Wednesday, March 20, 2019

All 32 Smaller US Investments-Activity-Related Financial Cos With Stock Market Caps of $1-10 Bil Saw Their Total Pretax Earnings Collapse in the December 2018 Quarter, Declining By 46%

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These 32 Smaller Investments-Activity-Related Financial Cos posted very flat Total Pretax Earnings in both the 2Q 2018 (Down 1%) and in the 3Q 2018 (Up 1%). 
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But then it got ugly in the 4Q of 2018 with Total Pretax Earnings declining By 46% from that in the 4Q of 2017.  And excluding FS KKR Capital's 4Q 2018 $717 mil unrealized appreciation gain resulting from merger accounting, the decline would be a much higher 66%.
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 From a review of SEC filings and individual Company information in MSN Money, I found 32 US Investments-Activity-Related Financial Companies with stock market caps sometime in 2018 of more than $1 Bil and also not exceeding $10 Bil any time in 2018.

My Focus is on Pretax Income rather than on After-Tax Net Income because Corporate Income Taxes are simply a transfer of financial wealth between US Corporations and the US Federal, US State and Foreign Governments.  It has nothing whatsoever to do with Company Operating Performance.

The chart below shows the Gold-Standard US GAAP Total Pretax Income (Loss) From Continuing Operations for the 4Q 2018 and 2017, the 3Q 2018 and 2017 and the 2Q 2018 and 2017 for each of these 32 Cos.

US US US US US US
GAAP GAAP GAAP GAAP GAAP GAAP
Pretax Pretax Pretax Pretax Pretax Pretax
Income Income Income Income Income Income
(Loss) (Loss) (Loss) (Loss) (Loss) (Loss)
US 4Q 4Q Better 3Q 3Q Better 2Q 2Q Better
State US Financial Companies 2018 2017 (Worse) 2018 2017 (Worse) 2018 2017 (Worse)
HQs Investments-Activity Related Quarter Quarter % Quarter Quarter % Quarter Quarter %
Stock Market Caps of $1-10 Bil End End  Change End End  Change End End  Change
mils $ mils $ mils $ mils $ mils $ mils $ mils $
PA FS KKR Capital Corp            598              15          (11)            85          (31)            19
NY Evercore            253            187            77            89          107            48
NY Lazard Ltd            156            359          139          144          200          173
MO Stifel Financial            156               (1)          141          108          118            83
NY Ares Capital Corp            153            232          209          139          254          178
CO Janus Henderson Group plc            144            187          138          148          169            63
CA Oaktree Capital Group LLC            125            282          150          148            71          301
MA Eaton Vance            120            137          142          145          145          117
PA Federated Investors              82              93            84            91            52            87
NY Moelis & Co              68            187            55            58            59            59
NY Alliance Bernstein Holding LP              67              86            73            49            65            48
CA Houlihan Lokey              63              55            57            54            42            48
KS Waddell & Reed Financial              60              57            60            84            57            51
WI Artisan Partners Asset Mgt              57            372            81            80            80            64
NY MarketAxess Holdings              56              49            48            47            53            50
IL Morningstar              48              42            73            51            55            61
PA Hamilton Lane              41              41            38            21            25            29
MA BrightSphere Invest Group plc              35              85            11            15              6            15
MN Piper Jaffray              32              10            30          (82)              5            20
NY Cohen & Steers              31              44            40            43            35            37
NY Och-Ziff Capital Mgt Group LLC              20            397          (36)            18          (36)            39
CA Ares Management LP              19            137            52            88            51          115
NY Golub Capital BDC              18              21            16            22            22            20
NY PJT Partners              17              26            12          (16)            10            (2)
TX Main Street Capital              12              74            73            39            56            45
NY New Mountain Finance               (1)              27            27            25            23            27
NY Apollo Investment Corp               (1)                6            28            32            13            29
NY TCG BDC Inc               (1)              27              6            26            13            16
CA Hercules Capital             (17)              18            36            33            52            33
NY Prospect Capital             (67)            122            84            12          114            51
DC The Carlyle Group LP             (79)            395            61          166          253          244
MD Legg Mason           (267)             (41)          111          126          109            92
Total all 32 Cos         1,998         3,728 -46%       2,105       2,088 1%       2,247       2,260 -1%



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