Cohen & Steers, Inc. (CNS): The Risk Of Being A Niche Asset Shop

The Contrast

BlackRock Kelso Capital Corp. (NYSE:BLK) is among the largest asset management companies in the world. It’s been growing through acquisition, including the purchase of exchange traded fund shop iShares. At the start of 2013 the company had over $3.75 trillion under management. It was split pretty evenly between stocks and bonds. That number increased to $3.9 trillion at the end of the first quarter, but fell to $3.85 trillion at the end of the second quarter.

Note, however, that the ups and downs here are small compared to what’s going on at Cohen & Steers, Inc. (NYSE:CNS) and Calamos Asset Management, Inc (NASDAQ:CLMS). Size and diversification are the main benefits that drive Blackrock Kelso Capital Corp. (NASDAQ:BKCC)’s relative AUM stability. Although a broad market sell off would hurt the company, it would likely be a bigger drag on the other pair. Moreover, BlackRock’s earnings were up an impressive 35% year over year compared to relatively weak showing at Calamos and Cohen & Steers.

Be Careful What You Buy

Investors looking for an asset manager need to look deeply at what they are buying. It might be nice to own a “specialist,” but that increases the list of risks you face to include the popularity and performance of the niche in which the company operates. Cohen & Steers, Inc. (NYSE:CNS) and Calamos Asset Management, Inc (NASDAQ:CLMS) have impressive histories, but they can’t escape that dynamic. You should stay on the sidelines unless you are willing to do the extra legwork. Blackrock Kelso Capital Corp. (NASDAQ:BKCC), with its broadly diversified product portfolio and massive size, is probably a better option for most.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends BlackRock.

The article The Risk Of Being A Niche Asset Shop originally appeared on Fool.com.

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