AMG stock jumps most in over 2 years on better-than-expected results
Stock in Affiliated Managers Group (AMG) jumped to its highest in more than two years on Tuesday after the group reported better-than-expected results for the first quarter 2014.
Massachusetts-headquartered AMG announced that first-quarter economic net income jumped 11 per cent year-on-year to $137.9 million in the three months through March this year. Per shares net income jumped to $2.48, more than analysts' average estimate of $2.38 a share.
However, it should be noted here that the group's measure of economic net income does not conform to generally accepted accounting principles (GAAP). Under GAAP rules, the group's net income for the three months under review stood at $77.2 million or $1.40 per share, as compared with $62.4 million or $1.15 per share in the year ago period.
Following the announcement of the quarterly results, AMG shares jumped 8.5 per cent to close at $195.11 apiece in New York. It was the stock's highest level since October 2011.
AMG also announced its decision to purchase a majority stake in global equity manager Veritas Asset Management LLP. The acquisition will add to the group's already huge collection of boutique managers that specializes in stocks, private equity and hedge funds.
Michael Kim, a senior analyst at Sandler O'Neill & Partners, said, "The combination of the deals and the strong flows suggest the momentum at this company will continue,"
However, AMG will not get managerial control over Veritas, despite the majority stake. It will acquire the equity interest just as part of its multi-affiliated business strategy. Veritas will continue to retain its full autonomy over investment plans and no rebranding or alteration in fund management will take place.