PZENA INV MGMT CL A (PZN) filed Quarterly Report for the period ended 2009-06-30.
Pzena Investment Management LLC which will become the company\'s operating company upon the consummation of the offering is a premier value-oriented investment management firm with a record of investment excellence and exceptional client service. PZENA INV MGMT CL A has a market cap of $471.18 million; its shares were traded at around $7.34 with a P/E ratio of 23.68 and P/S ratio of 4.65.
Highlight of Business Operations:
As of June 30, 2009, we had approximately $1.7 million in unrecorded compensation expense related to phantom operating company units issued pursuant to our deferred compensation plan and operating company unit and option grants issued under our PIM LLC 2006 Equity Incentive Plan. We expect that the amortization of these amounts will be approximately $0.7 million for each of the next three years, with a negligible amount amortized thereafter.
While our operating company has historically not been subject to U.S. federal and certain state income taxes, it has been subject to New York City Unincorporated Business Tax. As a result of our reorganization, we are now subject to taxes applicable to C-corporations. As such, our effective tax rate has increased as a result of our reorganization. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2009 and December 31, 2008, the Company recorded a $63.4 million and a $62.7 million valuation allowance, respectively, against the deferred tax asset associated with our acquisition of operating company units in conjunction with the offering.
Beginning in the second half of 2007 and continuing through the quarter ended March 31, 2009, performance of our investment strategies was negatively impacted by significant volatility in the equity markets. Performance prior to 2009 was influenced by our overweight investment exposure to the financial services sector in particular. As a result, our assets under management declined by $7.9 billion, or 42.7%, from $18.5 billion at June 30, 2008 to $10.6 billion at June 30, 2009, due to negative performance of $4.5 billion and net outflows of $3.4 billion.
During the three months ended June 30, 2009, we experienced gross outflows of $1.0 billion, which were partially offset by gross inflows of $0.6 billion. Our sub-advised accounts experienced gross outflows of $0.7 billion, which were partially offset by $0.3 billion in gross inflows. Our separately-managed accounts experienced $0.3 billion in gross outflows, offset entirely by $0.3 billion in gross inflows. The $0.4 billion in overall net outflows was mainly attributable to the weaker performance of our sub-advised funds compared to that of their peers.
During the six months ended June 30, 2009, we experienced gross outflows of $2.2 billion, which were partially offset by gross inflows of $1.4 billion. Our sub-advised accounts experienced gross outflows of $1.4 billion, which were partially offset by $0.6 billion in gross inflows. Our separately-managed accounts experienced $0.8 billion in gross outflows, offset entirely by $0.8 billion in gross inflows. The $0.8 billion in overall net outflows was mainly attributable to the weaker performance of our sub-advised funds compared to that of their peers.
At June 30, 2009, the Company managed $10.6 billion in total assets, a decrease of $7.9 billion, or 42.7%, from $18.5 billion at June 30, 2008. The year-over-year decrease in AUM was due primarily to $4.5 billion in market depreciation, and, to a lesser extent, net outflows of $3.4 billion. Generally negative economic conditions and our 2008 overweight investment exposure to the financial services sector in particular contributed to the performance-related decline in our AUM. Our sub-advised accounts experienced net outflows of $0.4 billion for the three months ended June 30, 2009. These net outflows were driven in part by our investment strategies’ underperformance relative to their respecti
PZN is in the portfolios of John Keeley of Keeley Fund Management.
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