Call Start: 17:00

Call End: 17:36

Calamos Asset Management ( CLMS)

Earnings Conference Call

October 26, 2010 04:00 pm ET


John P. Calamos – CEO, CIO, Sr. Chairman

Cris Wasaik – Chief Financial Officer

Jim Boyne – President Distribution and Operations

Jennifer McGoven - Director of Investor Relations

Mark Infanger - Controller.


Adam Beatty - Bank of America Merrill Lynch

Larry Hetton - KBW

Alex Blossi - Goldman Sachs



Ladies and Gentlemen this is the Operator. Today's conference call is scheduled to begin momentarily. Until that time your lines will again be placed on music hold. Thank you for your patience. This presentation may contain 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 made in good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause factual performance to result and 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, a third party retail distribution channels, damage to our reputation, competitive conditions and poor performance of our investment strategies. For discussion concerning some of these and other risks, uncertainties and other important factors as it effects future results, see forward-looking information in managements discussion and analysis of financial conditions and results of operations and where applicable risk factors in the company's annual and quarterly reports filed with the U.S. Securities and Exchange Commission.

Good afternoon, my name is LaPorsche and I will be your conference operator today. At this time I would like to welcome everyone to the Calamos Third Quarter 2010 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during that time simply press start then the number one on your telephone keypad. If you'd like to withdraw your question press the pound key, thank you. Mr. Calamos, you may begin your conference.

John P. Calamos

Thank you for joining us on the Calamos Asset Management Third Quarter 2010 earnings call. We appreciate your interest in our companies and for taking the time to be with us today. Participating with me today are Cris Wasaik, our Chief Financial Officer and Jim Boyne, our President of Distribution and Operation. Also, joining us are Jennifer McGoven our Director of Investor Relations and Mark Infanger, our Controller.

They will be available to answer any questions during the Q&A. 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. I will then provide a recap of our investment performance before opening up the call for Q&A.

On Slide 4, is highlighting our third quarter. In the third quarter Calamos Asset Management continued to maintain its strength. Also, in overall financial health of the company and the steady increase of assets under management throughout the period. On the distribution side we saw ongoing interests in our low volatility equity strategies in both the intermediary and institutional channels. In addition we continued our marketing efforts to run those low volatility strategies and our growth equity strategies as well.

Our investment portfolio's performed well relative to their respective benchmarks. We continue to see particular strengths in our global international and emerging market strategies where we see significant opportunities. Our investment team continues to actively manage risks in the portfolios and seek performance results over full market cycles. This was another challenging quarter for the industry with continued stock market volatility and continued flows out of equity funds. In reflection investors skittishness about equities in general.

However, we continue to see good opportunities in the convertible market as well as the international and emerging markets. We also like what we are seeing as far as valuation and growth equities compared to value stocks at this time. On the next slide we're focused on the financial results. Our assets under management of $32.6 billion as of September 30th, 2010 represent an increase quarter over quarter as well as year over year at year-end. We finished the third quarter with total revenues of more than $78 million.

We're representing a 6% increase from a year ago. Our operating income of $30.6 million represents a $39% operating margin for the third quarter. Our healthy operating margin is at testament to our continued focus on creating efficiency throughout our business. We finished the quarter by earning $0.23 per share for our shareholders. Jim will now provide an overview of our distribution efforts, Jim?

Jim Boyne

Thank you, John, I'd like to start by taking a look at net flows. Slide A, presents our net flows in our fund and separate account products on a quarter over quarter basis. In addition to the impact of our decision to raise investment minimums for our convertible managed accounts, which led to $1.3 billion in redemptions and managed accounts during the first two quarters of 2010. Our domestic equity mutual funds continue to face headwinds. Specifically the net outflows of $325 million from our growth fund was the primary cause of net outflows from our open-end funds during the most recent quarter.

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