Sandler O'Neill reiterates its defensive stance on the asset management sector even as it's outperformed the S&P 500 and financials YTD (up 20% vs. 14% and 18%, respectively), and the group trades at about 14.5x earnings vs. its long-term average of 16-17x.
Though cautious on the sector as a whole in light of higher market volatility, uneven asset flow trends, and slowing organic growth, the team does see opportunity in individual names. Affiliated Managers (AMG), Franklin Resources (BEN), and Invesco (IVZ) are all capable of generating growth no matter the macro backdrop. AllianceBernstein (AB) and Silvercrest Asset Management (SAMG) have compelling relative valuations and are uniquely positioned to capitalize on the higher-growth high-net-worth segment of the industry.
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