AMG's Q3 2025: Contradictions on 2026 Earnings, Alternatives Strategy, and Investment Pipeline

Date of Call: None provided

Financials Results

• EPS: $6.10 economic earnings per share in Q3, up 27% year-over-year; Q4 EAPS guidance $8.10–$9.26 (assumes 28.9M adjusted weighted average shares); company expects a meaningful increase in full-year EAPS in 2026.

Guidance:

• Q4 adjusted EBITDA expected $325M–$370M, including net performance fees of $75M–$120M (implying 2025 performance fees of $110M–$155M).
• Q4 economic earnings per share expected $8.10–$9.26 (assumes 28.9M weighted average shares).
• Guidance includes full-quarter contributions from Montefiore and ComVest private credit; Qualitas Energy and BBH expected to close Q4 and Q1 2026 with no Q4 impact.
• Company expects a meaningful increase in full-year adjusted EBITDA and economic EPS in 2026 driven by organic alternatives growth, new investments, and share repurchases.
• Plan to repurchase at least $500M of shares in 2025.

Business Commentary:

* Strong Financial Performance and Earnings Growth: - AMG reported a 17% year-over-year increase in EBITDA and a 27% growth rate in economic earnings per share for the third quarter. - This growth was driven by record net inflows in alternative strategies, a 3% annualized organic growth rate, and strategic investments in new affiliates and growth opportunities.

• Alternative Asset Management and AUM Increase:
• AMG added approximately $76 billion in alternative assets under management, representing nearly a 30% increase in total AUM.

• This expansion was fueled by $51 billion in net inflows into alternatives, contributing 55% of AMG's EBITDA on a run-rate basis.

• Strategic Investments and Deals:

• The company committed more than $1 billion across five new growth investments and sold stakes in Peppertree and ComVest, generating significant returns.

• These investments and strategic partnerships, like the strategic collaboration with BBH Credit Partners, are aimed at enhancing AMG's position in the alternative asset management sector.

• Diversification and Organic Growth:

• AMG's affiliates raised $4 billion in private markets and achieved $14 billion in net inflows in liquid alternatives, with a particular strength in tax-aware solutions.
• The diversification and strong performance in alternatives, coupled with the strategic alignment of affiliates' investment strategies with client demand trends, are driving AMG's organic growth.

Sentiment Analysis:

Overall Tone: Positive

• Management described 2025 as a "landmark year," reported 17% YoY EBITDA growth and 27% YoY growth in economic EPS, highlighted record/near-record alternative net inflows ($9B Q3, $17B YTD) and stated they "anticipate a meaningful increase" in 2026 earnings driven by alternatives, new investments, and share repurchases.

Q&A:

• Question from Bill Katz (TD Cowan): A, maybe I just wanted to get just maybe delve a little bit more into BBH, how that sort of arose, did they seek you out? And then just as you look at the pipeline looking ahead, how should we be thinking about activity level into next year after a really strong 2025?
  Response: BBH and AMG "found each other": BBH sought a partner for structured credit in U.S. wealth and chose AMG for complementary underwriting, product development, capital formation and cultural fit; pipeline remains strong but AMG will remain disciplined, pursuing secular-growth alternative partnerships with mid-to-high-teens return targets and returning capital (repurchases) if opportunities don’t meet criteria.

• Question from Alexander Blostein (Goldman Sachs): It feels a little bit earlier than typical to give guidance in 2026, but I was wondering if you could help contextualize what that could mean for next year, given a number of moving pieces, including you alluded to expansion in the margins at AQR and Pantheon. Any way you can help us frame what sort of the growth expectations you might have so far into 2026 would be helpful.
  Response: Management’s core point: 2026 should see meaningful EAPS growth driven by full-year contributions from 2025 investments, continued net inflows into alternatives, share repurchases and margin expansion at large affiliates (e.g., AQR, Pantheon); more detailed 2026 guidance will be provided on the next call.

• Question from Rick Roy (Jefferies, on behalf of Dan Fannon): You reported another quarter of accelerating liquid alts flows, and it sounds like momentum in the tax-aware AQR strategies continues to be a big contributor. Could you add color on the full diversity of flows from the AQR broader franchise and perhaps describe the performance-fee potential of the broader set of AQR strategies gathering inflows? Also, any notable private markets fundraisers to be aware of near term and into 2026?
  Response: AQR is driving record liquid-alts inflows (tax-aware, separate accounts, 40-act long-only), generating management fees with performance-fee upside as mix shifts; private markets fundraising was strong ($4B in Q3, led by Pantheon with contributions from EIG and Abacus), supporting alternatives AUM growth and fee-related earnings.

Contradiction Point 1

Organic Growth and New Investments Impact on 2026 Earnings

It involves differing perspectives on the impact of organic growth and new investments on 2026 earnings, which are crucial for investor expectations.

Can you explain the 2026 growth expectations? - Alexander Blostein (Goldman Sachs)

2025Q3: Our 2026 earnings growth guidance includes expectations for contributions from organic growth and new investments. - Jay Horgen(CEO), Dava Ritchea(CFO)

Can you discuss AQR and Pantheon's contribution to earnings and the mix of management and performance fees? - Daniel Thomas Fannon (Jefferies LLC, Research Division)

2025Q2: So as you think about 2026, our guidance reflects contributions from organic growth, reflecting the strength of our operating model, Dava's process for delivering on what we promised. - Jay Horgen(CEO)

Contradiction Point 2

Strategic Focus on Alternatives and Organic Growth

It highlights a shift in AMG's strategic focus and expectations for organic growth, which are critical for investor understanding of the company's future direction.

Can you discuss notable private market fundraisers and trends impacting AMG's business mix? - Tom Wojcik (President and COO, AMG)

2025Q3: AMG's business mix is evolving towards alternatives, with a focus on the wealth channel. AMG's products are aligned with client demand trends, enhancing its solid organic growth trajectory. - Jay Horgen(CEO), Tom Wojcik(COO)

What drives the decision to partner with affiliates, especially in private markets, and are there plans for additional sales, including minority and majority stakes? - Alexander Blostein (Goldman Sachs)

2025Q1: Our business mix will increasingly shift towards them [alternatives] despite strategic directions taken by some affiliates. - Jay Horgen(CEO)

Contradiction Point 3

Impact of Investments and Transactions on Organic Growth

It addresses the impact of investments and transactions on AMG's organic growth, which is crucial for understanding the company's financial performance.

Can you provide context for the 2026 growth expectations? - Alexander Blostein (Goldman Sachs)

2025Q3: Organic growth and new investments will significantly impact 2026 earnings. AMG expects expansion in AQR and Pantheon margins, contributing to 2026 growth. - Jay Horgen(CEO), Dava Ritchea(CFO)

Clarify the 8% accretion from investments and Peppertree's sale, and their impact on organic growth? - Brian Bedell (Deutsche Bank)

2025Q1: The shift to alternatives will positively impact future organic growth. - Dava Ritchea(CFO), Thomas Wojcik(COO)

Contradiction Point 4

Pipeline for New Investments

It involves expectations about the pipeline for new investments, which is crucial for the company's growth strategy and investor expectations.

Can you clarify the 2026 growth expectations? - Alexander Blostein (Goldman Sachs)

2025Q3: Our pipeline is strong, with several late-stage opportunities. NorthBridge is one example, a high-quality independent firm in the secular growth area of industrial logistics. - Jay Horgen(CEO)

Could you provide more details on the new investment pipeline and how it compares to this time last year? - Trevor Dodds (Jefferies)

2024Q4: We attract firms for our ability to provide strategic resources while preserving their independence. A change in administration favors more new investments, potentially accelerating our pipeline due to lower regulation and pro-business development environment. - Jay Horgen(CEO)

Contradiction Point 5

Types of Deals in the Investment Pipeline

It involves expectations about the size and nature of deals in the investment pipeline, which affects the company's growth strategy and financial projections.

Can you highlight recent private market fundraisers and trends impacting AMG's business mix? - Tom Wojcik (President and COO, AMG)

2025Q3: Our pipeline includes both mid-sized and larger deals, ranging from $250 million to $750 million in enterprise value. We typically take minority or bare majority stakes, leaving the business alone. - Jay Horgen(CEO)

Is the strategy moving forward focused on the NorthBridge model—minority stakes and smaller franchises leveraged through your advanced global distribution platform—or could larger deals accelerate growth and strategic progress more quickly? - Bill Katz (TD Cowen)

2024Q4: We are very pleased with the results that we've had on investments over the last several years. The success of this type of strategy has, of course, created some momentum, because it's a way for us to grow AUM at the organization without the capital expenditures. - Jay Horgen(CEO)