be available to answer your 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. Jim will provide an overview of distribution efforts followed by Cris who will then provide greater detail of our financial results. Before we open the call up for a Q&A I'll recap our investment performance and talk a bit about the market outlook.

On slide four, the second quarter highlights are indicated. Our investment performance this quarter demonstrated strength relative to our peers in terms of both short and long-term performance. The performance numbers for each one are available in the appendix of this webcast presentation or on our website, www.calamos.com.

Morningstar increased its overall ratings for four of our mutual funds. Growth & Income is now a five star fund; Global Growth & Income is also a five star rated fund; International Growth is now a four star fund; and High Yield was upgraded to a three star rating. Also, two [Kelmos] funds hit important milestones this quarter.

The global Equity fund reached the three-year mark and International Growth reached the five-year milestone. Both have four star ratings from Morningstar and continue to outperform their benchmarks.

Among the highlights of our distribution efforts were positive flows on the institutional side with $250 million in new client funding. Our global and alternative strategies continued to generate positive net flows. However, flows in the intermediary were negative due to outflows in domestic equity, consistent with industry trends -- and also the final stage of our decision to raise the minimum balance requirements for intermediary separate managed accounts, or SMAs.

The next slide shows industry trends. This was a tough quarter for the industry and nothing demonstrated that more clearly than the stock market. There was significant volatility this spring, including a more than a 1000 point drop during the month of May. At the same time, the European debt crisis weighed down on the global markets. So we've seen an increase in volatility during this period.

After the industry enjoyed positive net flows in April for equity and fixed income funds, both categories went negative in May. Fixed income flow rebounded strongly in June but industry equity flows rebounded but remain negative.

Industry flows for global and international products trended towards emerging markets and global allocation funds and away from diversified equity funds. There was also a strengthening in demand across the board for low-volatility equity strategy. This, of course, is a core competency of our as investors continue to seek better risk-adjusted returns.

The next slide shows the overview for our second quarter results. In focusing on the financial results on slide six, our assets under management of $29.9 billion as of June 30 represents a decline from the second quarter. Our asset levels still remain favorable to the corresponding period in 2009.

We finished the second quarter with total revenues of $81 million, representing a 20% increase from a year ago. Our operating income of $29.7 million represented a 36.9% operating margin for the second quarter. Our healthy operating margin is a testament to our continued focus on creating efficiencies throughout our business.

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