Silvercrest Asset Management's (SAMG) CEO Rick Hough on Q3 2017 Results - Earnings Call Transcript

Silvercrest Asset Management Group (NASDAQ:SAMG) Q3 2017 Results Earnings Conference Call November 2, 2017 8:30 AM ET

Executives

Rick Hough - Chairman & Chief Executive Officer

Scott Gerard - Chief Financial Officer

Analysts

Andrew Disdier - Sandler O'Neill

Steven Lipper - Royce & Associates

Operator

Good day, ladies and gentlemen, and welcome to the Silvercrest Asset Management Group Incorporated Q3 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

Before we begin, let me remind you that during today's call, Silvercrest will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future events and developments in Silvercrest's future performance as well as management's current expectations, beliefs, plans, estimates or projections relating to the future are forward-looking statements. These forward-looking statements are only predictions based on current expectations and projections about future events. These forward-looking statements are subject to a number of risks and uncertainties and there are important factors that could cause actual results, level of activity, performance or achievements to differ materially to statements made. Among these factors are fluctuations in quarterly and annual results, incurrence of net losses, adverse effects of management focusing on implementation of a growth strategy, failure to develop and maintain the Silvercrest brand and other factors disclosed in the company's filings with the SEC, including those factors listed under the caption entitled Risk Factors in the company's annual report on Form 10-K for the year ended December 31, 2016, filed with the SEC. In some cases, these statements can be identified by forward-looking words such as believe, expect, anticipate, plan, estimate, likely, may, will, could, continue, project, predict, goal, the negative or plural of these words and other similar expressions. These forward-looking statements are predictions based on Silvercrest's current expectations and its projections about future events. All forward-looking statements made on this call are made as of the date hereof. Silvercrest assumes no obligation to update these forward-looking statements.

I would now like to introduce your host for today's conference, Chairman and CEO, Richard Hough. Mr. Hough, you may begin.

Rick Hough

Thank you, very much. Welcome to our third quarter 2017 results.

Silvercrest's third quarter and year-to-date results record, record revenues and net income for the third quarter and year-to-date periods. Our total assets under management increased by $700 million for the third quarter ended September 30. It was driven by investment performance and new client capital. Silvercrest's discretionary assets under management now total $15.3 billion, representing a year-over-year increase in discretionary assets of 16% and a new high for the firm. Silvercrest's total assets under management now stands at $20.6 billion as of quarter end.

Year-over-year, Silvercrest's quarterly top line revenue increased 12%, consolidated net income increased 28%, our GAAP diluted net income per share increased 21%, and adjusted diluted earnings per share are up approximately 26%. Silvercrest's results are driven by the steady execution of our announced growth strategy which we'll discuss further in the call, and by focusing on businesses in which we believe we have a competitive advantage. Our differentiated high quality service, intellectual capital and the investment performance results have helped Silvercrest continue its growth in assets, revenue and earnings.

The third quarter of 2017 represented the firm's eighth straight quarter of net organic growth and Silvercrest has delivered 17 quarters of positive or breakeven asset flows with 14 of those quarters being positive. Silvercrest's growth has been achieved, while we have maintained or increased our adjusted EBITDA margins, even as we've invested in the business on behalf of our clients and for future growth. We continue to invest in Silvercrest's next generation of high quality talent and we funded new growth initiatives. We have also made technological investments, including creation of a new data warehouse, reporting system and online portal to better serve and attract our family wealth clients.

We're very pleased today to announce a new Outsourced Chief Investment Officer growth initiative to offer endowments, foundations, family offices and other institutional investors excellent discretionary asset management services. We've built and incubated a first-class team at Silvercrest with deep knowledge and experience in the OCIO marketplace. Our OCIO offering represents a logical extension of our 2013 strategic acquisition made to strengthen Silvercrest's portfolio construction, asset allocation, due diligence and risk management capabilities. We've now won our first OCIO investment mandates, and we've built a very healthy pipeline of new OCIO business opportunities.

Silvercrest continues to evaluate selective and prudent acquisitions to complement the organic growth we've shown, as well as capabilities and professional talent, including the potential to expand to new geographies. All of us at Silvercrest are grateful for the long time support of our clients and shareholders.

On October 31, the company's board of directors declared a quarterly dividend of $0.12 per share of Class A common stock. The dividend will be paid on or about December 22 to shareholders of record as of the close of business on December 15. With that, I'll turn it over to Scott Gerard, our CFO, to discuss financial results, and then I will take Q&A and discuss the OCIO business as well as other developments at the firm.

Scott Gerard

Thanks, Rick. As disclosed in our earnings release for the third quarter, discretionary AUM as of September 30 of this year was $15.3 billion, and total AUM as of the end of the third quarter was $20.6 billion.

Revenue for the quarter was $22.8 million, and reported consolidated net income for the quarter was $3.7 million. Looking at the quarter, again revenue of $22.8 million represented approximately a 12% increase over revenue of $20.5 million for the same period last year. This increase was driven primarily by growth in management and advisory fees as a result of increased AUM.

Expenses for the third quarter were $17.5 million, representing approximately an 8% increase from expenses of $16.3 million for the same period last year. This increase was primarily attributable to increases in comp and benefits expense of $1.3 million, and the driver of the increase in comp and benefits was the increase in the accrual for bonuses and increased salary expenses as a result of merit-based increases. G&A costs for the quarter basically remained flat at $4 million. We did have some decreases in this area primarily related to lower investment research costs being the conversion of soft dollar credits to hard dollar expenses for research, that was lower. And lower sub-advisory and referral fees. This was partially offset by nominal increases in occupancy and T&E expense, travel and entertainment that is.

Reported consolidated net income was $3.7 million for the quarter. This compared to $2.9 million in the same period last year. Reported net income attributable to Silvercrest or to Class A shareholders for the third quarter of this year was $1.9 million or $0.23 per basic and diluted Class A share. Adjusted EBITDA, which, again, we define as EBITDA without giving effect to equity based compensation expense and non-core and non-recurring items, was approximately $7 million or 30.7% of revenue for the quarter compared to $5.9 million or 28.8% of revenue for the same period last year.

Adjusted net income, which we define as net income without giving effect to non-core and non-recurring items and assuming an income tax expense rate at the corporate level of 40%, was approximately $3.3 million for the quarter or $0.25 per adjusted basic share and $0.24 per adjusted diluted share. Adjusted earnings per share is basically equal to adjusted net income, divided by the actual Class A and Class B shares outstanding. As of the end of the reporting period for basic adjusted EPS and to the extent dilutive, we add unvested restricted stock units to the total shares outstanding to compute diluted adjusted earnings per share.

Looking year-to-date. Revenue for the nine months ended this year was $66.9 million. This represented approximately a 13% increase over revenue of $59.1 million for the same period last year. Again, the increase was driven primarily by management and advisory fees due to increased AUM. Expenses for the nine months ended September 30 were $51.7 million. This represented approximately an 8% increase from the expenses of $47.8 million for the same period last year, driven by increases in comp and benefits of $4.2 million, partially offset by decreases in G&A of $0.3 million. And again, comp and benefits increased because of the increase in incentive accrual and increased salary expense related to merit-based increases.

G&A expenses decreased primarily, again, due to lower investment research costs and lower sub-advisory and referral fees. Professional fees year-to-date were a bit higher than the prior year due to a documentation related project which occurred during the first half of the year. And furthermore, there were nominal increases in travel and entertainment, marketing and occupancy expense. Reported consolidated net income was $10.6 million for the nine months ended September 30 of this year, that compared to $7.5 million in the same period last year. Reported net income attributable to Silvercrest, or the Class A shareholders for the nine months ended this year was $5.4 million, or $0.67 per basic and diluted Class A share.

Adjusted EBITDA was approximately $20.3 million or 30.3% of revenue for the nine months ended this year, and this compared to the prior year's amount of $16.6 million or 28% of revenue. Adjusted net income was $9.4 million for the nine months ended this year or $0.56 per adjusted basic share and $0.53 per adjusted diluted share.

Quickly looking at the balance sheet, total assets were approximately $109.6 million, as of September 30 compared to $112.3 million as of the end of last year. Cash and cash equivalents were approximately $39.6 million as of September 30 of this year, that compared to $37.5 million of cash on hand at the end of last year. Notes payable was down to $0.7 million at September 30, that compared to $2.5 million at the end of last year. And lastly, total Class A stockholders equity was approximately $50.1 million at September 30.

That concludes my remarks. I'll turn it over to Rick and then we'll have Q&A.

Rick Hough

Great. Thanks, very much, Scott. I look forward to taking questions. We have our operator on the line.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Andrew Disdier with Sandler O'Neill. Your line is now open.

Andrew Disdier

So. first, let's hop right into it. OCIO sounds like a good opportunity, great opportunity. In going through the release so the win, any color around that? Has the AUM hit yet? And if not, would you be able to provide timing on it and in addition, would you be able to provide any color on the size?

Rick Hough

Yes. The size of it, let's wait to announce that. It's a nice modest start. It's a fairly small, medium size foundation, charitable organization and that will hit in the fourth quarter. It is signed up, which is why we've chosen to announce the OCIO now. I would say it's under $100 million. The other thing to keep in mind is we've now been working on it obviously, and we've built up a meaningful pipeline of new business. Just as we've talked about, institutional equity RFPs or other opportunities that we're in the hunt for mandates, the OCIO business now has its own pipeline and that pipeline stands at $1.8 billion.

Andrew Disdier

Great. So it does sound like with the $1.8 billion pipeline, teams have been in place for a while, have the active pipeline. It sounds like any spend related to human capital has really already been accounted for in the expense base. Is that fair to say?

Rick Hough

That's very fair to say. Let me just go through perhaps, how we funded this initiative and then talk a bit about the logic of the OCIO business. How it relates to the rest of our business, our growth initiative and its relationship to the high net worth business. I think our investors should understand our strategy in detail when it comes to this. So I'm going to talk about it for just a bit. The OCIO business had its roots in 2013 when we made an acquisition of Ten-Sixty Asset Management towards the beginning of that year. That group had expertise in risk management, asset allocation work, alternative investments, sub-advisory work and in fact had done a significant amount for Silvercrest in those areas starting in approximately 2003 or '04. And so we had a long history of working with them as sub-advisors and due diligence managers. We brought that capability in-house. The firm had grown to a point where we really felt it was important to have the intellectual capital under our own roof to make it available to our high net worth clients and family offices. It made a lot more sense economically to bring that expense internally at the same time. And the final thing was that just as we have created a revenue center around our equity capabilities, our internal equity capabilities, we thought there would be an opportunity to further extend institutional relationships that, that group had already developed, They came to the firm with revenue paying for themselves, by building out the team further, connecting it to our brand and ability to market and our own networks.

So what we did was make that group the internal Investment Policy & Strategy Group, in coordination with other portfolio managers already at the firm who had been working in that capacity, who were dealing with high net worth clients. Worked very hard on integrating it, making sure that we had a process for asset allocation, manager selection and due diligence and those other elements that I mentioned, that were really built into Silvercrest and part of Silvercrest, that integration and buy-in takes time. And then we augmented the team with a couple of key hires. Those hires were made with the growth in revenue of that Ten-Sixty business at Silvercrest. They've continued to get new clients and due diligence mandates as well as, thanks to the overall growth in organic growth of Silvercrest, both institutional and family wealth. So those additional hires have been made and they haven't, as you've noticed, affected our comp ratio or hit EBITDA because it was done within our current growth scenario. I will talk about future growth and investments further on in the call, but that's how it was funded and that's why you haven't noticed it.

The second thing is, the hires we made are very focused on the OCIO business. One of the new gentlemen who's joined the firm is the former CIO of Bucknell University, it gives us a tremendous amount of credibility in the educational space, as you might imagine. As well as someone who is a practitioner who was working on the frontline to manage a significant endowment and working with other firms like ours. Which is very helpful to us both internally as well as from a marketing perspective externally and adds value and insights to other endowments and foundations who don't have that expertise. We also hired a gentleman who was with Graystone Consulting, and acted as a very high level PM with a significant number of institutions, primarily in the Midwest. He will handle a lot of client relations and, of course, is well versed in the OCIO space since that's the business he was in. And we've built out sales assistance with regards to RFPs and the like. So that's how we built it. That's the logic. It is to create revenue that is distinguished from the high net worth business that is in a different institutional space, so it diversifies revenue in the firm, gives us a new potential growth engine for the future. And on the marketing side, with regards to what it does for our client base, which we never want to forget.

The high net worth client base is told that they are receiving institutional quality discretionary asset management at Silvercrest. Whether they are invested with our proprietary fixed income and equity teams, that is absolutely true and the proof of thesis that, that is the case is the fact that our equity capabilities are followed by and used by some of the most significant institutions in the United States. Secondarily, the portfolio managers that work with those wealth clients are asset management professionals in their own right with an expertise, they are not merely relationship managers. That's very important to keep in mind. So the story is the same across the board. And now, finally, with our Investment Policy & Strategy Group, to the extent they have an institutional following, and you've got large endowments, foundations and other charitable institutions using that group for their expertise in manager selection, asset allocation and risk management. It's extraordinarily comforting and provides a great halo effect to assure high net worth clients that, that function at Silvercrest is top-notch institutional quality. So there is a real complementary aspect to it even helping our organic growth on the high net worth side. It puts our firm on a much higher level than a lot of other competing RIAs, when we're talking to a family with $30 million, $50 million or $100 million.

So thanks for the question. It allowed me to go on at some length about the logic behind what we were doing here, but I think it's important.

Andrew Disdier

No. Absolutely. There was a question later on, but it saved me a little, saved me some wind. And I guess as far as systems go related to back-office and technology, it sounds like there probably shouldn't, we shouldn't anticipate any step up tied to the outsourced CIO platform. Is that also fair to say?

Rick Hough

In terms of technology, yes. No. In fact, the risk reporting engine and other work, the data warehouse I referred to in my opening remarks, serves that business very well and has already been built.

Andrew Disdier

Got it.

Rick Hough

On the OCIO business with regards to the opportunity, I mentioned the $1.8 billion somewhat near term pipeline. It takes a while obviously for these things to fall into place and we won't win them all, but we like our chances. I do want to mention what the fee basis and operating margin of that business looks like. There is a misconception that this is a 25-basis point type business or 20 basis point business. It's not. That would be true if we were serving as consultants. Institutional outsourced CIOs or chief investment officers are acting on behalf of an institution on a discretionary basis. So it is very similar in fees to the institutional business, that's already here that goes into equity portfolios. Or very similar to a very large family office, or family that gets fee breaks along the way. We manage those funds on behalf of our clients in a discretionary manner and we will be doing that for these institutions where we are literally becoming the CIO and acting in discretion on behalf of the institution.

So the business is actually more like 40 to 50 basis points and it could even be as high as 60, if it's an institution that's small enough and they don't get a charitable break in fees. So it's a very nice business from a fee revenue basis. It's very compatible with the institutional business we already have. And with regards to operating leverage, because you built a platform of managers and asset allocations and a reporting system, it's an efficient business. So it's one that has nice operating margins that's highly consistent with the rest of the business which is currently, of course, running at a 30% EBITDA margin. I think as I've mentioned in prior calls, that's on the high end for the firm. But I want to be careful about how the fees are considered by our investors.

Operator

[Operator Instructions] And our next question comes from Steve Lipper with Royce. Your line is now open.

Steven Lipper

Exciting new initiative. So I wanted to just ask some follow up on that. That was a very helpful sort of background context. And so one specific is that the Ten-Sixty Asset Management, are they now co-located in your headquarters or are they still where their previous location was?

Rick Hough

They moved into our headquarters in 2013. They have been collated since then and fully integrated. You walk into the front lobby of Silvercrest, you will be looking at the office of the fellow who runs that group.

Steven Lipper

Okay. Great. Second question is around business development. So this is a different market obviously and so people need to be credible and dedicated to it. So how many people have a business development role for this initiative?

Rick Hough

Let's see, one, two -- I haven't counted them, so I'm going to count it now. There are approximately five or six people with some aspect of business development. Some are almost entirely devoted to that. Others are in a role that I would consider extraordinarily important to business development that is not pure business development. So, for example, the head of the group is important but he has a lot of other functions. The portfolio manager, I mentioned, that came over from Graystone, is extremely important to business development and is an important part of that job. The head of our institutional business is extremely important to that sales effort. We have someone dedicated in sales support and the RFP process. That's almost a full time marketing support role.

The former CIO of Bucknell, again, that's going to be very marketing oriented in terms of making connections and following up on leads on our behalf. So just on the high net worth side, we have portfolio managers who are working with our families at a very high level. Their mission and job here at Silvercrest is also to bring in new business via referrals. It's very similar for this OCIO group where the key portfolio managers engaged in the business also have responsibility for bringing in new business. And, of course, I'm deeply involved in the business development effort as well as new growth initiatives. A fair bit of that pipeline were opportunities I have generated and I hope to plan to do so on the firm. So we're all focused on it and we have at least for a start a good number of people who are looking to build that business.

Steven Lipper

So then the pipeline that you mentioned, those are RFPs which you have, that you've been included in the OCIO search?

Rick Hough

They are either RFPs where there has been an announced search, or they are institutional referrals, where we have a more focused introduction to the group and we may be one of only two or three people they are talking to. It's a mix of those things. So it's one or the other, but they are real live opportunities. They're not opportunities where we see someone is looking and they haven't announced something, or that it is just a super wide search and we've just thrown a hat in the ring. These are actionable pipeline opportunities that exist right now for the firm.

Steven Lipper

Yes. I want to compliment you on your strategy about having both of the components, the portfolio as well as the investment management capabilities, be sort of market tested on their own and that reinforcing your value prop of the quality that you go to market with the high net worth. So most firms actually don't have the confidence to do that and I think it creates a really nice feedback loop to maintain a high level of quality if you're going to go out and pitch business. So kudos there.

Rick Hough

Well, thank you very much. I like the feedback loop analogy you use. I may use that in the future. The fact is this goes back in many ways to our original strategy of how the firm is organized, which supports the growth strategy of the firm, and that is we have segregated duties here. We have portfolio managers working with our wealthy clients, but they're not picking stocks and doing analysis. They're focused on their clients and new business to deliver the highest quality portfolios they absolutely can. Our equity team is only focused on building very high quality institutional portfolios. It's the same for this OCIO group. And what's important is not just the feedback loop, but when you create a revenue stream to support a particular group, whether it's our equity team or this new group, or the portfolio management group, you are providing the means and the revenue to both attract and retain and motivate very good professionals. Whereas a lot of our competitor firms, as you alluded to, they may hire some low level analysts to do due diligence for them or have a function answering to other portfolio managers who are also managing clients. But it doesn't rise to the level of an institutional quality or of very high level professionals with decades of experience in the business that we're able to build here because of the distinguished revenue stream that we're creating.

Steven Lipper

Yes. The model makes a lot of sense. Let me just conclude my questions. Just going back to the high net worth side and understanding a little bit more about the cash flow for the quarter. Did we add any client facing advisers? Were there new advisers added that contributed to that cash flow?

Rick Hough

We did not add anyone this quarter. We are always looking and talking to people about potentially joining the firm. And most people we've added have been via M&A and we continue to have a pipeline of M&A opportunities and discussions. So that could very well change, should we add someone. But we haven't added someone in a good bit. The positive organic flows, I think, Sandler came out with a notice that said we had flat flows, which is true if you're rounding off billions of dollars, which we now have and I'm glad we have. But we actually had positive flows, again. The positive flows this quarter were primarily driven by additions. For existing high net worth clients there were a couple new high net worth clients. It was a little low this quarter on that front. The institutional business actually had some pretty decent numbers coming in. It was close to $100 million in added assets or new mandates. However, we had $55 million flow out during the quarter. So that attenuated our overall organic growth, the $55 million flowed out because we've continued really excellent performance and institutions had to rebalance. So as I've said in prior calls, that's a really high class problem. It's something that comes along with strong performance. So it's a negative around our own success but look it bodes well for us winning future mandates in the institutional business.

Steven Lipper

Great. So my last question is just around M&A. We really like the high net worth space and we have a number of investments in banks that are prioritizing wealth management or high net worth management as well.

Rick Hough

Yes.

Steven Lipper

They are very active on the M&A front, as well as the rollups, HighTower and others. So I guess, what I see is a pretty challenging landscape to, there is just a lot of bidders for good RIAs that come to a point where they want to join somebody else. So I guess, I'm a little pessimistic about your abilities to add inorganically there because you guys have price discipline. How would you respond to that?

Rick Hough

Right. So we do have price discipline. You're absolutely correct. And we have lost more than a few opportunities, three or four, maybe four, over the past year. Where the pricing for a potential target just got into a range where I just wasn't comfortable spending shareholder capital in that way. There seems to be a fair bit of froth in the $500 million to $1.5 billion, maybe $2 billion space. And it's not just driven by banks and roll-up folks. In fact, I rarely run into the Focus and HighTowers of the world, occasionally I do, but a lot of the firms they're looking at just have very different characteristics from what we're interested in, either because of their geography or structure and it wouldn't be a good cultural fit. But in that $500 million to $2 billion space, one reason it's frothy is because if you look at the tables of the size of RIA firms, it just falls off a cliff. Right. You've got a couple up where we are in size and then it just drops very rapidly down to $2 billion.

And a $2 billion firm or a $1.5 billion firm in a city is a very nice size firm. It's a good firm. It's a pretty large firm in the fragmented RIA business. But a lot of firms sort of stall out on growth at that size and have trouble breaking it through, we can talk another time or later in the call about why. But that means there are other $2 billion, $3 billion, $1.5 billion firms that have also stalled out on growth and to get scale and size, they feel the need to combine with someone that is similar. And they will pay up in order to do strategic merger of equals beyond what we're willing to pay because they have other reasons to try to get bigger via that route. So you're absolutely correct. It's a very difficult environment. It has been almost 2.5 years since our last deal, which we did on very good economic terms. And we are just going to be patient. There is a space in sort of the $4 billion to call it $6 billion size that looks different for us for a variety of reasons and is a place that could provide opportunity assuming it has the right strategic reasons for us. That market looks a little better.

Steven Lipper

Well, thanks. Thanks for that overview what the market dynamics are there and again as a shareholder and your big shareholder too, we really appreciate that price discipline.

Rick Hough

Well, thank you very much. I know you guys have been very long-term shareholders. You've provided us with very good advice and you have encouraged us to maintain that discipline and to even make sure we've got cash to do the deal on the right terms if one should arise, and we appreciate that.

Operator

And our next question comes from Andrew Disdier with Sandler O'Neill. Your line is now open.

Andrew Disdier

So just going through the 10-Q, I wanted to flesh out a couple of items. So understanding the relationship is small from an economic impact, did notice that there was no disclosure around state treasurer relationship. Understand that in the past there was an $825,000 fee cap on an annual basis. So just wondering, if there has been any update there?

Rick Hough

Yes. So they ran a consulting process. It was a cash management mandate that was not a fee for AUM piece of business. It was just the project fee. And, frankly, the amount of work as their assets grew for the capped fee rate was becoming questionable in terms of the extent to which we really wanted to carry on. We made a new proposal to make the economics make a little bit more sense. Overall, it's a rounding error for the firm. So it was something we always knew was potentially at risk. Given the nature of politics, state governments, the treasurer in South Carolina is an elected official and the fact they were going through a consulting process. So sometimes you lose something. It didn't really have a material impact because of the way our economics work, as well as the terms of our acquisition of Jamison. Obviously, we would much rather have it but we move on and replace the revenue. Not too concerned about it.

Andrew Disdier

Yes. Understood. Agreed. Just wanted to be clear on it. And then another, just small modeling item on the expense side. Saw in Boston, there was a new rent renewal, looks like the expense will be about $35,000 a month. Just trying to figure out, if you can disclose the incremental rent expense associated with that renewable?

Scott Gerard

Yes. I mean, the incremental expense on that is totally nominal, it's not even a rounding error in our numbers. It's a small, we have a small amount of space up there. So, yes, it doesn't even make the page in that respect. Yes.

Operator

[Operator Instructions] And I'm not showing any further questions at this time. I would now like to turn the call back over to Richard Hough for any further remarks.

Rick Hough

Great. Thank you very much. As we announced, we've had another great quarter which has continued for some time. I'm extraordinarily proud of the professionals at our firm and how they pull together to create an integrated one firm perspective on how we deliver services to both our high net worth audience as well as institutions. And we're extraordinarily excited about this new OCIO growth initiative that we've been building since 2013 and now officially announced as a new potential growth engine for the firm as well as ongoing growth in the other two businesses. There are four keys to our strategic plan. Brand management and supporting very high quality brand, continuing organic growth in the high net worth space, complementing that with institutional business which is now both in our equity capabilities and other high proprietary products, as well as the OCIO effort. And finally, prudent but opportunistic M&A opportunities. We've been executing on that strategy. We've continued to grow the firm on that basis. And we appreciate everyone's support. Thank you very much.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a wonderful day.