AGF Management Limited

Ladies and gentlemen, thank you for standing by, and welcome to the second quarter 2023 AGF Management Limited Earnings Conference call. At this time, all participants are on a listen-only mode. After this biggest presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference. Mr. McCready, you may begin.

Thank you, operator, and good morning, everyone. I'm Kevin McCready, the CEO and CIO of AGF Management Limited. Before we begin today's call, I want to welcome Ken Tsang, AGF Management Limited CFO, who joined us earlier this month. Ken brings over 30 years of strategic finance and corporate development experience to AGF, which will be an asset as we continue to evolve our business.

Thank you, Kevin, and good morning, everyone. I'm thrilled to be here with you today. That has been a fantastic first couple of weeks, and I look forward to building on the great momentum at AGF together with the AGF team.

Great, thanks. I also want to thank Jenny Quinn for her significant contributions to the firm as the interim CFO for the past few months. Jenny has returned to her role as chief accounting officer and will be available for the question and answer period with investment analysts following the presentation today. Judy Goldring, president and head of global distribution, will also be available to address questions. Slides supporting today's call and webcast can be found in the investor relations section of AJF.com. Today on the call, we will discuss highlights of our Q2 results, provide an update on the key segments of our business, review our financial results, discuss our capital and liquidity position, and finally, close by outlining our focus for the remainder of 2023. After the prepared remarks, we will be happy to take questions. Turning to slide five, In the second quarter of 2023, equity market narrowness drove the returns while the median stock experienced underperformance. This was evidenced by the S&P 500, which was up 5% in the quarter, whereas the S&P 500, when equal weighted, was down 5%. At the end of Q2, we reported AUM and fee earning assets of $41.2 billion, up 2% from Q2 of 2022. Our mutual fund business reported net sales of $77 million in the quarter, marking the 11th consecutive quarter of positive mutual fund net sales in Canada. We continue to see strong momentum in our US SMA business, generating $73 million in net sales in the quarter as well. Diluted EPS for the quarter was $0.45 per share. Our capital position is strong. At 2-2, we generated over $80 million of free cash flow on a trailing 12-month basis. We also have $130 million available on our credit facility to fund further investments as required. In addition, we have $20 million in cash and $266 million in short and long-term investments on our balance sheet. Backing this amount out from our market capitalization as of June 19th implies an enterprise value for our business of approximately $230 million. Starting on slide six, we'll provide updates on our business performance. On this slide, we break down our total AUM and fee-earning assets in the categories disclosed in our MD&A and show comparisons to the prior year. Mutual fund AUM increased 3% year-over-year, driven by organic growth. Over the same time period, the S&P 500 rose only 1%. I'll provide more color on our mutual fund business in a moment. Institutional, sub-advisory, and ETF AUM increased by 3% compared to prior year due to market and flows. We continue to expand the U.S. SMA business with a number of strategies available on leading SMA and wealth management platforms, such as Investnet, SmartX, Vestmark, and more recently, UBS and Pershing. In addition, two of our strategies were named with a gold classification on the SmartX Select Manager list. Overall, our US SMA business brings in a steady stream of inflows for our institutional business, and we are pleased with the growth and momentum we are seeing there with a half a billion dollars raised to date. On the liquid alternative side, our market neutral anti-beta strategy continued to attract interest from investors who are looking for a strategic or tactical hedge for their portfolios. Year-over-year AUM for this strategy has doubled to $852 million. Finally, we continue to see interest from institutional investors across multiple strategies and jurisdictions, which bodes well for future sales. Our private wealth business remained steady with $7.2 billion in AUM, and our private capital AUM and fee-earning assets were $2.1 billion at the end of the quarter. It is our goal to grow and diversify our private markets business to be one of Canada's emerging leaders in private market investing. We currently have an active pipeline of private capital opportunities we are looking at within Canada and the US. We will continue to take a measured approach in evaluating these opportunities to ensure alignment to our strategic plan and to deliver shareholder value. Turning to slide 7, I'll provide some details on the mutual fund business. The Canadian mutual fund industry experienced net outflows for the fifth consecutive quarter, reporting net redemptions of approximately $16 billion in the quarter. Despite the challenging industry backdrop, our mutual fund business managed to be in positive net inflows for the 11th consecutive quarter and recorded $77 million of net sales. AGF has been consistently outperforming the industry. On a trailing 12-month view, AGF has reported $431 million in positive retail mutual fund net sales, while the industry long-term mutual funds reported $73 billion in net redemptions over the same period. AGF's outperformance to the industry is attributable to our disciplined investment process, our strong brand, the increasing diversity of our sales channels and client base, as well as our team's continued efforts to build key relationships with our clients and partners. I want to now give a quick update on our investment performance. AGF measures mutual fund performance by comparing gross returns before fees relative to peers within the same category, with the first percentile being the best possible performance. We target an average percentile ranking versus peers of 50% over any one year and 40% over three years. AGF has approximately 50% of our AEM with exposures to US and international equity markets, The recent equity market returns have been dominated by a small group of U.S. mega cap technology stocks, leading to historically narrow market breadth. Median U.S. stock has underperformed the S&P index by approximately 800 basis points year-to-date and is broadly flat as of May 31st. AJF funds have generally been underweight mega cap tech versus peers and have had a bias towards smaller, large cap, and mid cap stocks where we see better long-term investment opportunities. As a result, our performance rankings have declined somewhat over the very short term. At the end of 2-2, our average percentile ranking was 63% over the past one year and 44% over the past three years. Performance has improved markedly so far in June, with the AGF funds delivering better percentile rankings versus peers. This reflects the improving market breadth and is an indication of how short-term performance should improve again as unsustainable market narrowness fades. Our long-term fund performance remains solid, with approximately two-thirds of our strategies outperforming our peers on a three- and five-year basis. We remain confident in our investment management team and our disciplined investment processes, given our extensive collective experience and demonstrated ability to navigate challenging markets in the past. With that, I will turn the call over to Ken.

Thanks, Kevin. Slide eight reflects a summary of our financial results for the second quarter with sequential quarter and year-over-year comparisons. EBITDA before commissions for the current quarter was $42.8 million, 58% higher than Q1 and 21% higher than the prior year. Diluted EPS was 45 cents this quarter compared to 26 cents in Q1 and 14 cents in Q2 of last year. Our results this quarter reflected higher contributions from the private capital business, which I will discuss in a moment. When looking at EPS, the increase against prior year was also influenced by the elimination of the deferred selling commissions, which came into effect on June 1st, 2022. Net management fees for the quarter were 76 million. The 3.7% increase over Q1 is in line with the increase in asset levels and days outstanding. Compared to prior year, net management fees were relatively flat, reflecting higher average assets offset against lower net management fee rates. SG&A for the quarter was $53 million. Excluding severance, SG&A for the quarter was 51.9 million, which is 0.9 million lower than Q1 and 4.8 million higher than the prior year. The decrease against Q1 includes the impact of lower employee benefits, which are typically higher in the first quarter of each fiscal year. The year over year increase in SG&A was driven by higher incentive compensation as a result of our strong long-term investment performance and the successful execution of our sales strategy, which is to increase our presence in the investment dealer channel. In addition, the increase in corporate strategic investments made in support of our growth plan and the impact of higher inflation. AGF private capital contributed EBITDA of $18 million in the quarter, which is $14 million higher than Q1 and $13 million higher than the prior year. EBITDA from private capital managers this quarter included $0.9 million of carried interest revenue, recognizing strong performance in two of our long-term private capital investments. Both are in the private credit space and managed by a partner staff group. This compares to $0.4 million of carried interest revenue in Q1. Carried interest can be variable quarter to quarter and is impacted by the timing of monetizations within the funds. EBITDA from private capital LP funds was $16.3 million, which is 13.4 million higher compared to Q1 and 11.6 million higher than prior year. AGF participates as an investor in the units of private capital LP funds benefiting from valuation increases and distributions from the funds. During the quarter, we saw valuation increases across multiple funds and recorded a gain related to a monetization. On a long-term basis, we expect to earn returns of 8% to 10% from investing in private capital LPs. Turning to slide 9, I will walk through the yield on our business in terms of basis points. This slide shows our average AUM, net management fees, operating expenses, and EBITDA before commissions as basis points on our average AUM in the current quarter, previous quarter, and trailing 12 months. This view excludes AUM related to results from the private capital business, as well as DSC revenues, other income, severance, and corporate development costs. The Q2 2023 net management fee yield is 76 basis points, which is one basis point higher than Q1 and the trailing 12 months. SG&A is a percentage of AUM with 52 basis points this quarter, two basis points lower than prior quarter and flat to the trailing 12 months. EBITDA yield was 24 basis points in the quarter, which is three basis points higher than prior quarter and one basis points higher than the 12 months prior. Turning to slide 10, I will discuss our free cash flows and capital uses. This slide represents the last five quarters of consolidated free cash flows on a trailing 12-month basis as shown by the orange bars on the chart. The black line represents the percentage of free cash flows that was paid out as a dividend. Our trailing 12-month cash flows was $84 million, and our dividends paid as a percentage of free cash flows was 32%. In the same period, we returned $64 million to shareholders. That includes dividends, share repurchases under our NCIB, and the $24 million substantial issuer bid completed in November 2022. Our cash balance at the end of May was $20 million, and we have $266 million in short and long-term investments. We have $130 million remaining on our credit facility, which provides credit to a maximum of $150 million. We are comfortable increasing our net debt to the right opportunities arise. Our remaining capital commitment to our private capital LPs is $27 million. Not included in this is our anticipated commitment of US $50 million to an upcoming third fund managed by INSTAR. Committed capital may be funded from excess free cash flows, but keep in mind, there will also be further recycling of capitals as monetizations occur, which will help to fund future commitments. Taking all of this into account, we currently have excess capital available. Our future capital allocation will be balanced It includes returning capital to shareholders in the form of dividends and share buybacks, as well as investing in areas of growth. Redeploying our excess capital to drive growth and generate reoccurring revenues is a key strategic priority. We will have further updates on this in the coming quarters. Turning to slide 11, I will turn it back over to Kevin to wrap up today's call.

Thanks, Ken. In the second quarter, we continued to make progress against a number of our strategic objectives. Despite the market environment, our AUM and fee-earning assets remained resilient. We continued to outperform the industry and recorded the 11th consecutive quarter of positive mutual fund net flows. We remained disciplined in our investment processes. And finally, the board declared a quarterly dividend of 11 cents per share. As we continue to navigate through the uncertainties in the market, we remain focused on building on the momentum from the past few years managing the risks and our results, and creating value for our shareholders over the long term. Looking forward, I'll address SG&A guidance. At the beginning of the year, we estimated $202 million for 2023, excluding costs related to corporate development and severance. As the year has progressed, we've seen a couple of factors impact this number. First, the impact of our long-term track record of investment performance has driven variable performance-based compensation higher. As highlighted earlier, while the short-term performance has been influenced by our recent equity market narrowness, our longer-term three- and five-year performance has remained strong. Second, as the retail channel landscape evolves, we are focused on increasing our presence in the investment dealer channel. As we successfully execute on this sales strategy, we are seeing higher incentive-based competition. With this in mind, we believe that our 2023 SG&A guidance will be closer to $206 million. We are in a growth mode and the goal to ultimately drive higher value for our shareholders. As a reminder, our strategic priorities are to deliver profitable growth and to deliver consistent and repeatable investment performance. Maintain our sales momentum and generate net inflows while building a diversified private markets business. We'll also meet our revised expense guidance and continue to invest in key growth areas. And finally, enhance our corporate sustainability programs. Finally, I want to thank everyone on the AGF team for all their hard work. We will now take your questions.

Thank you. Ladies and gentlemen, if you have a question at this time, please press star 1 1 on your touch zone telephone and wait for your name to be announced. One moment, please, for our first question. Now, first question coming from the line of Gary Ho with the new line is open.

Thanks, and good morning. Just want to go back to the $16 billion in net outflows for the industry. It's fairly sizable. Maybe for Kevin or Judy, can you share with us kind of what you're hearing from the retail clients, advisors, their rotation into GICs, elevated inflation eating in the savings rate, and maybe give us a glimpse of how kind of fund flows are tracking in the first few weeks of June?

Yeah, hey Gary, it's Kevin. Let me start in all hands to Judy for some additional current color. I mean, I think, you know, if you look at last year, we had equity markets down, we had fixed income markets, three negative quarters of that. And at the same time, people finally getting alternatives to move into GICs and others, right? So I think of that, if you look at the trailing 12 months, you're really looking at a number that's probably 70 billion out of the industry. And I think it's all three of those, right? You had investors spooked, you had higher rates, and people sitting on the side. You're seeing the last quarter, it's starting to moderate. I would caution until rates start to come down, people are probably going to hide out in GICs for a bit. But I think that the trend towards stabilizing, if the equity market kind of continues to grind along here, you could probably see a pretty decent start to next year, but it's hard to predict right now. But I'd say most of the money, you know, the rate of flow is starting to dampen, which is a good thing for the industry. You know, when it comes back is a jump ball, but it's going to be, again, as rates start to drop, people feel like they don't want to leave it and GIC is repricing lower and stabilization markets may bring people back. But there's a fair amount of hardship out there, too. I think people are dealing with higher costs, higher mortgages. Some of that may be actually being used to fund lifestyles and bills. But Judy, maybe you can give some more color on the current quarter start.

Yeah, thank you. I guess we're also hearing across the advisor base, too, that there is some money in motion if their current provider did not perform as well last year. So we were able, I think, to take a bit of advantage of that. What we're seeing, as you know, we did report the 11th net positive quarter. We're seeing... going into the month to date June as we know is seasonally slower and we do expect that to continue through the summer but we still remain at basically flat slightly negative And I think what we're anticipating is that, you know, the summer should be a bit softer, but the later months of the year should be stronger again.

And that's a trend, Gary, we've seen every June. It's one of those things where, you know, you kind of scratch your head and say, why June? But, you know, you can explain July and August, but the industry tends to soften up in June a little bit. And we're not seeing a different pattern, though, than we've seen previously.

Okay, great. That makes sense. And then my next question, just on the SG&A guidance bump, what are you assuming there in terms of maybe Q3, Q4 net sales, and how much does that move the needle if it goes above or below kind of what your assumptions are?

Yeah, I mean, there's a couple of things going on here. One, you got to remember, we took out probably 20 million right before COVID, the years coming right into COVID. So we basically positioned, you know, to pivot the strategy a bit and move toward more growth, right? So that was part one. Two, I'd say when you look at the current environment last year, we looked at how to shift our channel strategy away from, again, and to defend when DSC was going to leave, how we'd pick up in other places, right? And that was obviously, as you've seen, DSC has rolled off our sales and stayed resilient. We incented parts of our channel strategy at a different rate, and they're actually doing what we want, which is diversifying away. So that's cost is something we look at sales for the rest of the year. We've kind of baked that incremental comp from that sales twist in there. So gross is running literally where we thought, if you will, from where we were a year ago. It's just a different mix, which is something we had engineered and wanted to have happen. The second component of it is really on the investment performance side. And we can talk about it later, but short term, we've had a drift in it because of some of the issues going on in the market. Our comp plans are heavily tilted toward longer investment performance, which is what we want. We want to be more heavily tilted toward three and five versus any one. So the strong performance from late last year is feeding into those higher calculations. So that's probably the second component of that guidance change. And I'd say the third is basically there is just higher inflation everywhere, and I think we're all seeing it. We're fully back to work here. So we are traveling at a normalized rate, which is significantly different than we were last year. But the spend rate for hotels, airlines, et cetera, is double-digit kind of inflation. Our data costs from providers for indices and other things also running at double-digit rates. So we factored that into it as well. So we feel pretty comfortable when you put those three that we have good line of sight on sales, good line of sight on performance, and we've made some assumptions around this higher inflation, which is stickier.

Okay, that's helpful. And then maybe just my last question, just on the private old space, 16.3 million in that fair value contribution this quarter, maybe give us a bit more color. What is that related to specifically kind of what funds or what assets can, I think you said it was higher valuation as well as a game, I believe. Was that right? and how do you get comfortable with the private marks on these assets in today's environment?

Yeah, sure. I mean, yes, we did have a $16 million bump up from their value adjustment. I'd say about two-thirds of that was just from valuations of our various funds. A third of that was actually driven by some monetizations that we had achieved. So I'd say overall, I mean, we are tracking from a

evaluation perspective and just seeing some results across the board from our respective funds and in terms of the marks how do you get how do you guys um kind of get comfortable with with the valuation yeah so the um on the monetization is pretty clear right there's just yeah an asset that uh we sold and carry um the other piece of it is i call it quote unquote event related with the underlying funds meaning there is some Transaction activity would surface new marks on things, which gives you pretty good clarity. And two, I'd say related to that, the assets that we're playing with in those spaces or infrastructure where we're not seeing any issues in the industry with missed marks, the assets that underlie infrastructure are pretty visible and clear. Second, private credit, same thing. Not typically where you're seeing people have issues. Where you're seeing people in the industry have issues is real estate right now. Hard to value if you're in commercial real estate what that is. We don't have that exposure. Or if you're in buyout funds or what I call late stage growth equity. But none of those exposures in our book. So we feel pretty comfortable with the marks that we have.

Okay. Great. Thanks for that. And those are my questions.

Thank you. And our next question coming from the lineup. Graham Reading with TD Securities. Your line is open.

Oh, hi. Good morning. Maybe just start with flows. How much of the positive flows contribution this quarter came from your US SMA channel versus your Canadian channels? Maybe just some color on the mix.

Yeah. Hey, Graham. Good morning. It's Kevin. Yeah. The 70 million flow is really just pure retail and mutual fund flows. So Judy can maybe give you some color on the SMA. So we don't lump the SMAs into that number. So that's a separate number.

Yeah, and just in terms of the SMAs, looking specifically, I guess, to our U.S. institutional strategy down there, we've been seeing some strong flows after about only really two years with that strategy in play. We're now on about four or five different significant platforms, and we're now growing that business to approximately $500.5 billion, which really represents about a 70% growth year over year from last year. And so we're really pleased with the trend on that. It's about $50 million a quarter.

And then also, you also commented on Canada. Canada is not in that 77. We keep that bucket separate, too. That business is, as I think everyone in the industry has talked about, is growing pretty significantly, and we're seeing the same growth there.

Okay. So that U.S. SMA sits in your institutional AU.

Correct.

Can you remind us what strategies you have on those platforms? And I guess, do you anticipate, you know, if you continue to grow those assets and get some traction, could that potentially just start to weigh on your weighted average management fee to some extent?

Well, just in terms of the strategies, we've got the global balance, global equity and global sustainable mandates and the small, mid, SMID fund. Those are the primary mandates that we're promoting down there. In terms of the asset growth and impact overall, we do hope to certainly see significant growth and that would be what we're targeting in terms of impact to the overall financials.

Yeah, one of the things we talked about, Graham, in that business, if you remember, we're basically giving our alphas and weights to people. There's not a big operational tail to that like a fund company would have where you're you're creating an NAV every night clearing trades, instead of the trading is done on those platforms. So we don't have a large operational tail. So when you think about that, pricing differential is probably in line on an operating margin basis, kind of like what an F-series fund would probably trade at. So, you know, again, if you had the same underpinnings operationally, then I'd say, yeah, absolutely. But, you know, I think volume has been pretty good. And, again, think operational margin, not price on that.

Okay, understood. And when you said earlier that you're investing, you know, I guess in your sales efforts in the investment dealer channel, is that referring to sort of your Canadian investment dealer, not this SMA channel? Is that correct?

Yeah, I mean, I think it's really focused on the IROC channel and making sure that, you know, we do work with the banks on their platforms as well. So it's a combination of both the SMA build-out along with the focus on the IROC channel.

I'd say a little bit of that. A little bit from year over year was down in the U.S. on supporting that SMA channel, too, as well. But most of it was the comp number we're referencing on the incentive comp is made in retail.

Okay. Understood. And then just my last question on the private ops side. Any expectations this year for what that organic growth could be that you're targeting on your current $2.1 billion in private ops AUM? And then In an inorganic basis, are there any particular strategies or asset classes that you're narrowing in on when you sort of assess potential acquisitions?

Yeah, I mean, you know, Ash has been on board now a year. He has started to build out that team. They have really, the amount of things in the pipeline that they have screened down, they've probably done 25 to 30 transactions. They are very active and very close to probably one or two now, prioritizing which one of those they're going to move forward with. So you should see something over the coming quarters there as we have, again, gone through a pretty good vetting of things out there. But these things take time to get them across. We've been very disciplined and thoughtful about it. The question earlier about marks is something we're focused on. So we want to be a little bit more deliberate right now, which I think will serve us well. In terms of strategies, what we have today is mostly infrastructure and private credit. We continue to like those. Broader, we'd like to build that out. Again, we're looking at some of the dislocated things out there, such as real estate, maybe. But that would be opportunistic. We like parts of the private equity space and the fund-to-fund space, potentially. But again, in private credit, I think will be something that we continue to focus on. But it's not narrowed to a specific strategy theme. It's really about how we could bring a product to market that will have acceptance to our client base. It's not driven off of let's go find X, Y, Z in this space. It's more driven about what we can distribute and can find the right manager and partner.

Okay, great. And then anything on the organic side? Any targets this year for, you know, I think you're hoping to launch a third fund from – Instar, but maybe any color on the organic side of that product as possible.

Yeah, I think we're still tracking between the inorganic that we just talked about and organic meaning a third fund for 2023. So that probably hasn't changed. Beyond that, I can't give specific timing on the first close.

Okay. So we should be looking for a third fund this year. Okay. That's good for me. Thank you.

Thank you. And our next question coming from the lineup, Jeff Kwan with RBC Capital Markets, Ceylon, is open.

Hi, good morning. Just wanted to go back on the $16 million of fair value marks and the gains. I think you said it was two-thirds the fair value marks and a third from the gains. Can you kind of segment that between what was coming from like infrastructure versus private credit for each of those buckets?

Yeah, we don't typically go down into the specific funds, et cetera, but I would say that the monetization was private credit. So I'll call that roughly $4.5 million. Between that and carry there, I would say a small portion of it is true up from estimates from Q1 across the platforms, and the remainder is going to be on the infrastructure side, just, again, normalized fair values.

Okay. And then just with respect to, I think you guys have, is it something like 25 million a year is kind of what you kind of guide because it can be lumpy quarter to quarter. Given what you saw in Q2, would it be 2023 might be a higher than usual year? In other words, let's say if it's, you know, five to maybe like 6 million a quarter in the back half of this year might be reasonable or what you saw in Q2 would generally be in line with how you encapsulate what that line would be for all of 2023.

Yeah, you know, I still think we look at four to five-ish, right? You know, whether it's going to be lumpy, right? But again, we like the underlying assets, and they're less market disrupted. But to be conservative, Jeff, I'd say kind of call it five-quarter in terms of your modeling.

Okay. And just the last question, just reconfirmation, is I think when you give the SG&A guidance that is SG&A excluding severance and corp dev costs. Is that correct?

That is correct.

Okay, great. Thank you.

Thank you. One moment for our next question. And our next question coming from the line of Nick Fry with CIBC Capital Markets. Your line is open.

Okay, thanks. About a month ago, you announced a series of management fee changes across the product lineup. I was just wondering if you might be able to quantify what the run rate revenue impact might be of those changes.

Impact-wise, for the remainder of the half year, it's probably less than a basis point. It's probably half a basis point. Again, we've talked to you guys for a long time that we think over time it's one to two basis points a year. We haven't seen it in some years. But, you know, mixed shift will have a big play in that, too. But it's about a half a basis point.

Yeah. Okay. No, that's very helpful. I think my other questions have been answered. Thank you.

Thank you. And as a reminder, ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your touch-tone telephone. And our next question, coming from the lineup, Tom McKinnon with BMO Capital. Your line is open.

Yeah, thanks very much and good morning here. The question really is with respect to the excess capital that you have right now, $300 million if you include the cash, $130 million in a credit facility. You buy back some stock, but it might be equivalent to about 3% of the float per year. I mean, commitments are looking to be maybe another $50 million and you're generating some good free cash flow. So, do you have any other ways you think you can put it to work other than just by buying back some shares? Is there anything out there that you would contemplate looking at in terms of significantly ramping up, say, some of your private capital investments, maybe looking to purchase some distribution? There's people been buying distribution out there as well. Just your thoughts on that, Kevin.

Yeah, thanks, Tom. You know, we like our capital position, obviously, but optimally we'd like to have some debt at some point and relever. As I said, clearly the acquisition side is coming closer on the private capital side, given the fact that we've been through this very active pipeline. So we'll get some of that capital back to work. In the meantime, we've obviously, and we've said this for a long time, we believe in a very balanced approach, right? Dividends, buybacks, as well as investing for the future. At different times, they're going to take different precedents. We're probably moving more toward investing for the future in the coming quarters on that. So you'll see that capital get put back to work. And again, think more private capital things. That's where we see the opportunity. That's where we see the asset allocation shifting. But that's not to say we don't look at other things that would be added to our business as part of that too. But there will be a mix shift for sure in terms of how we think of that balance. But in the meantime, yeah, and we obviously think the stock is cheap. If you think about the fact that Even if he gave us a dollar for each of our investments and called that private capital business, it rounded up to $250 from the $247. Our enterprise value today is, I don't know, call it $500, strip that out and say we're not getting any credit for that. Our operating businesses, or what you guys call wealth management businesses, round that up, probably earns $100 million. So you take that 250 and 100 million in earnings, it's two and a half times, right? So it has been cheap and attractive for us to buy the stock back when you think about what we're getting credit for in our core businesses. But that will shift. But as it shifts, it shouldn't be seen as a sign of less buybacks means we're not attracted to the valuation. It's about driving for the organic growth that we see in the future to drive earnings.

All right.

Thanks for the call, Eric. Operator? Olivia?

I'm not showing any further questions in queue at this time. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. AGF's next earnings call will take place on September 27, 2023. You may now disconnect.