AFFILIATED MANAGERS GROUP, INC. Q3 FY2024 earnings call

• AMG delivered 18% growth in economic earnings per share, driven by momentum in the business and capital allocation strategy.
• Ongoing demand for specialized private market strategies accelerated, with $7 billion in new capital raised at various affiliates. Liquid alternative strategies had positive flows, and opportunities for organic growth exist, especially at AQR with tax-aware solutions.
• AMG's affiliates manage over $265 billion in client assets in alternative strategies, with private markets and liquid alternatives contributing to EBITDA. The business is shifting towards alternatives to improve organic growth prospects and cash flow stability.
• AMG has broadened strategic capabilities to magnify affiliates' efforts, particularly in product development and capital formation. Examples include filing for public offering of AMG Comvest Senior Lending Fund and successful seed rounds for other funds, with over $0.5 billion in net inflows from alternative products in the quarter.
• The company continues to innovate in product development, with new alternative strategies launched in the wealth channel, and aims to scale existing products and access new clients globally through strategic relationships.

Private markets affiliates generated $7 billion in net inflows in the third quarter, with year-to-date fundraising at $18 billion and an annualized organic growth rate of over 20%. Liquid alternative strategies had positive flows. Differentiated long-only strategies saw net outflows of approximately $10 billion in equities and flat flows in multi-asset and fixed-income. Private markets affiliates now manage more than $265 billion in client assets, with alternative strategies (private markets and liquid alternatives) making up approximately one-third of AUM and generating about half of EBITDA.

• Fourth quarter adjusted EBITDA expected to be in the range of $260 million to $270 million, with economic earnings per share between $5.94 and $6.17.
• Full-year performance fees are anticipated to be below historical average due to underperformance at certain absolute return strategies, but carried interest from private markets is expected to contribute more in the future.
• Repurchased $103 million in shares in Q3, on track to repurchase approximately $700 million in 2024, with a strong balance sheet and capital flexibility to execute growth strategy and return capital to shareholders.

Q: Triangulate between pipeline seasoning and capital deployment. How to think about pipeline and capital allocation for 2025?

A: Jay Horgen mentioned the pipeline is robust with high-quality opportunities in private markets and liquid alternatives, and Dava Ritchea stated they have a disciplined capital allocation strategy, with plans to continue repurchasing shares subject to market conditions.

Q: Double-click into performance fee guidance and carried interest. Any specific absolute return strategies struggling?

A: Dava Ritchea said certain absolute return strategies, specifically trend-following ones, have struggled, but performance fees are expected to contribute long-term. Carried interest is expected to grow as private markets businesses mature.

Q: Detail on democratization pipeline for new products and liquid strategy demand. AUM of tax advantage products?

A: Thomas Wojcik discussed the growth of new products in the US wealth platform, including the AMG Pantheon Fund and others, with strong growth in tax-aware products. AQR's tax advantage products are growing, with innovative strategies driving asset growth.

Q: Detail on 4Q flow seasonality and alternative realizations. AUM headwind?

A: Thomas Wojcik and Jay Horgen mentioned seasonality is muted, and AMG's private market exposures are differentiated, leading to strong fundraising and realizations, with less impact from industry-wide slowdowns in certain areas