Affiliated Managers Group Inc Q1 2011 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dan Fannon - Jefferies & Company - Analyst : Hi, good morning.

Question: Dan Fannon - Jefferies & Company - Analyst : I guess in terms of the flows, good color on kind of where things sit today. I guess how would you characterize the backlog of the institutional channel today, versus where it sat a quarter or two quarters ago?

Question: Dan Fannon - Jefferies & Company - Analyst : Okay. Great. That's helpful. And then on the distribution efforts that you guys are doing. Can you talk a little bit more about what the incremental investments are going to lead to and maybe update us -- you highlighted some new offices in regions. I guess how many salespeople do you have today and I guess with the incremental investments, where do you think those numbers can go to?

Question: Dan Fannon - Jefferies & Company - Analyst : Great. Thank you.

Question: Craig Siegenthaler - Credit Suisse - Analyst : Hey, thanks. Good morning, everyone.

Question: Craig Siegenthaler - Credit Suisse - Analyst : First question. I just had a question on performance fees related to the guidance increase. How has AUM, relative to high water marks and benchmarks in your performance fee generating assets, how has it really trended over maybe the last few months and the last few quarters here?

Question: Craig Siegenthaler - Credit Suisse - Analyst : Got it. And then just kind of a secondary question here on the M&A pipeline. It seems like over the last year or two, your interest level has gone more outside the US. When you think of your potential pipeline here and you think of here in the US, Europe, Asia, maybe even South America, how is the mix kind of distributed among kind of conversations and your interest level in those areas?

Question: Craig Siegenthaler - Credit Suisse - Analyst : Great. Sean, thank you for the color. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Bill Katz - Citigroup - Analyst : Thank you very much. Just coming back to performance fees for a second. Could you segment how much of that was embedded in the revenues through the individual line item, versus within the non-operating investment income line?

Question: Bill Katz - Citigroup - Analyst : Right.

Question: Bill Katz - Citigroup - Analyst : Okay. That's helpful. Stepping back a little bit, in light of the step-up of strategic spending here, is there any shift in the economics with any of the affiliates that you're looking to leverage specifically in terms of revenue shares or the underlying economics of the business?

Question: Bill Katz - Citigroup - Analyst : Okay. That's helpful. Then just last one. And you may have covered this, I apologize. You mentioned your positioning in terms of the deal pipeline, and the pipeline itself, but can youtalk a little bit about pricing, in terms of what some of the trends you might be seeing between both the traditional and the alternatives in US and Non-US?

Question: Bill Katz - Citigroup - Analyst : Great. Just one last one. Thanks for taking all my questions. In terms of the pipeline for new business, obviously the theme here is global and alternatives. But to the extent that the allocations and you talked to consultants and notwithstanding the structural opportunity here, in a tactical sense, are allocations full-up at this point in time? Or is there still room for those allocations to move higher?Are you seeing a shift real-time to that?

Question: Bill Katz - Citigroup - Analyst : Right. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Bill Katz - Citigroup - Analyst : All right. Thanks for taking all my questions, guys.

Question: Michael Kim - Sandler O'Neill - Analyst : Hey, guys. Good morning.

Question: Michael Kim - Sandler O'Neill - Analyst : Just a couple of questions. Just, first, a follow-up on kind of the deal front. I realize timing of transactions is inherently lumpy. But anything here that suggests the environment is maybe becoming a bit less favorable, just given maybe more competitors out there, perhaps some affiliates, some potential affiliates are still somewhat reluctant to do a deal, just given kind of ongoing market volatility. And then just related to that, the pay down of the credit facility this quarter. Should we read anything into that, as it relates to maybe your near-term prospects?

Question: Michael Kim - Sandler O'Neill - Analyst : Okay. And then, maybe, Sean, if you can just give us an update on, in terms of the traction you seem to be gaining as it relates to kind of sovereign wealth funds and other sophisticated pools of capital. Just seems like you present a pretty unique proposition for those types of investors. So maybe where do you think you are in terms of kind of fully leveraging that opportunity?

Question: Michael Kim - Sandler O'Neill - Analyst : Okay. Thanks for taking my questions.

Question: Roger Smith - Macquarie Research Equities - Analyst : Thanks. I just wanted to dig in a little on the institutional business on the sales and the redemptions here. Out of those net client inflows, can you give us an idea of what percentage really did come from your distribution efforts? And then if you can further bifurcate that, what, where -- how much of that really came from Australia, versus the Middle East?

Question: Roger Smith - Macquarie Research Equities - Analyst : Okay. Thanks. And then can you tell us -- to me I kind of think about that then as the sales of about $13 billion, about $3 billion were, come from you guys as the introduction. $10 billion were done by the affiliates themselves. Where was the $10 billion source from? Can you give us an idea on that, geographically?

Question: Roger Smith - Macquarie Research Equities - Analyst : Okay. And then was there anything that did -- was -- I guess you did just talk about the redemption levels being a little bit high here. Was

Question: Roger Smith - Macquarie Research Equities - Analyst : Okay. I guess just my last question is on the mutual fund business. Can you comment on some of the managers or the products that are doing well in there, that aren't necessarily in the data that we can see on the -- from a monthly point of view. So I guess is there some non-US products that are in there or stuff that's sourced out of the US that we don't see and you can comment on?

Question: Roger Smith - Macquarie Research Equities - Analyst : Great. Thanks very much.

Question: Unidentified Participant - Bank of America - Analyst : Thank you and good morning. This is Adam [Bea] in for Cynthia. Just a follow-up on the mutual fund flows. I'd like to get your thoughts on, in addition to the obviously good response to the products and performance on offer, as you look across the affiliates, do you feel as though

Question: Unidentified Participant - Bank of America - Analyst : Right.

Question: Unidentified Participant - Bank of America - Analyst : Great. Thank you very much. Really appreciate that. Also just turning to emerging markets. Obviously your acquisitions of affiliates and emerging markets is a long-term strategy. Just, if I could, get your high-level take on the near-term, maybe within the year, outlook for emerging markets. Are you concerned about the level of investment returns there at all?

Question: Unidentified Participant - Bank of America - Analyst : Got it. Thank you very much. That's all I had today.

Question: Robert Lee - KBW - Analyst : Great. Thank you. Good morning, everyone. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Robert Lee - KBW - Analyst : Actually I have a couple of questions and I'll try not to [winger] too much. First thing is I'm just curious if the global distribution platform, since its kind of at the affiliates option I guess, whether they want to make use of it, can you talk a little bit about how that's changed, now that you've got some track record of gathering assets? Are you seeing more affiliates talk to you about making use of the platform and being interested in it and to what extent does that play into your outlook for really leveraging that platform going forward?

Question: Robert Lee - KBW - Analyst : In maybe the follow-up question, as you expand globally, get much larger in size, the different tasks or services that you've made available to affiliates has expanded obviously. The global distribution is one. But you've talked about compliance functions and maybe some -- leverage some buying power. I believe at Pantheon you may do their IT infrastructure. Where do you see kind of the services you're providing to affiliates more broadly. Where is that going? Where's it expanding and how do you make sure that you don't get saddled with costs through that, that somehow impact the AMG shareholders?

Question: Robert Lee - KBW - Analyst : Great. That's helpful. If I could, maybe just one last question and Sean, since you opened the door, I guess about an hour ago, may as well step through it with the wealth management platform. Can you maybe update us on you know what that is. What the strategy is there, how you expect that to kind of unfold? You talked about having a senior-level hire possibly soon. I mean what should we be thinking about? Or just what the business model will be.

Question: Robert Lee - KBW - Analyst : Great. Well thanks for your patience and thanks for taking my questions.