Calamos Asset Management, Inc (CLMS): Can This Financial Firm Rebound?

Industry Trends

After two years of declining assets under management in the industry, equity flows have finally turned positive.  Inflows for 1Q13 so far total over $80 billion in assets.  While the inflows have tapered slightly, $2.9 billion for the week of March 13, 2013, down from $4 billion versus four weeks prior, they remain steady.  The increase in equity assets under management, as well as bonds, is largely coming from money market funds.  In terms of the shape of fund flows over recent years, equity assets under management increased from 2005-2007, declined in 2008, increased in 2009-2010 and then declined in 2011-2012.  There is a degree of seasonality, as fund flows are usually positive in the start of the year. That said, the magnitude in 2013 is greater than in years prior.  Calamos Asset Management, Inc (NASDAQ:CLMS) has not grown in line with this and has had negative revenue growth in every year since and including 2007.

Calamos Underperforming Versus the Industry

Calamos’ negative asset flows most peaked in December 2012, when there was a decline of $977 million.  This has softened since, with a decline of $544 million in February 2013, though that’s still a very large and concerning number for shareholders.  However, the slowing pace is not encouraging when taking into account positive industry trends.  At Calamos Asset Management, Inc (NASDAQ:CLMS), their two largest funds have lagged their benchmarks significantly over the past three years.  Also, over 50% of their assets are in US Growth, which may underperform as a sector.  That said, some of their smaller funds are outperforming, such as their international growth fund.  However, it will be difficult for Calamos Asset Management, Inc (NASDAQ:CLMS) to offset outflows at their large funds with increased assets at their small funds.

Dividend and Share Purchases

The CEO of Calamos, who is also the founder, has steadily put his money back into the company’s shares over recent months.  Since December 1, 2012, insiders have repurchased $34.7 million in stock.  This is a large number when taking into account the fact that Calamos has a market cap of $233.4 million.