Robert Lee, an Analyst with Keefe, Bruyette & Woods, Inc., says he expects Affiliated Managers Group, Inc. (AMG) to deliver better organic growth than its peers. He says the Massachusetts-based asset manager stands to benefit from equity strategies, as well as from global strategies and alternatives. In addition to organic growth, he says the company could grow through acquisitions.
“Affiliated Managers Group has for the past two decades, one of their core strengths of their strategy is that they make investments in kind of mid-sized boutique managements, they have done it for 20 years pretty successfully, they kind of have a proven model,” Lee says. “And when they do an acquisition depending on the size, I use rule of thumb that every $100 million they spend on a transaction tends to be $0.10 to $0.20 accretive to cash flow.”
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Lee says he thinks Affiliated Managers Group’s current valuation is reasonable, and his estimates don’t include any potential acquisitions, which he believes are likely. He says the timing of a potential acquisition is unclear, but he expects to see at last one deal within the next 12 months.
“Now again, they could announce one tomorrow or Monday and may not announce one for six months, you don’t know,” Lee says. “But, I would expect that sometime over next year, you could see one or several transactions that should be incrementally accretive to earnings and those are not in [our] earnings estimate.”
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