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Here's Why Affiliated Managers Group Is Dropping Today

By Matthew Frankel, CFP® – Updated May 6, 2019 at 3:14PM

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Poor market performance in late 2018 is weighing on the asset manager's results.

What happened

Asset management company Affiliated Managers Group (AMG -0.87%), also known as AMG, reported its first-quarter earnings on Monday morning, and it seems investors aren't thrilled. As of noon EST on Monday, shares were down by about 11%.

So what

Excluding a noncash expense, AMG earned $3.26 per share, a decline from $3.92 for the first quarter of last year. The main culprit was declining assets under management (AUM) and performance fee income, most of which can be attributed to the stock market's dismal performance in the fourth quarter of 2018. The earnings figure was a penny shy of the $3.27 analysts had been expecting.

Businessman with hands on his head.

Image source: Getty Images.

AMG also made a couple of other big announcements. First, the company is getting a new CEO. Jay Horgen, currently AMG's president and CFO, is taking over for current CEO Nathaniel Dalton following the company's 2019 annual meeting.

Dalton has been CEO for only the past year, having taken over after the current executive chairman, Sean Healey, was diagnosed with ALS. Dalton will remain with AMG as a director and advisor. So appointing Horgen as CEO is intended to be a more permanent move.

Second, while transaction details weren't disclosed, AMG has also agreed to take an equity stake in Minneapolis-based asset manager Garda Capital Partners. Garda specializes in fixed-income strategies and has about $4 billion in assets under management, and Garda's senior partners will retain a majority after the deal is finalized.

Now what

It's worth mentioning that some of today's decline can likely be attributed to the overall decline in the market on Monday. After President Trump tweeted a threat to raise tariffs on $200 billion of Chinese imports, markets dropped sharply.

That said, there's still clear disappointment with AMG's results. Going forward, investors should pay attention to how the stock market's strong performance thus far in 2019 translates into rising AUM and fee income for the company, and should also pay attention to any further details of the Garda investment, as there simply isn't enough information available to gauge how it could affect AMG's bottom line.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool recommends Affiliated Managers Group. The Motley Fool has a disclosure policy.

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