Citi Reaffirms Its Buy Rating On Affiliated Managers Group

Citi reaffirms its Buy rating, $128 price target and considers Affiliated Managers Group AMG among best mid-cap traditional A/M picks following its meeting with management on 2/7. Though no ground breaking discussion, Citi was encouraged on several fronts around the transition in leadership. First, AMG has developed strong H/C bench aiding in the transition. Second, it sees no break in deal momentum. Third, Citi sees no adverse affiliate developments – indeed, Mr. Horgen has solid relationships with ~70% of AUM, usually the more major affiliates, so little operational risk should develop. Fourth, Mr. Horgen was receptive to ways to further improve financial disclosure and reduce B/S complexities. Management reiterated $10B to $20B 2011 flow potential is reasonable, if not conservative, and suggesting upside to Citi's $15.2B forecast and above consensus $7.57 2011 ENI forecast. AMG closed Monday at $101.83