UPDATE 3-AMG quarterly profit drops but beats expectations

* Cash EPS $1.00; Street view 96 cents

* Revenue $201.2 mln vs $309 mln

* Eyes new investments

* To go ahead with postponed Harding Loevner deal

* Shares jump more than 2 percent, then retreat (Adds analyst quote, stock activity, byline)

By Svea Herbst-Bayliss

BOSTON, July 29 (Reuters) - Affiliated Managers Group Inc (AMG.N), a holding company for money managers, reported lower quarterly earnings on Wednesday but beat analysts' estimates and said it was ready to make new investments.

AMG, which owns stakes in mutual fund firm Third Avenue Management and hedge fund firm AQR Capital Management, also reported stronger-than-expected revenue and assets under management.

AMG shares rose more than 2 percent in early trading, outperforming many other asset managers, including Janus Capital Group (JNS.N) and Eaton Vance (EV.N), which posted quarterly losses. But AMG quickly gave back the gains, having enjoyed a strong run already this year.

For the second quarter, AMG reported net income of $11 million, or 26 cents a share, down from $34.6 million, or 82 cents a share, a year ago.

Cash earnings per share, which AMG says are made up of net income plus amortization and deferred taxes related to intangible assets, plus affiliate depreciation, was $1.00, down from $1.49 a year ago.

Analysts and the company focus on cash earnings per share. Analysts had expected 96 cents a share.

AMG, based outside Boston in Prides Crossing, also beat analysts' revenue expectations, reporting revenue of $201.2 million. That is down from $309 million a year ago but topped analysts' average forecast of $195.48 million.

"Their revenue and assets under management figures were stronger than expected and that certainly bodes well for the future," said Michael Kim, analyst at Sandler O'Neil.

AMG, which made its reputation with well timed acquisitions, said it is "well positioned to execute on our new investment opportunities."

In a statement, the company said its acquisitions pipeline includes attractive opportunities at a time when many asset managers are reported to be for sale, as several banks are eager to raise cash after being hurt by the financial crisis.

AMG said assets under management, the main driver of revenue and profit at money managers, rose to $173.8 billion at the end of June from $152.9 billion at the end of March.

Six months after being forced to postpone a deal because of difficult market conditions, AMG said it would go ahead with its planned acquisition of asset manager Harding Loevner.

Including Harding Loevner's assets, AMG's aggregate assets under management were $178.7 billion at June 30.

To finance future deals, AMG said it has $375 million in available cash resources and an undrawn credit facility to $770 million.

AMG shares were down 9 cents to $62.62 in morning trading on the New York Stock Exchange after rising as high as $64.15 earlier in the session. Since January the stock has risen nearly 50 percent, handily beating the Dow Jones U.S. Asset Managers Index .DJUSAG, which has climbed 17 percent. (Reporting by Svea Herbst-Bayliss; editing by John Wallace)