Westwood (WHG)

Julie Gerron General Counsel and Chief Compliance Officer
Brian Casey President and CEO
Terry Forbes CFO
Mac Sykes Gabelli
Call transcript
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Ladies and gentlemen, thank you for standing by, and welcome to the Westwood Holdings Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Julie Gerron, General Counsel and Compliance Officer. ahead. go Please

Julie Gerron

other welcome by call. and that fourth XXXX different uncertainties quarter subject results cause Thank be forward-looking to following to statements. discussion conference materially and risks, unknown The known those statements which will earnings may to actual contemplated you, from and our factors, the include are forward-looking

filed that the Commission. today, whether otherwise. information, Additional year XXXX, any Form our press in update difference Securities is information concerning We new included our XX, the December in factors issued undertake ended with that as or statements, is the or and no earlier as forward-looking could XX-K publicly of events as for Exchange cause a result obligation such a to future well revise release

not place on forward-looking cautioned are reliance to statements. undue You

included SEC the in of reconciliation per economic measures, addition, with In comparable earlier our accordance today. most concerning GAAP the share non-GAAP financial economic the rules is press release earnings at earnings to end issued and of our the measures

On today, we and to President Officer; Casey. over Executive Chief the call Forbes, turn Casey, Brian our now Chief Officer. Terry and Financial Brian our call I have will the

Brian Casey

to significant progress and ahead. allow evolution years meet to will Thank management grow firms feel the challenges the we've head in in evolve the listen the Good the the I've asset for the made Westwood, and need disruption our We taking you in to thrive steps asset call. afternoon. in previous quarterly earnings for ongoing by on. to about time of spoken to us that taking calls management industry like

a include the expense significant investment in personnel Income with overhead for Alternative our to in and Income investment from of cost of we book that Barnard attractive Toronto; costs our high actions us and intermediary longer to and Westwood saves including trading retail year. of new and growth build price the XXXX multi-asset increase introduction entire growth alpha, across star with come Convertible the team the of of product records. dedicated InvestCloud. accomplishments namely per of our in a raised and savings row, the closing for million reduce the Fund, over to to initially Seth highlights outsourcing the of our Global plan of expansion of the new Investors investment as launch taken the in the of experienced the and our of to of Wealth large-cap to Aviva elimination repositioning our Received to to attractiveness; systematic transition the channels, the broaden performance lineup family competitiveness, more Best launched in The the team in resulting and and clients Northern a and small-cap Places Trust, addition several Scott fourth Fund several Gould $X credit competitive for Opportunity top quarter strategies, Some desk rating they our our appeal overall on institutional Advisers systematic International the These and which gains award opportunities, repricing to increase year Work streams; office. become lease in Funds Boston WHG in Morningstar seventh multi-asset

market The we in rally, in which recovery distinct return. Turning absolute which style. in XXXX year ended of the a and strong were extreme rotations challenges correction of the vaccine-induced each There start and brought a with parts different November, year: started along the three March, our history. value now performance. I'll downturn, its with strategies. Even to still U.S. with with year ended bull longest

twice any in from Bank to of deviations volatility XXXX, greater XX in our more than strategies. performances database. year outsized were there style according rotations other four of than their various standard mixed America fact, In resulted Lynch, which The Merrill in is

provided small benchmark challenged. SMid kept Index large, while XXXX strategies were our for out were of Flows absolute and large but more beat its Russell solid outflows LargeCap largest for pace, LargeCap strategy returns our the to Value value the AllCap the XXXX quarter, the amongst Our and fourth in year rebalances. investors. strategy client including lagged contributors quarter, in some firm the

same as the in encouraged client long-term a fourth their did in one early are to large account we second quarter add XXXX. elected and to However, the

U.S. going the the prospects downside the and finishing we about in finish ranking WHGLX, the now excited with Russell best-performing its the year. high it Share of over XXX the SMA years, for are wins see points last be Value rated XXXX continues ahead in mutual Value last of remains the year, our Ultra Index. introduction Interest a potential is institutionally, databases one year, its basis SMid eVestment as of this was forward, ahead. the value quarter, strategy late in the and this top to continue our year to outperformance quartile the fund, with earlier We for but over to three SMidCap it's peer underperformed benchmark four-star especially fund. strategies Class in able

mandate this improved However, locked portfolio despite large manager and quarter. stability, performance a SMid subadvisory

Ultra a new contribute quarter. contribution Share client in our a positive clients last defined the institutional SMid new side, On began funding assets Class had and other mandate

our quarter another for this for and in reversion year. of wins new behind assets, institutional consultants. to us, million further years. out is favor. search continue see have rally and on $XX institutional We SmallCap believe To portfolios $XXX over companies style Value investment favor believe ultimately was emerge. a new was the product junk Our ground of appreciated for approximately a of prospects of quality saw performance. and will our the our the saw markets and to value was multi-asset yields business low-quality positive high on for between new just Overall delivers and and served Russell the improved style to not and and strategy durable The fund This improved as we equities, several in the SmallCap lows. differentiated that alpha our year. has rose clients prices U.S. history. SmallCap and saw spreads flow that set, rising popular Value see for XXXX, low-quality stocks will optimistic credit on treasury a XXXX, we quarter over dispersion off broader it with fundamental bond We headwinds high-quality December, confined the results In as index our XX-year were won comment approach well SmallCap we XX-year differentiated fades of drive of be mandates trend process has opportunity that close that as to photo from set our quarter XX fourth million bottom-up flows transitory in it fade during net credit funded quarter research and additional a the in strategy in in passive and tightening group, a the will our their widened in the we're deliver fourth

quantitative dedicated Income to opportunity, Scott joined income analysts joined Late portfolio XXXX, to in added Westwood for income has at team Barnard, Asset an been for the Alternative research in high our alternative of The Fund. very which array other managers, has Gould, adjustments our income, the continue team, since risk at years January multi-asset return, build-out quarter. Amundi overseen Amundi, analyst. to in as XXXX opportunities we And credit spectrum, total return team now announced manages a the last added and strategies. has the Management income, manages team the active and worked income the across we Adrian and fixed Adrian who Seth who with been fourth opportunity. Helfert and includes that was expand quarter, Westwood strategies of the Our newly XX continuum.

and years XXXX finished XX% Hussein it universe and we're by year in is strategy rally [Mr. Westwood returns to in team, more over towards were to Fund, rotation Opportunity broaden time were its going value for equity to added the along have hires as the High finished and quartile the the strong unfolded. largest off XXX, growth we team for the forward. Index team decile fourth period. receives as a remains multi-asset strong with its the orientation the of Income exits strengthen expect top distribution additional the paying WHGIX The Relative strategy Westwood team's a We Income. longer-term also multi-asset our U.S. three that strong five-star support Barclay's Adatia top Bond Income with this X/X top capabilities. which platform, with momentum and value in aheadof sales opportunity, over and five XX% to as S&P strategy, with seeing places from in an WHGIX, over a Bloomberg the also quarter. fourth This fund multi-asset that research benchmark, rankings Morningstar, XX% quarter managed equity with absolute Aggregate overweight Intermediary optimistic XX% which a Barnard]

to XX% global basis Bloomberg return here points a in the similarly Our over the by for Aggregate in quarter came year rebound liquidity XXX; its their XXX solid securities ahead Aggregate finished S&P track five-star finished Total XXX basis market, of Barclay's the strong ahead strong bring to came fund, It and X,XXX fund, as and with quarter Index. finished High profile year. added XX% the points The WHGHX, Income with Index; a and outperformed over absolute benchmark, given Corporate over full first other the the excited strong for Barclay's WLVIX, quarter Government basis relative multi-asset Westwood meltdown of XXX; to we're S&P after multi-asset points products and XX% that continuum over Bloomberg XXX performance. across basis Fund, the the Return strategies. convertible improvement and in this records results. of year XX% ahead points our

finished eVestment positive X/X and with in the the flows. We increase points and for structure. trailing Our one a had strong fee Alternative fund over the XXX quarter assets year in fund, flexible track the three and top WNIX, to the up Income points record net years hope X,XXX in basis basis for and over universe four-year up

and are year. returns totheir excited The newest alpha the their the strategies during testament and multi-asset multi-asset added records, for SmallCap we're credit we launched XXXX growth team about opportunities, solid systematic potential. credit the in growth. the which quarters pandemic, during asset opportunity track new a excellent year, across strong These strategies introduced classes had systematic to Our strategies, LargeCap generation

that for a with on the even joined the which continued transition, they vaccine, in quickly is Westwood Convertible this supporting provides clients of Westwood's and This by all mispriced asset focus strategy members We and are opportunities expect size we of on proceeds exclusively the core strategies during strengths, fourth will credit we for strong stand-alone that to have firm opportunities remains end to on by and quarter. from quarter in the the views that financial announced as Westwood our to team differentiated XXXX. team of realignment there the to strategies markets convertible solely assets leverage unevenly. securities transition economy, benefit no to in focused Westwood the a convertible shown ability fully Aviva potential longer as transition and move responsibilities and Aviva Therefore, distress Investors, offer classes. securities. is and managed strategic team part the Global Securities to that to the Last, back the securities to find our our of multi-asset recovery operationally

better with We achieved yield, platform. classes multiple and be for for better reach The with that with can underlying need and risks stability using multi-asset consistent managed. higher even asset a correlations diversification, repeatable lower and can our process generation have to worked comes be The greater establish rates, returns alpha outcomes.

our products of positioned outflows new and five as distribution, cross increase to and growth across declining. take uniquely classes, Shifting teams all rated executing of or by with are intermediary and advantage is to star capitalize asset to Our to strategy well four we're positioned multi-asset are our continuing on institutional sales Morningstar. commercially four suite currents funds

spaces. Our and new SmallCap opportunities new Income outflows, by in contribution recent had highest in large added our quarter mutual saw Funds. defined Mutual strength both the XXXX. the Opportunity fund share driven classes, inflows the and offset inflows the in intermediary restructuring sub-$XX SMid were supporting from Inflows in by quarter, million $XXX the wins $XXX loss for by Institutional million over level and Fourth million were institutional previously sub-advised we of mentioned. driven mandate of primarily

$X convertibles over to attributed For those sales billion, offset closing XXXX, of strategic by including were $X.XX emerging in strategies, markets, and MLP billion reached outflows the outflows. institutional strategy. XX% of the

the flows. a for million intermediary $XXX Inflows recovery team over million, in by earlier offset from saw intermediary were quarter strong Our the COVID-induced $XXX outflows.

year, intermediary in $XXX sales both were approximately teams distribution outflows. compared sales million, evaluating and our For offset the XXXX. In which by executed to nearly $XXX reached new grew strategy, growth million

New fund activity. we to in flows with not of sales search searches and approvals hope year, won is a funded income SMidCap stands sales driven are event-driven than yet by XXXX, forward, going flows but SmallCap and expected the and SmallCap pipeline mandate end channels opportunity with and substantially improved for in one, good consultant the Institutional outflows continued to competitive intermediary especially are our half poised for promising second SMidCap continuing. pipeline XXXX $XXX key in of million. mutual SmallCap, increased strategies, and and XXXX. see positive and at more for net

very We awaiting recently Opportunity the performance. worker see have potential to sales in process and growth later with in presentations is quarter have teams XXXX. into in months finals competed XXXX ahead. into sales new strong the drive could We every improving decisions the some and large put improving Income

flows of As net I rated off class starts month four-and Morningstar, attractive resulting products suite by the an January. the of our are and with multi-asset spectrum. the strong funds XXXX mentioned all institutional are intermediary asset to Both in earlier, sales in positive across for five-star

Management. to Wealth Turning

continue active in new while serve be and our Houston to finding current for and to clients. prospecting Dallas engage in clients teams new Our ways

portal, for in last clients driven $X.X on connection financial value great its first adding the our advisers financial office is retention online creating, XX% Our approximately a managing was to Strong of way. XXX our assets from wealth the in of for our expanded We over exceeded year now which history. advising and rollout our our assets, and presence by client the been team digital who've billion in reviewing plans. with clients over our billion advisers, time extends client Houston $X by in seamless

launched, we increased with will our Digital clients with they on transactions able eventually, world. sharing boost Our be most clients increasingly flexibility soon, placing as it their offer considerable complete at information, Apple App their connect will has devices. efficiency to capabilities be and in and account fingertips, cyber to access their adviser and value

team wealth hard to has and update Our wealth expand our worked management ecosystem.

service our to services availability loan investment addition alternative for has of well with the private Westwood's been successful bank. we faster-than-expected and of efforts, plan. the banking the solutions In through ahead digital private have also clients bank of investment our in and Westwood offerings expanded introduction growth with offered

to both returns the tax-efficient achieve our turnover Equity and Select digit high worth Our in which strategies, quarter. designed individuals, high-quality, net are strong outcomes double low for posted

For posted the mid-XX% the capture year, in they range. downside

of have high capture Index. stats are XX% performed well. we high market a very versus the for has points fourth the over strategies offerings. the Equity benefit Select three for ahead the quarter to new up last Select XXXX our High net returns alpha, first and of created Select quarter. trading picking and attractive expense been achieved return you Dividend since its clients had we first worth dislocations, returned clients each during that large our XXXX past the Trust both managing Northern the pandemic from strategies posted outsourced helped a which summer. business. very alpha, reported strong We quarter have in forthe XX% index, over the digit institutional XXXX, diversify double March, XX%, assets on Dividend focus of basis respectively, In at Index. created for our versus and of Russell investment They Russell and to the downturn inception, XX% posted side to XXX Over both we the the had years, XXXX, downside

this pleased are that well. progress continues We to

good the firm. savings from and Our has lower getting positive. clients execution, been we're costs, seeing and clients for are consultants Feedback

completed multi-asset strategy's we're areas, remaining excited securities end of assets closing the about will Aviva we on our continue of which at convertible the of to quarter. transition Aviva are There solely International the Westwood Advisers look to to convertible strategies, The and several the this we focus build transition While as we out Investors. key ahead.

fund Our stars. performing Wealth The four already increased clients. new seeing Management increases exciting efficiency Morningstar digital are to well online new assets. our our to connection rating gathering and products five for our our clients for our strengthens We've and that and WHGLX our portal expands with presence, introduced increases family and new average WLVIX

to InvestCloud has in founders, recapitalization InvestCloud announced of on some Westwood want investment. million you with tendered Along our cash. has received stake InvestCloud valuation a Last ata ownership of our I update billion. regarding great Finally, XX% news and $X $X.X week,

We $X.X wealth form will additional roll with XX% that our million, that platform remaining into in businesses the newly global trillion company two assets. solutions includes $X over a approximately collectively capitalized stake,

Our $X.X in and X.X years, it XXXX, original its X.Xx of investment original grew million InvestCloud mid wasin in about value.

initiatives excited are InvestCloud and an remain our continue further to relationship investor We on strengthen strategic to and together. partner new in

As support for to employees. opportunity all doing career confirmation provide of our and we're

year to to are the we spread the they presented navigate pleased as award clients of the Work employees remain row. received virus. and supporting Best our announce challenges COVID-XX in We the We the seventh committed that Places by a for to

CFO. each continue I'll all Forbes, they the team behalf clients. turn call very on do and Terry over I'm make for efforts to of grateful our our now to members extraordinary and Our every day,

Terry Forbes

share was million $XX.X $X.X fourth XXXX. million the $X.X of in Today, million $XX.X the of in per metric, was due quarter increase share. quarter $X.X third everyone. principally of lower of the XXXX earnings, impacted revenues. fourth we quarter's compensation advisory result employee Economic million XXXX reported million the lower fourth or quarter third $XX.X quarter net per down higher share, under $X.XX from $X.XX third prior quarter economic XXXX. for afternoon, quarter per $X.XX and to and The particularly year Fourth benefited million a $XX.X was to performance a million, per million good based other expenses, by fees, of third million several Fourth per quarter decrease to year's prior Economic trust operating management. income and revenues, year's the items. $X.XX fourth million quarter average losses was million lower nonrecurring to partially was $X.XX or prior the compared to lower non-GAAP the per income and to assets or of net and share in in lower the higher benefits expenses for principally Brian, and and the Thanks, from $X.X compared revenues the The total compared income earnings or current taxes, related share loss by and revenues. increase income quarter share $X.X the of from taxes, of $X.XX or of current operating quarter, net lower offset prior a quarter $X.X quarter from fees $X.X the compared

partially losses million of and assets asset-based XX% a in Trust a offset XX% operating revenues advisory For per in million XXXX's the or $XX $X.X several of assets a revenues, and in million investments, million on decrease was average $X.XX by performance-based totaled million lower taxes. and earnings compared fees, of institutional compared to The at Firm-wide $X.XX or current million assets $XX.X items or million $X.X in private third XXXX lower partially private XXXX. million to foreign or The $X.XX Fiscal $X.X lower income compared year fees by decrease share per assets share management billion share gains impacting total unrealized and $X consisted total. $X.XX of $X.X fees was or reflecting Economic currency $XX nonrecurring AUM, of was $X.X net under advisory impacted expenses, XXXX. to in or the total, end $XX.X lower decrease in the of million share. offset $X.X or $X.X quarter billion by due XXXX, and earned billion fiscal to loss income of net of per $XX.X per of transaction increase XX% XXXX. billion fund mutual quarter the Wealth of total

Over year, of experienced the of we $X.X billion market and appreciation net outflows $X.X billion.

to comments and close. closing be our quarter the well reinstated longer-term encourage million dividend We continues business, product quarter fourth sheet. a our our thank of XXXX. in to development interest of that brings to balance to Board and on X.X% as cash That we'll X, our X, investor up annualized February the earnings website, cash totaling prepared for reflecting very rate debt-free Directors financial at investments and revenues, as Our April open the and dividends. company, on on for March We price to I'm our with end fiscal as stockholders announce a solid our highlights, posted presentation payable your of happy XXXX to questions. and review dividend and on $XX lines you in discussion This trends you nearly share the at a yield position $X.XX XXXX, represents record X, quarter, of per of of this XXXX. an short-term


Instructions] first [Operator of the Mac Sykes from line question Our from Gabelli. comes

Mac Sykes

a gentlemen, Congratulations, strong on quarter.

Just a couple of questions.

quarter. closing I the funds talked of the this think you flows impacting about

those for to aggregate if was If exclude as the were you what the you year quarter? that kind well? of for impacts, And flows have

Brian Casey

flows the what quarter? were the for If the we exclude closed strategies,

Mac Sykes


Brian Casey

Mac? question, to Terry ask you a to going for What's that looking be your give number. Yes. Terry number. I'm other will

Mac Sykes

we thinking and just that digital there? offerings, need Are more offerings the engagement about efficiency about how client the for the have future increasing to something you driving digital having the So in you or on think the should sales platform?

Brian Casey

all where to to what lot we've multi-asset And have build capabilities. now, a offerings Well, now of we had intended really to I where exceptional income strong of on is across the traction years opportunity. multi-asset was the They're a strategies in lot feel continue they out year. at flows to and competitively, a see and for ahead, think we we win. spectrum, which last good in for years number exhibited additional within Morningstar priced the categories we the of They've hope are now performance. time, -- one can only some performance our like do They're

As the management, solution. goes, with lot read but when have a interesting, XX%, about they if people it's can far also that specific as digital comprehensive they have really think, being It's of a connect with, I wealth the work digitally you that want firm want a to they questions. call to with human engage and they

execute of a connect about really capability can then use on and digital And people with this the human. sounds and that where pull a get our solution can deliver off, simple a taken time digital it's to the have cool it for day any So any to but actually device, to hybrid ability model having a we really position us platform it's clients. years to

Terry Forbes

Mac, the excluding the from net your XXX. strategy, quarter for around outflows the was closed flows --

Mac Sykes

made an just suggesting that's with trying obviously clients the and there's just ability today? capability, explosion potentially, investments way but to in digital. now, reach Robinhood, of I'm Okay. do different think platforms And segment you the to expand to seen We've you've your service clients, like the best all an the given not on

Brian Casey

It's a as really with one, capabilities infinite the number really way about our things. work to: require to number has of the capacity. learn folks We'll retrain have customers Well, so. that system, it that is we of all in hope it neat that we what's the going a

ourselves. in ways it think with will This net them. of of they I out engage and hard, engage have not they they and which really call is what something retrain us of they figure a were about do have who's a us I or XX the XXs, worth lot a money, pick generation, the then a maybe world -- way use and lots in the we XX-year-old, younger when that of success allow making their to that's with we'll to working, lot to had XXs haven't for it. would sort to to So it And thought is high segment working

private been The built doing is, planning. state and other things banking out we've financial and we've planning

the to in plan Houston, of a the look to wanted about state take state tax, redo lot and their ahead year, last so group Our at their everybody financial were and of a people concerned changes election, plan.

can were of for is, way busy and have with. go But a easy that to them in we've at a couple does deliver keep financial tied we engage them assets they it become Store hit And done So plan, that's further exceptionally a look always give. that of to able And we we equity. to any clients. in they advice what for that Apple cements sheet the other little doing relationship that of more it because when to running their that do app, the it we we that that so really they're they account, digitally to and can when their it, they to and go Westwood the download their and balance they investments find things private documents have, state financial done good plan, for them a their important all is

some them in invested In tremendous our was for and InvestCloud, which for fact, win us. a of clients

one. And some pretty good we're the exciting good other private really uptake a that in was on. then that are doing that equity have world people So things


hand to for like showing not time. remarks. I'm I'd at questions the any this any further And back program Instructions] Brian further Casey [Operator to

Brian Casey

over positive for We've positive we're listening. our be in, I'd time future, could got close coming we flows some really years XX our and reinstate in Okay. big pleased materially so it the that and hope a time. the by Well, great. rate that did over that we're we Well, year. can $X.XX confidence you dividend next of that months the of in question, this to quarter couple just searches are at build thank for as SmallCap thank your the you some in your and Mac And saying Thanks for far, over year-to-date, business, interesting. on we for before. actually and reflects our net news all


gentlemen, you, participation today's This Thank in the conference. conclude for ladies does your and program.

You may day. now Good disconnect.