The asset management sector is expanding as a result of client demand for reliability, cutting-edge digital technologies, and creative management techniques. Thus, it seems wise to scoop up shares of Affiliated Managers Group, Inc. (AMG), SEI Investments Company (SEIC), and Victory Capital Holdings, Inc. (VCTR) for robust gains this year.
Let's understand this in detail.
Leading-edge digital technologies are revolutionizing asset management. The imperative for high-performance computing, essential for scrutinizing extensive trading data, is compelling firms to attract and retain top-tier computer science talent. This fortification is enhancing the industry's outlook and potential for advancement.
Furthermore, numerous companies are allocating resources to propel technological advancements, encompassing AI, predictive maintenance, Augmented Reality (AR), the Internet of Things (IoT), and other innovations. The integration of these management practices is augmenting operational efficiency and extending the lifespan of assets.
The potential of asset management solutions to streamline operations, optimize resource utilization, and consequently yield cost savings, heightened profits, and improved Return on Investment (ROI) is anticipated to propel industry growth.
Furthermore, escalating client expectations for heightened reliability, safety, and operational efficiency are compelling industries to invest in Asset Integrity Management (AIM) for superior asset performance.
According to Future Market Insights, the asset integrity management market is anticipated to reach $26.8 billion in 2024 and is projected to surge to $44.4 billion by 2034 at a CAGR of 5.2%.
Considering this encouraging outlook, let’s look at the fundamentals of the three Asset Management stocks.
Stock #3: Affiliated Managers Group, Inc. (AMG)
AMG delivers comprehensive investment management services to mutual funds, institutional clients, and retail and high-net-worth individuals. Specializing in quantitative, alternative, and fixed-income products, AMG also oversees assets for foundations, endowments, and corporate and municipal defined benefit and defined contribution plans.
On October 23, 2023, AMG strategically enhanced its market position by acquiring the minority equity interest in Ara Partners from Capital Constellation. Specializing in global investments for a lower-carbon economy, this move could significantly diversify AMG's portfolio, fostering impactful growth and expanding its presence in lucrative private markets.
On August 17, 2023, AMG successfully concluded its investment in Forbion Group Holding B.V., a prominent pan-European venture capital and growth equity firm. Boasting €3 billion ($3.28 billion) in assets under management, Forbion's strategic focus on high-quality life sciences companies could aid AMG in supporting impactful advancements in medicine through capital infusion and expert guidance.
For the fiscal 2023 third quarter that ended September 2023, AMG’s net income and EPS increased 74.1% and 110.8% year-over-year to $286 million and $6.22, respectively. As of September 30, 2023, the company’s cash and cash equivalents amounted to $999.20 million, compared to $429.20 million as of December 31, 2022.
In addition, AMG’s total assets stood at $9 billion, up from $8.88 billion as of December 31, 2022.
Analysts expect AMG’s EPS to increase 10.4% year-over-year to $20.45 for the fiscal year ending December 2024. Moreover, the company topped the consensus EPS estimates in all four trailing quarters. Shares of AMG have gained 9.5% over the past month to close the last trading session at $151.56.
AMG’s fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AMG stock has a B grade for Quality and Momentum. It is ranked #5 out of 50 stocks within the Asset Management industry.
In addition to the POWR Ratings I’ve highlighted, you can see AMG’s Growth, Value, Stability, and Sentiment ratings here.
Stock #2: SEI Investments Company (SEIC)
SEIC furnishes clients with wealth management, retirement and investment solutions, asset administration, and investment processing outsourcing solutions. Additionally, it delivers financial services and investment advisory services, demonstrating expertise in launching and managing equity, fixed-income, and balanced mutual funds.
On December 21, 2023, SEIC revealed its acquisition of Altigo, a cloud-based platform offering inventory, e-subscription, and reporting services for alternative investments. The strategic move aligns with the growing demand for alternatives, with 35% of investors aged 25 to 44 expressing interest.
As global alternative assets are projected to reach $23 trillion by 2027, SEIC anticipates meeting the rising demand for diverse, high-quality alternative investment products.
On November 21, 2023, SEIC finalized its acquisition of the National Pensions Trust (NPT), emphasizing its dedication to institutional markets. The integration enhances the SEI Master Trust, amplifying SEIC's capacity to provide top-tier services on a large scale, ensuring superior member outcomes in retirement and beyond.
For the fiscal 2023 third quarter that ended September 30, 2023, SEIC’s total revenues increased 1.2% year-over-year to $476.76 million. Its income from operations rose 112.5% from the year-ago value to $108.47 million.
Additionally, the company’s net income and earnings per common share grew 87.6% and 93.3% from the prior year’s period to $115.66 million and $0.87, respectively.
Analysts expect SEIC’s revenue to increase 3.8% year-over-year to $1.99 billion for the fiscal year ending December 2024. The company’s EPS for the ongoing year is expected to come in at $3.90, up 11.6% from the prior year. Moreover, the company surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 5.3% over the past month, closing the last trading session at $63.34.
SEIC’s robust outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
SEIC has a B grade for Momentum, Stability and Quality. It is ranked #4 out of 50 stocks within the Asset Management industry.
Click here to access additional SEIC ratings for Growth, Value, and Sentiment.
Stock #1: Victory Capital Holdings, Inc. (VCTR)
VCTR provides a spectrum of services, including investment advisory, fund administration, compliance, transfer agent, distribution, and other management services. The company caters to institutions, intermediaries, retirement platforms, and individual investors, ensuring comprehensive support across diverse financial needs.
On December 21, 2023, VCTR disclosed the launch of its new rules-based exchange-traded fund (ETF), VictoryShares Small Cap Free Cash Flow ETF (SFLO), through its wholly-owned investment adviser, Victory Capital Management Inc.
The expansion of the free cash flow lineup, building on the success of VictoryShares Free Cash Flow ETF (VFLO), brings innovative methodologies to the small-cap segment. SFLO would enable investors to benefit from companies with appealing free cash flow yields while retaining growth potential in their small-cap portfolio allocations.
During the fiscal 2023 third quarter that ended September 20, 2023, VCTR’s total revenue increased 1.2% year-over-year to $209.69 million. Its adjusted EBITDA grew 3.5% from the year-ago value to $107.23 million.
Furthermore, as of September 30, 2023, the company’s cash and cash equivalents amounted to $107.99 million, up from $38.17 million as of December 31, 2022. Its total assets stood at $2.59 billion, compared to $2.54 billion as of December 31, 2022.
The consensus revenue estimate of $824.82 million for the fiscal year ending December 2024 reflects a 1% year-over-year improvement. Likewise, the consensus EPS estimate of $4.77 for the current year exhibits a 6.3% growth from the previous year. Moreover, the company surpassed the consensus EPS estimates in all four trailing quarters.
Shares of VCTR have gained 18.5% over the past year, closing the last trading session at $33.75.
VCTR’s sound prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
VCTR has a B grade for Growth, Stability and Momentum. It is ranked #3 within the same industry.
Click here to access the additional VCTR ratings (Value, Quality, and Sentiment).
What To Do Next?
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SEIC shares were trading at $62.98 per share on Tuesday afternoon, down $0.36 (-0.57%). Year-to-date, SEIC has declined -0.90%, versus a -0.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Asset Management Stocks to Grab in 2024 StockNews.com
