Milwaukee-based global investment management firm Artisan Partners Asset Management Inc. reported lower fourth quarter earnings due to market volatility, but cautioned that its strategies are meant to be evaluated long-term.
Net income attributable to Artisan was $20.1 million, or 47 cents per share, in the fourth quarter, down from $21.3 million, or 58 cents per share, in the fourth quarter of 2014. Operating income was $65.7 million in the quarter, down from $77.9 million in the year-ago quarter. The company’s operating expenses were up $1.3 million year-over-year on increased equity compensation and the startup of a new team.
Revenue totaled $192 million in the fourth quarter, down from $206 million in the same period a year ago. The company attributed the decline mostly to lower average assets under management.
Eric Colson, chairman and chief executive officer of Artisan, told investors in a call this morning that its AUM declined by 8 percent in January alone because of declines in equity markets.
Despite the volatility, he said Artisan will continue with its existing strategies.
"Our firm was consciously defined with market volatility in mind,” Colson said. "As AUM and revenue decline, our investment professionals' bonus pools also decline. Because the majority of our expenses automatically adjust, we can continue to focus on our long-term business objectives. We are not forced to revisit or re-evalute our business plan."
For the full year, net income attributable to Artisan was $81.8 million, or $1.86 per share, up from $69.6 million, or a 37 cent loss, in 2014. Operating income was $282.4 million, down from $306.9 million a year ago.
The company’s 2015 revenue totaled $805.5 million, down from $828.7 million in 2014.
At the end of 2015, Artisan had $99.8 billion in assets under management, down from $107.9 billion at the end of 2014. The company’s average AUM over the year was $106.5 billion, down from $107.9 billion last year.
Artisan said its strategies are long-term, and pointed to its five-year average annual returns, which showed eight of its 12 investment strategies surpassed their benchmarks.
“We are cautious about commenting on short time periods like one year,” Colson said. “Clients don’t entrust us to manage their money for only one year at a time, nor do our portfolio managers make investments with a one-year outlook. Similarly, we don’t make business decisions, or assess our business performance, on a January 1 to December 31 basis. In each of these contexts, long-term performance and decision-making is what matters: Compounding client assets over full market cycles. Building multi-generational investment franchises. Developing investment strategies with strong track records that will be relevant to sophisticated investors for years to come.
“Looking at 2015 through this long-term lens, I am pleased with what we accomplished as a firm. Investment performance was strong across the majority of our strategies and teams. The global products that we’ve launched over the last 10 years are delivering impressive and differentiated performance and proving to be attractive to investors and clients worldwide.”