Westwood Holdings Group Inc. (NYSE:WHG) Q3 2018 Earnings Conference Call Transcript

Oct 24, 2018 • 04:30 pm ET


Westwood Holdings Group Inc. (NYSE:WHG) Q3 2018 Earnings Conference Call Transcript


Loading Event

Loading Transcript


Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 Westwood Holdings Group Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today's conference may be recorded.

I would now like to turn the call over to Ms. Julie Gerron, General Counsel and Chief Compliance Officer. Ma'am you may begin.

Julie Gerron

Thank you. Good afternoon, and welcome to our third quarter 2018 earnings conference call.

(Forward-Looking Cautionary Statements)

In addition, in accordance with the SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today.

I will now turn the call over to our President and CEO, Brian Casey.

Brian Casey

Good afternoon, and thanks for taking time to listen to our third quarter earnings call. I'll start with some comments from investment environment and then dive deeper into our investment performance and business. In the US, economic data continue to be strong and despite the news on trade wars, we saw some nice topline revenue growth for many of the companies we follow. Tariff relief for large multinationals came in the form of a newly renegotiated NAFTA agreement, now called USMCA or the US, Mexico, Canada agreement and helped LargeCaps to outperform SmallCaps by nearly a 2:1 margin in the third quarter.

The fed continued down the path of increasing interest rates, which will continue shifting the investing landscape of the past eight years from a monetary policy that created a rising tide lifting all boats scenario, towards one with both winners and losers. This landscape benefits active managers as does higher volatility, which provides more mis-priced securities and asymmetric reward-risk outcomes to invest in and lines up well with the way we've managed money for 35 years. Our US value products performed well with solid security selection driving out performance in many of our strategies as high quality companies were rewarded this quarter.

Our LargeCap-Value product outperformed against its primary benchmark, the Russell 1000 value, for the seventh straight quarter and remain solidly ahead for the year with top quartile peer rankings year-to-date, as well as over the last one and five-year time periods. Concentrated LargeCap nearing completion of its fifth year extended its lead year-to-date with another strong quarter and is now up more than 4% over the Russell 1000 value. Concentrated LargeCap peer rankings remained strong with a 12 percentile ranking year-to-date, fourth percentile for the trailing one year and first percentile since inception, among its LargeCap-Value peers. We're excited about the prospects for new business growth and our marketing and product development team is developing new presentation materials for a big push in 2019.

Our SMidCap strategy improved this quarter and outpaced the Russell 2500 Value Index with nice improvement in both returns and peer group rankings this