The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Patrick Davitt - Autonomous Research - Analyst
: Good morning, everyone. I'm going to start with a higher level question on the money market, fund market share, excluding the SMAs. It feels like
the SMAs are kind of making up what looks like a little bit of market share loss on the fund side.
Could you speak to maybe any trends that are going on that would kind of explain why some of the other large money fund complexes, say, at the
banks or even other large asset managers like BlackRock are seeing so much higher fund flows, mutual fund flows than you guys? I appreciate that
the SMAs are making up for that, but I'm just curious what dynamics you're seeing there and maybe we can't see from our position.
Question: Patrick Davitt - Autonomous Research - Analyst
: Helpful. Thanks. And then as a quick follow-up, obviously, rebuilding a fairly large cash balance. Stock price has been range bound, but you ratcheted
down the repurchase quite a bit. So maybe update us on how you're thinking about repurchases through the lens of the range-bound price and
now much higher cash balance again?
Thomas Donahue - Federated Hermes Inc - Vice President, Treasurer, Chief Financial Officer and Director of Federated Hermes, Inc., President of
FII Holdings, Inc.
Well, Patrick, looking backwards, ratchet down, okay, we were buying the stock as it was going up. And then right as soon as we weren't allowed
to buy anymore, the stock went down. And these are all fit into our models of which tell us that because of our belief in the growth of the firm, the
price is still significantly under value.
So we have to do two things. Look at it on a high level and say, should we be buying stock? The answer to that is yes. And then we get every day
to get to decide, okay, is today, better to buy, or tomorrow, better to buy. And I think that's really how we would characterize the quarter, which I
don't really view ratcheted down, and we expect to buy in 2025.
Question: Michael Cho - JPMorgan - Analyst
: This is Michael Cho, I'm in for Ken today. I just wanted to follow up on the money market discussion. You called out the change in rate backdrop
in your opening remarks in a higher for longer rates. And I guess, do you envision flows strengthening from here for your money fund business,
and I think that you called out the start of the year seems to be strong on the mutual fund side.
And so I guess I'm just trying to understand or better appreciate how you envision the money fund business here and the higher for longer backdrop
as well as maybe some of your Ultrashort products as well, which seem to make up a considerable portion of the business.
Question: Michael Cho - JPMorgan - Analyst
: Great, thanks for all that color. If I could just switch gears for a second. I just want to touch on ESG and your very sustainable -- sustainability funds,
I mean with seemingly less focused on broader ESG products in recent years and maybe even more so now. Can you just kind of remind us and
talk through how some of your ESG and sustainability products like Global Equity or Global ESG and various impact funds might be positioned in
the market in the years ahead?
Question: Robin Holby - TD Cowen - Analyst
: This is Robin Holby on for Bill Cass. Follow-up on the last private markets question. Just given capital markets activity is accelerating, what is your
near-term outlook for realizations in the portfolio? And when do you expect the fundraising, with respect to the funds that you mentioned, that
start to offset these distributions?
Question: John Dunn - Evercore ISI - Analyst
: Great to see strategic value dividend improving and flipping positive so far this year. But can you kind of contextualize how people think about
that fund and the demand for it given the backdrop of markets and rates?
Question: John Dunn - Evercore ISI - Analyst
: Got it. And then -- is there any kind of chunky institutional mandates you could point to that might be at risk? And then just more broadly, what
areas of institutional are you worried could be at risk?
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