Company Reports

There was little in no-moat AGF Management's fiscal third-quarter results that would alter our long-term view of the firm. We are leaving our CAD 9.50 per share fair value estimate in place. We view the shares as being slightly to modestly undervalued.

While AGF Management's struggles are far from over, we believe the firm is on the right track. Long bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.

There was little in no-moat AGF Management's fiscal second-quarter results that would alter our long-term view of the firm. We are leaving our CAD 9.50 per share fair value estimate in place. We view the shares as slightly undervalued.

While there was little in no-moat rated AGF Management's fiscal first-quarter results that would alter our long-term view of the firm, we are increasing our fair value estimate to CAD 9.50 per share from CAD 7.50 to reflect revised near-term expectations for AUM, revenue, and profitability since our last update. Despite the increase in the company's stock price today, we view the shares as being only slightly undervalued relative to our revised fair value estimate.

While AGF Management's struggles are far from over, we believe the firm is on the right track. Long bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.

While there was little in no-moat AGF Management's fiscal fourth-quarter results that would alter our long-term view of the firm, we expect to raise our CAD 7.50 per share fair value estimate slightly given a higher level of managed assets for the firm since the end of fiscal 2023. We view the shares as being only slightly undervalued when compared with our expected revised fair value estimate.

While AGF Management's struggles are far from over, we believe the firm is on the right track. Long bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.

We've lowered our fair value estimate for AGF Management to CAD 7.50 per share from CAD 8.50 to account for revised near-term expectations about assets under management, revenue, and profitability since our last update. Our fair value estimate implies a price/earnings multiple of 5.5 times our 2023 earnings estimate and 6.2 times our 2024 earnings estimate. For some perspective, during the past five and 10 years, the shares have traded at an average of 7.4 and 9.5 times trailing adjusted earnings, with the highest and lowest multiples during the past decade being 20.8 and 3.4 times.

We believe that while AGF Management's struggles are far from over, the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.

There was little in no-moat AGF Management's fiscal second-quarter results that would alter our long-term view of the firm. We are leaving our CAD 8.50 fair value estimate in place. We view the shares as slightly undervalued despite their roughly 5% price increase during intraday trading June 21.

There was little in no-moat AGF Management's fiscal first-quarter results that would alter our long-term view of the firm. We maintain our CAD 8.50 per share fair value estimate. Despite a more than 10% drop in the company's stock price today, we view the shares as being only slightly undervalued.

We've increased our fair value estimate for no-moat-rated AGF Management to CAD 8.50 per share from CAD 7.50 after updating our valuation model to adjust for changes to our forecasts for assets under management, revenue, and profitability since our last update. The shares appear fairly valued currently, with our High Morningstar Uncertainty Rating requiring a wider margin of safety before recommending the stock.

We believe that while AGF Management's struggles are far from over, the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.

While there was little in no-moat-rated AGF Management's fiscal fourth-quarter results that would alter our long-term view of the firm, we expect to raise our fair value estimate slightly given the higher level of assets the firm had under management at the end of fiscal 2022. We view the shares as being slightly undervalued when compared with our expected revised fair value estimate.

While we believe that AGF Management's struggles are far from over, we feel that the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive positioning in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the big six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts, and increased transparency around fees and performance, to put pressure on active managers with higher-than-average fees and below-average performance.

There was little in no-moat-rated AGF Management's fiscal third-quarter results that would alter our long-term view of the firm. We are leaving our CAD 7.50 per share fair value estimate in place. AGF Management closed out the August quarter with CAD 39.6 billion in AUM, down 1.8% sequentially and 8.8% on a year-over-year basis. This was slightly better than we had been expecting given the equity market selloff that started in January 2022, which was exacerbated by the Russian invasion of Ukraine in February of this year. The firm (by our estimates) recorded negative flows during the period, with a reported CAD 51 million of inflows for its retail fund operations augmented by outflows from its institutional and sub-advised channels. Even so, we expect the firm to generate slightly positive organic AUM growth for all of fiscal 2022.

While we believe that AGF Management's struggles are far from over, we feel that the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive positioning in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the big six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts, and increased transparency around fees and performance, to put pressure on active managers with higher-than-average fees and below-average performance.

While there was little in no-moat-rated AGF Management's fiscal second-quarter results that would alter our long-term view of the firm, we are lowering our fair value estimate to CAD 7.50 per share from CAD 8.50 after updating our valuation model for lower levels of assets under management, revenue, and profitability in the near term than we previously forecast.

While we believe that AGF Management's struggles are far from over, we feel that the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive positioning in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the big six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts, and increased transparency around fees and performance, to put pressure on active managers with higher-than-average fees and below-average performance.

While there was little in no-moat-rated AGF Management's fiscal first-quarter results that would alter our long-term view of the firm, we are raising our fair value estimate to CAD 8.50 per share from CAD 8.00 after updating our valuation model for a slightly higher level of assets under management (and profitability) in the near term than we previously forecast. AGF Management closed out the February quarter with CAD 42.0 billion in AUM, down 1.6% sequentially but up 5.5% on a year-over-year basis. This was better than we had been expecting given the equity market selloff that started in January, which was exacerbated by the Russian invasion of Ukraine.