January 29, 2013 / 1:45 PM / in 5 years

UPDATE 2-Waddell & Reed, AMG beat Street despite drop in flows

* Waddell & Reed fourth-quarter EPS $0.58 vs est. $0.61

* Revenue $302.9 mln vs est. $301 mln

* AMG fourth-quarter economic EPS $2.55 vs est. $2.43

Jan 29 (Reuters) - Asset manager Waddell & Reed Financial Inc reported a better-than-expected quarterly profit despite a rare outflow of client funds and said fund performance has improved in the current quarter.

Chief Executive Hank Hermann said inflows have picked up since the end of the fourth quarter and total assets under management crossed $100 billion in January, up from $96.4 billion as of Dec. 31.

“... It is possible that investors have found renewed confidence in the equity markets,” Herrmann said on a post-earnings conference call.

The fourth quarter saw a net outflow of $165 million, the first in at least two years. The funds, however, were boosted by $1.72 billion by market appreciation during the quarter.

The company’s stock rose as much as 4 percent to an 18-month high on Tuesday. The shares were trading up 2.5 percent at $39.07 in afternoon trade on the New York Stock Exchange.

Fellow money manager Affiliated Managers Group Inc also posted a huge decline in flows, but was able to maintain net client inflows of about $5 billion.

The large drops in flows mirror similar trends at larger peer T. Rowe Price Group Inc, which also posted an outflow of customer cash in its latest results.


Waddell & Reed’s fourth-quarter net income from continuing operations rose 33 percent to $52.4 million, or 61 cents per share. Total operating revenue rose to $302.9 million, helped by a 12 percent increase in investment management fees.

Analysts on average expected the company, known for its Ivy fund family, to earn 58 cents per share on revenue of $301 million, according to Thomson Reuters I/B/E/S.

AMG reported economic earnings per share of $2.55 for the quarter on revenue of $491 million. Analysts expected the company to earn $2.43 per share.

AMG shares, which have risen 12 percent since the start of the year, were largely flat but inched to a life-high of $145.94 during the day.

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