In terms of the underlying EBITDA story, I think it’s really important when you think about AMG to think about it in a couple of ways. One, on the alternatives side, certainly those are higher-fee businesses. In general, we tend to own a minority stake in those businesses, although there is a mix, there are a handful, where we own a majority as well. But importantly, it’s not only the fee rate on the underlying management fee business, but also the opportunity on performance fees with respect to the alternatives firms on the liquid side, and then the longer-term carry opportunity on private markets. So the underlying EBITDA on the new fund-raising that we’re bringing in, you’re seeing some of it on day one in terms of management fee EBITDA, but a lot of it is building over the course of the next four, five six, and seven years as ultimately will experience carry there as well.
So, there are a number of different ways that this business mix-shift is going to improve both our flow profile over time, but also our overall earnings growth profile over time and the cash that we generate, and to Jay’s point, on the last question, there are lot of ways for us to use that cash to ultimately drive earnings growth.
Jay Horgen: Yes, and I’ll just – Tom did a nice job. I’ll just summarize by saying that, there are challenges and there are opportunities. I think, obviously, the challenge with respect to AUM and flows for us really relate to the long-only active investing. But we don’t think, it’s going away. The long-only active investing is not going away. And I think the way some of the attitude towards that part of businesses in our industry, not just ours, but those who have more legacy sizable businesses, we don’t believe it’s going away. We think it’s been right-sized. We think the quality has gone up. And ultimately, we do think that, whether it’s product structures or it’s just the evolution of technology, we think the delivery of active management is going to improve and therefore be successful in client portfolio.
So that’s the challenge, right? That’s a challenge on AUM. The opportunity on AUM is all the alternatives businesses that we keep describing and where we’re seeing, we had a good year this year. We had a good year the prior year. We had a good year, the year before, and we expect those to continue maybe even increase. So it really is a mix-shift question for us. And as Tom said, underlying that mix-shift, we think that the quality, stability, length, and the average fee rates are just going up because of that mix-shift.
Operator: Thank you. Our next question comes from the line of Dan Fannon with Jefferies. Please proceed with your question.
Dan Fannon: Thanks, good morning. I wanted to ask about the liquid alts. And specifically, do you think 2024 is where we can – where you will stop saying, ex quant or ex certain quant strategies? And in terms of the flows and specifically, how do you think about those Affiliates and the prospects given some of the performance has been good, performance fees have been good? How do you think about growth in specifically those Affiliates?
Thomas Wojcik: So, thanks for the question, Dan. If you go back in history a bit, just to maybe remind others, why we started reporting ex quant. We did have a situation where we had large outflows on the quant side, add an affiliate or a couple of Affiliates, who ultimately weren’t delivering a substantial amount of earnings. So, there was a pretty big disconnect between the quantum of AUM that was leaving the system, which was not really having a material impact on our overall earnings and our overall EBITDA profile. So we thought it was a much more transparent way to communicate with shareholders to help them to understand the overall earnings profile of the business. We do think that we’re at a point now where that has normalized.
So we’re going to continue to evaluate the way that we’ve been reporting ex quant, but I do think a combination of the normalization of where we are on AUM and earnings contribution, as well as the really strong performance we’re seeing in a number of those businesses, probably does put us in a position where it’s time to rethink that.
Jay Horgen: Yes, I would say that sometime this past year in 2023, we probably crossed over that point where we saw the normalization. And so looking forward, it probably is time for us to change that. And maybe making one specific point here, there were a number of firms that were in that bucket, the most notable being AQR and AQR, I guess we are increasingly optimistic about their forward prospects, and they had very strong results in ’23 and ’22, particularly in the liquid alternatives area, excellent performance, performance fees, and even seeing some organic growth. We think that business has regained momentum. And again, because it’s normalized, the size has normalized relative to the contribution that is the real reason that we think that we can pivot back to just showing it straight flows.
Operator: Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.
Brian Bedell: Hi. Great. Good morning, folks. Thanks for taking my question. Maybe just some sort of summing up a lot of the commentary that you’ve just discussed in the Q&A section and you’re also in your prepared remarks, it sounds like that you’re definitely positioning this firm for a stronger organic growth profile in the future. Certainly, from a let’s say predictability perspective, given the pipeline of fundraising that you potentially have and maybe if you can comment on the diversity of that fundraising pipeline, but also I’d like to touch on just the distribution angle in terms of your partnership and your contribution to distribution across your firms. Have you noticed that is improving and that can also help that profile, if you can just basically talk about that?
