MutualFundWire.com: Mayer Envisions a Nimbler, Leaner, Less Complicated Manning

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Tuesday, November 5, 2019

Mayer Envisions a Nimbler, Leaner, Less Complicated Manning

An Empire State fund firm's team is upgrading their technology and trimming down amid outflows, even as they put up strong investment results.

Marc Mayer
Manning & Napier, Inc.
CEO

Marc Mayer chief executive officer of Manning & Napier Advisors, Inc., states on the Fairport, New York-based firm's Q3 2019 earnings call (as transcribed by Seeking Alpha) that, "Each of our fundamental equity portfolios outperformed its respective benchmarks for the quarter. Within the U.S., our equity series delivered positive results for the period on an absolute basis and for the full year, the fund has moved ahead of its benchmark by over 250 basis points and is up 23% as of the end of September. Internationally, equity markets were down for the quarter but are up significantly for the full year. We are pleased with our relative results and on a year-to-date basis, our overseas series ended the quarter ahead of its benchmark by over 450 basis points."

Mayer also mentions "...we are closing a number of subscale or underperforming investment strategies and vehicles, which will have a deminimis impact on revenues. We are making associated reductions in our research staff. While the investment results we have achieved for clients have been good, we recognize the need to improve results for shareholders. We continue to see net outflows in all our businesses in spite of our investment results, including the previously disclosed termination of our largest sub-advisory relationship during October."

"Although our operating margin is up from the second quarter of 2019, at 10 percent, it is simply too low. We have been taking action on costs, and we'll continue to do," Mayer states. "Substantial spending to completely overhaul our IT infrastructure will continue to pressure margins through 2020 despite reductions in headcount and compensation expense."

"On the other side of the technology spend, we will have a modernized, future-proof infrastructure, enabling a nimbler, leaner, less complicated enterprise, a meaningful advance from the current state," Mayer adds.

Paul J. Battaglia Jr., chief financial officer, says "AUM decreased from $21.3 billion as of June 30, 2019, to $20.5 billion on September 30th. This 4% decrease was the result of $1 billion in net client outflows, partially offset by $300 million in market appreciation. When compared to September 30, 2018, AUM is decreased by $2.6 billion or 11%."

According to Manning & Napier's Q3 2019 earnings report, Q3 revenue was $34.2 million, down from $34.3 million in Q2 2019, and down 16 percent from Q3 2018. Total client inflows were $603.7 million for Q3 2019, up from $550.4 million in Q2 2019 but down from $1.0772 billion in Q3 2018.

Overall, Manning & Napier misses analysts' EPS expectations by $0.01 with Q3 GAAP EPS of $0.05. Revenue of $34.18 million beat expectations by $620,000.

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