8-K: Artisan Partners Reports Strong 3Q24 Results, AUM Jumps to $167.8 Billion

Artisan Partners Asset Management Inc. announced its third quarter 2024 results, highlighted by a significant increase in assets under management and a declared quarterly dividend.

Summary

• Artisan Partners reported its financial results for the three and nine months ended September 30, 2024.
• Assets under management (AUM) reached $167.8 billion as of September 30, 2024, a 23% increase compared to $136.5 billion in the same period last year.
• The company's AUM increased by $8.9 billion, or 6%, compared to the previous quarter, primarily due to $9.9 billion of market appreciation.
• Net client cash outflows were $0.8 billion for the quarter and $3.3 billion year over year.
• Revenues for the quarter were $279.6 million, a 12% increase compared to $248.7 million in the same quarter of 2023.
• Operating income for the quarter was $93.2 million, compared to $82.2 million in the same quarter of 2023.
• GAAP net income was $72.9 million, or $1.03 per basic and diluted share, for the quarter, compared to $53.1 million, or $0.76 per share, in the same quarter of 2023.
• Adjusted net income was $74.5 million, or $0.92 per adjusted share, for the quarter, compared to $60.8 million, or $0.75 per adjusted share, in the same quarter of 2023.
• The company declared a variable quarterly dividend of $0.82 per share of Class A common stock.
• Since its IPO in 2013, Artisan Partners has returned $36.47 per share in cumulative dividends and delivered an annual total shareholder return of 12.38%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, AUM growth, and shareholder returns. The company's strategic expansion into new asset classes and its focus on long-term value creation contribute to a favorable sentiment.

Positives

• The company's AUM has shown significant growth, reaching $167.8 billion.
• Artisan Partners has demonstrated strong revenue growth, with a 12% increase year-over-year.
• The company's net income and adjusted net income have both increased compared to the previous year.
• The company has a history of returning value to shareholders through dividends, with $36.47 per share returned since its IPO.
• The company's investment strategies have shown strong performance, with some strategies outperforming their benchmarks.
• The company is expanding into new areas such as fixed income, alternatives, and private assets.
• The company has a strong track record of long-term shareholder returns, outperforming the S&P 500 and Russell 2000 over the last five years.

Negatives

• The company experienced net client cash outflows of $0.8 billion in the third quarter of 2024.
• Operating expenses increased by 12% year-over-year, primarily due to increased compensation and benefits.
• The number of public companies has been shrinking, which may impact the company's investment opportunities.
• The company's investment strategies are subject to market risks and may not always outperform their benchmarks.

Risks

• The company faces the risk of losing key investment professionals or senior management.
• Adverse market or economic conditions could negatively impact the company's performance.
• Poor performance of investment strategies could lead to decreased AUM and revenue.
• Changes in the legislative and regulatory environment could affect the company's operations.
• Operational or technical errors could damage the company's reputation.
• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Future Outlook

The company expects to pay a quarterly dividend of approximately 80% of the cash it generates each quarter, subject to board approval. The board will also consider payment of a special dividend after the end of the year. The company is focused on expanding its capabilities in fixed income, alternatives, and private assets.

Management Comments

• Artisan Partners brings together differentiated investment talent, broad opportunity sets, and long-term asset allocation demand.
• Since our IPO in 2013, we have returned $36.47 per share in cumulative dividends and delivered an annual total shareholder return, with dividends reinvested, of 12.38% versus 12.05% for the S&P 500 and 7.80% for the Russell 2000.
• We remain true to Who We Are as a high value-added investment firm and we continue to execute on our business model and philosophy.
• Compelling long-term outcomes for clients, talent, and shareholders follow.

Industry Context

The document highlights a trend of shrinking public equity opportunities and a shift towards low-cost exposure and thematic ETFs. Artisan Partners is responding by expanding into fixed income, alternatives, and private assets, aligning with the broader industry trend of seeking alpha in less traditional markets. The company's focus on differentiated investment talent and long-term value creation positions it well in a competitive landscape.

Comparison to Industry Standards

• Artisan Partners' annual total shareholder return of 12.38% since its IPO is slightly better than the S&P 500's 12.05% but significantly outperforms the Russell 2000's 7.80%.
• The company's earliest strategies have delivered an average annual alpha of 289 basis points, indicating strong outperformance compared to their benchmarks.
• The Artisan High Income strategy's ranking of #4 out of 302 funds in its Lipper category over ten years demonstrates a strong performance relative to its peers.
• The Artisan Credit Opportunities strategy's average annual return of 10.29% since inception is competitive within the credit market.
• The company's expansion into private assets aligns with a broader industry trend of seeking higher returns in less liquid markets, similar to firms like Blackstone and Apollo Global Management.

Stakeholder Impact

• Shareholders will benefit from the increased AUM, revenue, and profitability, as well as the declared dividend.
• Employees may benefit from increased compensation and benefits due to the company's strong performance.
• Clients will benefit from the company's strong investment performance and expansion into new asset classes.
• The company's strong financial position may positively impact its relationships with suppliers and creditors.

Next Steps

• The company will host a conference call on October 30, 2024, to discuss the results.
• The company will pay a quarterly dividend on November 29, 2024.
• The board will consider payment of a special dividend after the end of the year.
• The company will continue to develop its ability to access demand for its new strategies.

Key Dates

Keywords

Asset Management, Investment Management, AUM, Dividends, Financial Results, Net Income, Revenue, Shareholder Return, Investment Strategies, Alternative Investments, Fixed Income, Private Assets