Affiliated Managers Group (AMG, Financial) (61%, 3.53%; 9%, 0.68%), the diversified asset-management holding company, was the top contributor after three consecutive quarters of >20% earnings per share (EPS) growth. Despite the strong, consistent FCF and long-term revenue growth, the primary reason that the stock has traded for low multiples was the company’s consolidated net outflows in the last few years. While most AMG strategies have grown their AUM with good performance and positive inflows, several large quantitative strategies with lower fees than the rest of AMG had been shrinking quickly. However, this year’s third quarter marked AMG’s first consolidated positive net inflows since 2018 due to strong demand for its Alternatives and Multi-Asset funds. AMG also closed the acquisition of a majority stake in Parnassus, a successful ESG manager and great addition to its portfolio. Our appraisal of AMG’s value is up over 40% this year, and the stock appreciated even more. Yet shares still trade for less than 65% of our appraisal value and 9.5x forward FCF.
From Mason Hawkins (Trades, Portfolio)' Longleaf Partners Fund fourth-quarter 2021 commentary.
