Artisan Partners Asset Management Inc. (APAM)

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Artisan Partners Asset Management, Inc. (APAM)

Q3 2013 Earnings Conference Call

October 28, 2013 5:00 PM ET


Makela Taphorn – IR

Eric Colson – CEO

C.J. Daley – CFO


Bill Katz – Citigroup

Robert Lee – KBW

Michael Kim – Sandler O'Neill

Marc Irizarry – Goldman Sachs

Cynthia Mayer – Bank of America-Merrill Lynch

Chris Shutler – William Blair

Surinder Thind – Jefferies



Good afternoon ladies and gentlemen. Thank you for standing by and welcome to the Artisan Partners Asset Management’s third quarter 2013 earnings conference call. My name is [Jamie] and I will be your conference operator today. At this time all participants are in a listen only mode. After the prepared remarks management will conduct a question and answer session and conference participants will be given instructions at that time. As a reminder, this conference call is being recorded.

At this time I would like to turn the conference call over to Makela Taphorn with Artisan Partners.

Makela Taphorn

Good afternoon everyone. Before we begin I would like to remind you that our third quarter earnings release and the related presentation material are available on the investor relations section of our web site. I would also like to remind you that comments made on today’s call and some of the responses to your questions may deal with forward-looking statements and are subject to risks and uncertainties. Factors that may cause our actual results to differ from expectations are presented in the earnings release and are detailed in our filings with the SEC. We undertake no obligations to revise these statements following the date of this conference call.

In addition some of the remarks this afternoon include references to non-GAAP financial measures. You can find reconciliations of those measures and the most comparable GAAP measures in the earnings release and exhibits and earlier today we launched a registered public offering of 4.8 million shares of our Class A common stock. Because we are currently marketing this offering we will not be discussing or taking questions on the pending transaction on this call so please refer to the documents on file with the SEC if you would like further information.

And with that I will now turn the call over to our Chief Executive Officer, Eric Colson.

Eric Colson

Thanks Makela. Good afternoon. Welcome to the Artisan Partners Asset Management business update and quarterly earnings call. I am Eric Colson, CEO and I am joined today by C.J. Daley, CFO. Thank you for your time today and I hope you find this discussion useful.

During this time I want to make sure to reinforce our long-term business strategy through a current presentation of our operational and financial statistics. Additionally as I mentioned last quarter I want to take some time to review our management approach.

Last quarter I focused on our talent driven business model. This quarter I am going to spend some time highlighting how we view growth. We are very committed to managing our business for growth. We think it is critical to talent acquisition and retention. But we don’t believe in growth for growth’s sake. We believe growth needs to be thoughtful and grounded in a long term view of success. Once I am done, CJ will take the lead walking through our financials.

Since our last reporting period, the only real change as noted on slide 2 is our AUM, which increased to nearly $97 billion during the quarter through a combination of organic growth, market appreciation and alpha generation from our investment team. Since quarter end, we have surpassed the $100 billion level. While reaching this milestone is noteworthy and worth recognizing this as an achievement for our hard work and great client support, $100 billion is just another number and states nothing about the quality of our business or thoughtfulness in our growth to achieve this milestone. I will elaborate our approach to growth later on this call.

The deck two slides provide a current view of our long term investment results. As a reminder, it’s our goal to produce superior investment returns on an absolute and relative basis with integrity over a full market cycle. So when we analyze investment performance we answer three questions. And we have been faithful to a strategy of stated investment philosophy and process. As the strategy produce good absolute performance how does the strategy’s performance compare to the performance of the peers, competitors and the index? As of September 30, 10 of our 12 investment strategies added value relative to their broad market performance benchmarks over the trailing 5 year and 10 year periods since each strategy’s inception. All 12 strategies have good absolute performance and followed their objective with integrity. We expect our 13th strategy, global small cap growth to be highly differentiated from its benchmark and relatively focused in nature. We will report on the strategy more closely after it has at least a year of results to discuss, even then we will emphasize a three to five year perspective if not longer.

With that stringent [ph] strategies we are not attempting to time the market. And more importantly, the first few quarters or any short time here is for that matter are not appropriate gauges of long term success for any of our strategies. Our global value strategy had a slow first six months and now has very attractive long term record. We launch strategies based on long term investment opportunities in alignment with secular asset allocation change. The process discipline of our investment teams will result in periods of relative weakness and that is okay. We value the long term value creation over short term success and we have confidence in the process and execution of our managers to be successful over long periods.

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