With high-net-worth individuals and the mass affluent seeing their wealth surge, coupled with a growing shift toward defined contribution retirement plans, the Asset & Wealth Management sector is booming. Thus, it seems wise to scoop up shares of SEI Investments Company (SEIC), Crescent Capital BDC, Inc. (CCAP), and Vinci Partners Investments Ltd. (VINP) for robust gains this year.
The future of asset management looks bright, with assets under management (AuM) expected to nearly double by 2025. From a solid $84.90 trillion in 2016, this figure is projected to reach $145.40 trillion, driven by robust growth in developing markets across Latin America and Asia Pacific.
A mix of rising high-net-worth individuals, the growing popularity of passive investing through ETFs, and the integration of artificial intelligence in portfolio management is driving the growth of asset management companies. Moreover, AI is transforming how asset managers analyze data and make decisions, while the increasing demand for alternative investments is expanding the range of options available to investors.
Additionally, firms are investing heavily in technological advancements like AI, augmented reality (AR), and the Internet of Things (IoT), which are enhancing operational efficiency and extending the lifespan of assets. This tech-driven evolution is not only streamlining operations but also optimizing resource utilization, leading to improved profits and returns on investment.
Considering this encouraging outlook, let’s look at the fundamentals of the three Asset Management stocks in detail:
Stock #3: Crescent Capital BDC, Inc. (CCAP)
CCAP is a business development company that maximizes shareholder returns through current income and capital appreciation. It provides capital solutions to U.S. middle-market companies with solid business fundamentals and growth potential. The company primarily invests in secured debt such as first lien, unitranche first lien, second-lien debt, and unsecured debt, including mezzanine and subordinated debt, along with related equity securities.
In terms of trailing-12-month, CCAP’s gross profit margin of 100% is 66.4% higher than the industry average of 60.10%. Its trailing-12-month net income margin of 51.60% is 130.3% higher than the industry average of 22.40%. Furthermore, its trailing-12-month ROTA of 6.09% is considerably above the industry average of 1.06%.
CCAP’s total investment income for the first quarter (ended June 30, 2024) increased 4.7% year-over-year to $48.95 million. Its net investment income grew 5.5% from the year-ago value to $21.70 million and $0.59 per share. As of June 30, 2024, the company’s cash and cash equivalents came in at $11.02 million, up 41.6% from $7.78 million recorded on December 31, 2023.
Street expects CCAP’s revenue for the third quarter (ending September 2024) to increase marginally from the year-ago value to $48.63 million. However, its EPS estimate of $0.57 for the same period represents a decline of 3.1% year-over-year. Nonetheless, CCAP has surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past year, the stock has gained 12.5%, closing the last trading session at $18.34.
CCAP’s mixed fundamentals are reflected in its POWR Ratings. It has a B grade for Sentiment. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Among 48 stocks in the Asset Management industry, it is ranked #5. To see additional POWR Ratings (Growth, Value, Momentum, Stability, and Quality) for CCAP, click here.
Stock #2: SEI Investments Company (SEIC)
SEIC furnishes clients with wealth management, retirement and investment solutions, asset administration, and investment processing outsourcing solutions. It also delivers financial and investment advisory services, demonstrating expertise in launching and managing equity, fixed-income, and balanced mutual funds.
SEIC’s trailing-12-month gross profit margin of 78.38% is 30.4% higher than the 60.10% industry average. Similarly, its 26.42% trailing-12-month EBITDA margin is 18.1% above the 22.38% industry average. In addition, the stock’s trailing-12-month ROCE of 23.74% favorably compares to the industry average of 10.31%.
For the fiscal 2024 second quarter that ended June 30, SEIC’s total revenues increased 6% year-over-year to $518.99 million. Its income from operations rose 21.2% from the year-ago value to $136.51 million. Additionally, the company’s net income and earnings per common share grew 17.1% and 18% from the prior year’s period to $139.12 million and $1.05, respectively.
Analysts expect SEIC’s revenue to increase 11.1% year-over-year to $529.78 million for the fiscal third quarter ending September 2024. The company’s EPS for the ongoing quarter is expected to be $1.05, up 20.7% from the prior year. It’s no surprise that SEIC surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 11.3% over the past nine months to close the last trading session at $66.34.
SEIC’s robust outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
It also has a B grade for Stability and Quality. It is ranked #4 out of 48 stocks within the Asset Management industry. Click here to see the other SEIC ratings for Growth, Value, Momentum, and Sentiment.
Stock #1: Vinci Partners Investments Ltd. (VINP)
VINP is a Brazil-based investment management firm engaged in asset and wealth management. It offers a range of investment products and solutions, including private and public equities, real estate, credit, infrastructure, and hedge funds. The company also provides financial advisory services, primarily focused on pre-IPO and mergers and acquisitions (M&A) for middle-market companies.
The stock’s trailing-12-month gross profit and EBITDA margins of 100% and 43.31% are 66.4% and 93.6% higher than the industry averages of 60.10% and 22.38%, respectively. Likewise, its 6.97% trailing-12-month ROTA compares favorably to the 1.06% industry average.
During the second quarter (ended June 28, 2024), VINP’s total net revenues from services rendered increased 12% year-over-year to R$131.23 million ($23.36 million). Its operating profit grew 15.8% from the year-ago value to R$65.01 million ($11.57 million). Also, the company’s adjusted distributable earnings for the quarter amounted to R$58.40 million ($10.39 million) and R$0.07 per share.
Analysts expect VINP’s EPS to increase 15.5% year-over-year to $0.16 for the current quarter (ending September 2024), while its revenue is expected to come in at $20.07 million in the same period. For the fiscal year 2025, its EPS and revenue are anticipated to register a year-over-year growth of 28.6% and 26.3%, respectively.
Shares of VINP have gained marginally over the past month, closing the last trading session at $10.22.
VINP’s sound prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
VINP has a B grade for Stability, Sentiment, and Quality. It is ranked #3 within the same industry. Click here to access the additional VINP ratings (Growth, Value, and Momentum).
What To Do Next?
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SEIC shares were trading at $65.42 per share on Friday afternoon, down $0.92 (-1.39%). Year-to-date, SEIC has gained 3.67%, versus a 14.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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