Affiliated Managers Group (AMG): A Value Play in the Active Management Renaissance

John W. Rogers, Jr., the legendary value investor and co-founder of Ariel Investments, has long championed undervalued stocks with durable competitive advantages. In 2025, he added Affiliated Managers Group (AMG) to his list of top picks, positioning it as a prime beneficiary of a potential renaissance in active management. As passive investing faces headwinds and value stocks regain momentum, AMG’s diversified portfolio of independent asset managers—and its strategic pivot toward high-growth sectors—makes it a compelling investment for patient investors.

Why Active Management’s Time May Be Now

Rogers’ thesis hinges on a “tale of two cities” market dynamic: a bifurcation between overvalued growth stocks and overlooked value-oriented firms. Passive strategies like ETFs tracking the S&P 500 have dominated the past decade, but Rogers argues that rising interest rates and a shift toward cyclical economic recovery could disrupt this trend. Active managers, particularly those specializing in value stocks or niche markets, may outperform as markets become more differentiated. AMG, as a holding company for 23 independent asset management firms, stands to profit from this shift.

AMG’s subsidiaries include firms like Fairholme Capital (a value-focused equity manager), Causeway Capital (a global macro equity specialist), and NorthBridge Partners (a logistics real estate specialist). This diversification insulates AMG from sector-specific risks while capitalizing on its affiliates’ expertise. As Rogers noted, AMG’s model “isn’t about chasing fads—it’s about building a portfolio of firms that thrive in different market environments.”

Financial Strengths: A Resilient Business Model

AMG’s 2024 results underscore its resilience. Despite a challenging year for active managers, economic net income (controlling interest) rose to $701.6 million, and assets under management (AUM) grew to $707.9 billion—a 5% increase from 2023. The partnership with NorthBridge Partners, announced in early 2025, further bolsters its growth prospects. NorthBridge’s focus on last-mile logistics—a sector benefiting from e-commerce growth and supply chain reshoring—adds exposure to an inflation-resistant asset class.

The company’s capital allocation strategy has been equally disciplined. In 2024, AMG repurchased $700 million of its own shares (a 13% reduction in shares outstanding) and maintained a $950 million cash cushion while managing $2.6 billion in debt. This financial flexibility positions it to capitalize on opportunities, such as acquiring stakes in high-potential firms or repurchasing shares at attractive valuations.

Valuation: A Discounted Gem

AMG trades at a 9.2x P/E ratio, well below the 15.7x average of its peers and far beneath the 24.2x industry average. A discounted cash flow (DCF) analysis suggests its intrinsic value is 40.8% higher than its current price, implying significant upside. Analysts’ price targets reflect this optimism: the average target of $194.72 (as of February 2025) represents a 19% premium to its April 2025 closing price of $163.16.

The company’s 10% growth in Economic EPS in 2024—despite a dip in diluted EPS—signals operational leverage. As private markets (which now account for 30% of AUM) continue to outperform public equities, AMG’s earnings could accelerate.

Risks and Considerations

No investment is without risks. AMG’s valuation hinges on active managers outperforming passive strategies—a shift not yet fully realized. Market volatility could pressure its fee-based revenue, while competition for top-tier asset managers remains fierce. Regulatory scrutiny of the investment management industry is also a wildcard.

Conclusion: A Patient Investor’s Play

AMG is a classic value stock: undervalued relative to peers, operationally resilient, and positioned to benefit from macroeconomic shifts. With a 9.2x P/E, a $275.77 DCF-derived fair value, and a strategic partnership like NorthBridge driving secular growth, the stock offers asymmetric upside. Rogers’ endorsement underscores its alignment with Ariel’s “tortoise” philosophy—steady, disciplined, and built to outlast market cycles.

Investors should monitor two catalysts: Q2 2025 results for signs of AUM growth and NorthBridge’s performance in its high-growth logistics sector. With a 3.4% dividend yield (when fully deployed) and a track record of shareholder-friendly capital allocation, AMG is a stock to buy and hold as the market’s pendulum swings back toward active management.