Unidentified Participant: Hi, guys. Luke here, on for Alex. Thanks for taking the question. Can you just provide a quick update on capital allocation strategy? Obviously, buybacks continue to be very healthy and are encouraging. But how are you balancing that with debt paydown and inorganic activity? And on the inorganic side, are there any specific areas of focus you guys are thinking about as you do your due diligence? Thanks.
Michael Policarpo: Sure. Good morning. I think our capital management strategy has really remained consistent and is unchanged. We want to maintain balance sheet flexibility really to execute our differentiated strategy, which really includes, as you highlight kind of the inorganic opportunities that we see. The strong financial performance that we’ve delivered, the business diversification, that’s really been driven by those organic investments that we’ve made in — inorganic investments have kind of provided us that ability to remain flexible. And really, as we think about the level of buybacks that we’ve done in the first half of the year, and balancing that versus the other capital management elements and pillars. We’ve been opportunistic and really those decisions are based on facts and circumstances.
We’ve leaned in the past several quarters on shareholder return. We think that’s been the right pivot from an allocation perspective. We’ve got a very advantageous debt stack. As we’ve talked about, we’ve got a hedge on about $450 million of the debt that it really allows us to kind of have a lower interest cost and it really is something that we think about kind of going forward. And we also believe on the share buyback because we think there’s a statement with respect to the value of the stock as well there. But I think as we think about going forward, the priority and the best use of our excess cash will continue to be inorganic growth. And we want to make sure that we’ve got the right capacity from — and tools to be able to deliver on that.
David Brown: Yes. And then I’ll take the — what kind of inorganic growth opportunities we’re looking at. I mean, first, anything we do, we start off that has to make the company better. A lot of what we have done in the past has made very, very great strides financially. But everything, the constant has been that we made the company better. So we start off, we estimate the company better. The different types of transactions that we’re interested in, I’d put them into a transformational transaction where it’s going to be large in size and scale, going to have multiple levers of value that you can create products, opening up distribution channels and we have done some of those in the past. Then another area we’re interested in is really acquiring products that are part of the future portfolio of our investors.
So a WestEnd type acquisition, New Energy, a THB, these are acquisitions that have fantastic products that are part of the future of portfolios and you know what we’re hearing from our clients, the type of products that they want and desire. So we’re looking at those kinds of opportunities. And from a sizing perspective, the range really is something very small to something very large. And as Mike has said, we have a lot of different levers to do acquisitions. Part of that has been debt in the past. We have — we generate cash, we have structuring, and we’ve done a number of different things. And we feel today that we have the balance sheet and then we have the other tools that we can use to really execute on M&A.
Unidentified Participant: I appreciate the color there. And maybe a nice segue into a follow-up. So WestEnd has obviously been like a very successful acquisition for you guys. Can you help frame for us how significant of a driver it has been and you expect it to be maybe for the quantum of flows? And is there anything specific that you can speak to that’s driven the recent pickup in activity here? Thank you.
David Brown: So I’ll take the back half of that question. I think the recent pickup is really just a general market environment. WestEnd has had excellent investment performance, but even deeper is they really do provide a solution to advisers and to clients. And so none of that has changed. It’s really just been a general market sentiment. And I think the group that’s out servicing and selling the product does an excellent job. WestEnd, since we’ve done — since we closed the acquisition really at the beginning of 2022, we’ve had organic growth. And if you think about the beginning of 2022 to today, to have a product that has grown organically, really at every time period that we measure, so all of 2022, year-to-date in 2023, both grow — both periods, they’ve grown and then cumulatively, they’ve grown.
It’s been excellent. We have big expectations for them going forward. We think they’re going to be a big part of our organic growth opportunity. And as the general investor sentiment gets better, we think that their organic growth will increase. If you remember, when we did the acquisition, this was a double-digit organic — annual organic grower, percentage-wise. So they have experienced great growth in the past, and I don’t see in a normal market environment why we can’t reproduce that.
Operator: And your next question comes from the line of Matthew Howlett from B. Riley Securities. Your line is open.
Matthew Howlett: Good morning and thanks for taking my question. Most of my questions have been answered, but Dave, I want to ask you on the 12 platforms, how often do you feel a need to get involved from a management strategy? Remind us again, sort of how often in the past you step in on the day-to-day and so forth?
David Brown: So our model really is all about an independent autonomous investment franchises is how we describe it. So you have investment professionals really every day, researching and managing the portfolio as they see fit. They do it on a platform, which we think is best of class. But really, the investment professionals are driving, building the portfolios and deciding how the portfolios are positioned. That’s how we have built our business and we think that that’s the best way to get great investment performance. You can see from our investment performance, how excellent it’s been, how consistent it’s been in. It’s really because we’ve got, as you said, 12 investment franchises where you have groups developing their own portfolios, and then — and the ability to articulate those portfolios without any interruption from non-investment professionals. And I think that’s been consistent over the last decade as being an independent company.
