Managing assets can be daunting in the current volatile and competitive economy. However, with the increasing demand for efficient asset utilization and management, the asset management industry enjoy lucrative growth opportunities. Moreover, the adoption of digital asset management is becoming increasingly common.
Against this backdrop, I present rising stocks Victory Capital Holdings, Inc. (VCTR), Hywin Holdings Ltd. (HYW), and Silvercrest Asset Management (SAMG) that could be ideal buys now.
The global asset management market is driven by increased demand for efficient asset utilization, tracking and management, and minimizing maintenance downtime.
Moreover, the increased demand for asset management solutions in developing countries and the adoption of asset management in the manufacturing industry also presents lucrative opportunities for growth in the asset management industry.
The Global Asset Management market is expected to expand at a CAGR of 28.4% from 2022 to 2028, reaching $1.79 trillion by 2028.
In addition, the adoption of digital asset management is becoming increasingly common across various industries. Also, the expanding use of advanced technologies such as data analytics and artificial intelligence across multiple industries is driving the growth of cloud-based digital asset management.
The global digital asset management market is estimated to accelerate at a CAGR of 13.8%, registering a revenue of $15.20 billion by 2032.
While the asset management industry might continue facing challenges like widespread volatility, rising operating costs, and client demands for lower fees this year, the industry is expected to see organic inflows into ESG allocations. As per ESG Clarity, managers may continue to increase their ESG AUM, partly to satisfy the 80% of millennial investors who value ESG as their top investment priority.
Let's take a detailed look at the stocks mentioned above:
Victory Capital Holdings, Inc. (VCTR)
VCTR operates as an asset management company in the United States and internationally. It offers investment advisory, fund administration, fund compliance, fund transfer agent, fund distribution, and other management services.
VCTR reported it had assets under management (AUM) of $158.60 billion as of March 31, 2023, and average assets under management for the first quarter of $157.80 billion.
On March 15, 2023, VCTR announced that its BOD had approved a new common stock repurchase program of up to $100 million through March 31, 2025. The company’s former $100 million stock repurchase authorization, initiated in May of 2022, had been completed.
David Brown, Chairman and CEO of the company, said, "This new repurchase authorization allows us to remain flexible and opportunistic with our capital allocation."
VCTR’s 10.84% trailing-12-month ROTA is 840,4% higher than the 1.15% industry average. Its trailing-12-month EBIT and EBITDA margins of 43.33% and 48.38% are 95.6% and 126.3% higher than the respective 22.16% and 21.38% industry averages.
VCTR paid a quarterly dividend of $0.32 per share on March 27, 2023. While its four-year average dividend yield is 1.48%, VCTR’s forward annual dividend of $1.28 per share translates to a 4.28% yield.
VCTR’s dividend payouts have grown at a CAGR of 92.5% over the last three years.
VCTR’s income from operations increased 6.8% year-over-year to $399.11 million in the fiscal year that ended December 31, 2022. Its adjusted EBITDA came in at $424.20 million. Also, the company’s adjusted net income came in at $293.80 million or $4.58 per share.
VCTR’s EPS and revenue are expected to come in at $4.54 or $835.61 million in the fiscal year ending 2023. Additionally, it has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
Over the past nine months, the stock has gained 27% to close the last trading session at $30.12. It has soared 12.3% year-to-date.
VCTR’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock also has an A grade for Momentum and a B for Stability and Quality. It is ranked #3 in the 53-stock Asset Management industry.
To access the additional ratings of VCTR for Growth, Value, and Sentiment, click here.
Hywin Holdings Ltd. (HYW)
Headquartered in Shanghai, China, HYW provides third-party wealth management, insurance brokerage, asset management, and other services.
As of December 31, 2022, HWY reported RMB7,013,429 ($1,019,809) of AUM.
On April 11, HYW announced the successful launch of a principal-protected structured product with a 9% risk control mechanism linked to the FactSet Hywin Global Health Care Index (FHGHC) in partnership with Swiss fintech firm Leonteq Securities AG and Arta TechFin, a hybrid fintech platform in traditional assets and digital assets.
The note is designed to offer investment opportunities in the global healthcare sector. Lawrence Lok, Chief Financial Officer of HYW, said, “This product launch is a strong testament to Hywin’s efforts in building a global network of partners in service to our high-net-worth clients.”
HYW’s trailing-12-month gross profit margin of 98.75% is 61.3% higher than the industry average of 61.22%. Its trailing-12-month ROTC and ROTA of 19.96% and 10.46% are higher than the respective industry averages of 5.01% and 1.15%.
During the first half of the fiscal year that ended December 31, 2023, HYW’s total revenue increased by 17.6% year-over-year to ¥1.04 billion ($151.22 million). Its income from operations increased by 15.5% year-over-year to ¥102.06 million ($14.84 million).
The company’s net income amounted to ¥70.58 million ($10.26 million), while income per ADS stood at ¥2.43.
Analysts expect HWY’s revenue for the fiscal year ending June 2023 to increase 3.3% year-over-year to $291.18 million. Its EPS is expected to rise 5.9% year-over-year to $1.25.
The stock has gained 8.5% over the past month to close the last trading session at $6.38.
HYW has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Momentum and a B for Value, Stability, Sentiment, and Quality. It is ranked first in the same industry.
In addition to the POWR Ratings stated above, HYW’s rating for Growth can be seen here.
Silvercrest Asset Management (SAMG)
SAMG is a wealth management firm that provides financial advisory and related family office services in the United States. The company serves ultra-high net-worth individuals and families, as well as their trusts, endowments, foundations, and other institutional investors. It also manages funds of funds and additional investment funds.
SAMG finished a volatile fourth quarter and calendar year 2022 with total Assets under Management (AUM) of $28.9 billion and a discretionary AUM of $20.9 billion.
SAMG’s trailing-12-month asset turnover ratio of 0.56x is 178% higher than the industry average of 0.20x. Its trailing-12-month ROTC and ROTA of 10.34% and 8.85% are higher than the respective industry averages of 5.01% and 1.15%.
SAMG recently paid a quarterly dividend of $0.18 per share of Class A common stock on March 17, 2023.
SAMG pays an annual dividend of $0.72. This translates to a yield of 3.90% at the current market price. Its four-year average dividend yield is 4.41%. Its dividend payments have grown at a CAGR of 5.2% and 7.3% over the past three and five years, respectively.
During the fiscal year that ended December 31, 2022, SAMG’s total expenses declined 16.3% year-over-year to $85.66 million. Its income before the provision for income taxes increased 20.5% year-over-year to $38.40 million.
Additionally, net income attributable to SAMG rose 28.1% from the prior year to $18.83 million, whereas its EPS grew 26.3% year-over-year to $1.92.
SAMG’s EPS is expected to increase 13.3% year-over-year to $1.53 during the fiscal year 2023. Its revenue is expected to increase by 1% year-over-year to $124.45 million for the current year. It has an impressive earnings surprise history, surpassing its consensus EPS estimates in each of the trailing four quarters.
The stock has gained 13.8% over the past month to close the last trading session at $18.85.
SAMG’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade in Momentum and a B in Stability and Quality. The stock is ranked #2 in the same industry.
Click here to see the POWR Ratings of SAMG (Sentiment, Growth, and Value).
Consider This Before Placing Your Next Trade…
We are still in the midst of a bear market.
Yes, some special stocks may go up like the ones discussed in this article. But most will tumble as the bear market claws ever lower this year.
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- 5 Warnings Signs the Bear Returns Starting Now!
- Banking Crisis Concerns Another Nail in the Coffin
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REVISED: 2023 Stock Market Outlook >
VCTR shares were unchanged in premarket trading Wednesday. Year-to-date, VCTR has gained 13.38%, versus a 8.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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