The market is a big believer in trends. So as Artio's AUM has fallen over the last several months (Artio reports its AUM monthly, in releases such as this one), the market appears to assume the trend will continue. If you're trend agnostic, however, and believe assets could rise or flatten just as easily as they could fall, you may think the stock has been oversold. Here's how AUM has bounced around over the last several years:
As a result of the stock's massive decline, Artio now trades for $250 million, despite having generated operating cash flow of at least $50 million in each of the last few years (and these have been some bad years for the industry, resulting in massive cash outflows). In this kind of business, there are few capital expenditures that need to be made, so theoretically most of that money should flow to shareholders. The balance sheet is clean, with a net cash position of $45 million, plus $65 million of investments Artio has made in some of its own funds (seed capital etc).
Earnings in this type of business fluctuate enormously, as fickle investors jump into and out of portfolios based on their perception of the direction of the economy. But for the investor who can withstand volatile earnings, there may be rewards in the long-term through investing when sentiment is very negative.
Disclosure: No position