Cohen & Steers Inc (CNS) 2005 Q4 法說會逐字稿

Welcome to the Cohen & Steers fourth quarter and 2005 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. (OPERATOR INSTRUCTIONS).

I would now like to turn the call over to Mr. Salvatore Rappa, Senior Vice President and Associate General Counsel. Please go ahead, Sir.

Thank you and welcome to the Cohen & Steers fourth quarter and 2005 earnings conference call. Joining me are Co-chairmen and Co-Chief Executive Officers, Martin Cohen and Robert Steers; our Chief Financial Officer Matthew Stadler; and our Chief Operating Officer, Adam [Darushan]. Before I turn the call over to Bob, I'd like to make the following remarks.

Yesterday we issued a press release announcing fourth quarter and 2005 financial results. The press release which is available on our web site at cohenandsteers.com contains information that we believe is useful in helping you evaluate our performance during the quarter. I want to point out that, during the course of this conference call, we may take a number of forward-looking statements. Forward-looking statements are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from those indicated in the statements. We believe that some of these factors are described in the Risk Factors section of our 2004 Form 10-Q -- 10-K.

I want to remind you the Company assumes no duty to update any forward-looking statements. Finally this presentation will contain information with respect to investment performance of certain of our funds. I want to remind you that past performance is not a guarantee of future performance. For more complete information about the funds we will discuss today, including charges, expenses, and risks please call 800-330-7348 for a prospectus and see the press release we issued yesterday.

With that, I'll turn the call over to Bob.

Thanks, Sal, and good morning, everyone. This morning I am going to start out by briefly discussing the headline numbers which hopefully most of you have seen by now. Then I am going to highlight a few notable developments that occurred during the past year. At that point I am going to ask Matt Stadler to spend a few moments expanding on the headline numbers and I will close our formal remarks with some comments regarding our goals for 2006.

As you should know by now, we reported fourth quarter earnings per share of $0.21 which included a $0.03 charge related to our headquarters relocation. This compares to $0.20 a share in the third quarter. For the year, fully diluted earnings per share were $0.79 which included three onetime charges -- the $0.03 relocation charge, a $0.02 charge related to a change in New York state tax law and a $0.03 expense associated with the launch of four of our five new funds.

And as we've mentioned during the year we believe that year-over-year comparisons to 2004 really are not ,meaningful since this was our first full year as a public company. Going forward, certainly, year-over-year comparisons will be more valid.

Before I ask Matt to provide the details on these numbers, I would like to first touch on a few of the many significant accomplishments of this past year, our first full year as a public company.

2005 in our view was clearly a transformational year for Cohen & Steers. Assets under management increased 12% to a record 20.5 billion, which is notably after 248 million of year end mutual fund distributions which were not reinvested. Performance of our open-end fund were again very strong with 75% of them exceeding their benchmarks and 75% of our funds eligible for Morningstar Ratings achieving four or five star status.

We made significant progress on our diversification strategy last year. During the year, we launched a total of five new funds which added international real estate securities and domestic equity dividend growth strategies to our lineup. To support our new investment capabilities and improve the productivity of our retail and institutional sales efforts, we added substantially to our Company's infrastructure during the year. Companywide we had 39 new hires and ended the year with 117 employees.

I would like to take just a minute and highlight some specific examples of this increase infrastructure as these investments are mainly in people who we expect will, in one way or another, generate real returns on this investment. We substantially expanded our commitment to the institutional marketplace including the addition of Stephen Dunn as Director of Global Institutional Sales and Marketing.

In addition during last year we entered into joint marketing arrangements in Australia, Europe and Japan. We've continued to expand our retail sales team through the addition of Kevin Crook as our National Sales Manager and the expansion of our internal sales desk. Matt Stadler, as you know, joined us midyear as CFO and he has, in very short order, substantially built out our finance department. And in my view, quite remarkably, we managed to achieve all of these things, while relocating our New York headquarters and opening offices in Seattle and Hong Kong.

Finally, we made substantial progress in transitioning the Company's compensation regime from one which focused strictly on cash to one where equity has become a more meaningful component of total compensation.

At this point, I am going to ask Matt to go into more details on the quarter and year.

Thanks Bob. Good morning, everyone.

We reported earnings of $0.21 per share, including a $0.03 per share after-tax nonrecurring charge attributable to the relocation of our corporate headquarters. This compares with $0.20 per share sequentially and $0.25 per share in the prior year's quarter. You will recall that last year's fourth quarter includes a $0.06 per share after-tax benefit, resulting from the reversal of non-cash stock-based compensation expense.

We recorded revenue for the quarter of 37.4 million representing a 2.7% increase from the third quarter and up 16.7% from the prior year's results. Our net income for the quarter was 8.3 million, up 4.3% from the 8 million we reported last quarter but down 16.1% from the prior year's fourth quarter. The 2005 quarter includes the relocation charge and the 2004 quarter includes the reversal of non-cash stock-based compensation expense.

For the year, our first full year as a public company, we reported net income of 31.9 million or $0.79 per diluted share. In addition to the $0.03 relocation charge, our 2005 results included $0.02 per share tax expense in the second quarter attributable to a decrease in our net deferred tax asset and a $0.03 per share first quarter after-tax expense, associated with the launch of four of our mutual funds.

Led by overall net inflows across all three of our product lines during the quarter, assets under management continued to increase, reaching 20.5 billion at December 31st and setting another record for the firm. This was achieved despite unusually large non-reinvested capital gains distributions of approximately 248 million from certain of our open- and closed-end mutual funds.

We continue broadening our product offerings. REIT common stocks now comprise 69.8% of total assets down from 74% last year. And International Securities, which we started managing during 2005 comprise almost 4% of total assets.

Now I will review the performance of our two business segments. First, in our core asset management business, we reported quarterly revenue of 35.4 million, up 16% from the prior year's period and virtually flat from the third quarter. Pretax income for this segment was 13.9 million up 1.9% from last quarter but down 21.5% from the prior year's fourth quarter, adjusting for the relocation charge in the fourth quarter of 2005 and the reversal of the stock-based compensation expense in the fourth quarter of 2004. Pretax income was up 16.9% from last quarter and up 15.1% from the prior year's fourth quarter.

Our pretax margin for the year was 37.2%. Our pretax margin would've been 4.1 percentage points higher if you exclude the relocation and fund launch costs.

Now let's review the changes in assets under management. Assets under management in our closed-end funds totaled 9.7 billion at December 31st, a decrease of 411 million or 4.1% from the third quarter. This decrease was comprised of 485 million of market depreciation which includes 193 million of capital gain distribution, partly offset by inflows of 74 million resulting from the issuance of preferred shares. For the year, assets under management in our closed-end funds increased 690 million or 7.7%.

Our opened end funds had assets under management of 5.6 billion at December 31st, a slight decrease of 5 million from the third quarter. Net inflows of 8 million led by 132 million of net inflows into our International Realty Fund were more than offset by 13 million of market depreciation, which includes 55 million of capital gain distribution.

For the year, assets under management increased 392 million or 7.5% including 279 million of net inflows from our international Realty fund which was incepted on March 31st.

Assets under management in our institutional separate accounts reached a record 5.2 billion at December 31st, an increase of 747 million or 16.7% from the third quarter. The increase was comprised of net inflows of 685 million, the result of adding four new accounts coupled with market appreciation of 62 million.

For the year, assets under management increased 1.1 billion. The increase was the result of 575 million of net inflows coupled with 533 million of market appreciation. For the year we gained seven net new accounts. Having increased 26.9% from last year institutional separate accounts now comprise 25.5% of our total assets under management.

Our strategic investment in Houlihan Rovers continued to contribute as their assets under management increased 30.1% to a record 1.6 billion at December 31st, compared with 1.2 billion at December 30th and almost triple from 569 million at December 31st.

Net income for the quarter was $478,000 compared with $570,000 sequentially. The decline in net income was due to an increase in local taxes as Houlihan Rovers' net operating loss carryforwards have been fully utilized. For the year Houlihan Rovers recorded net income of 1.8 million. As you know, we report 50% of Houlihan Rovers' net income.

In our Investment Banking segment we recorded quarterly revenue of 2.2 million, almost double the amount we recorded in the third quarter and up 46.1% from the comparable 2004 period. For the year, the Banking segment recorded 11.8 million, up 45.8% compared with last year. These significant variations highlight the fact that our Investment Banking revenue is very unpredictable.

The Banking segment recorded a 2.8 million pretax profit for the year. These generated during the year resulted from financial advisory and capital raising transactions.

Moving briefly to expenses. Although expenses were up slightly on a sequential basis, there are variances in employee compensation, G&A and depreciation and amortization that merits some discussion. On our last call and in today's prepared remarks, we mention that this quarter's results include a $0.03 per share charge resulting from the relocation of our corporate headquarters. This charge, which is reflected in both G&A and depreciation accounts for the majority of the variance in those respective categories. I should also mention that our old space has been entirely subleased.

We also mentioned on our last call that the fourth quarter would reflect a full quarter of compensation costs associated with the strategic hirings we made during the third quarter and that we expect the compensation expense to be about a penny a share higher in the fourth quarter. Well, this is in fact that case.

However we also [injusted] our year-end compensation to incorporate a higher stock-based component in order to further employee ownership and be more aligned with other public financial services and asset management companies. This effort was led by our two co-CEOs Marty Cohen and Bob Steers who each took 100% of their annual bonus in the form of restricted stock units. This adjustment to our year-end compensation more than offset the impact of the third quarter hiring and accounts for the sequential variance in compensation expense.

Now turning to the balance sheet. Our financial condition continued to strengthen as stockholders' equity reached 165 million, up from 146 million last year. Our growth cash and cash equivalents totaled 39 million up from 30 million last year and our marketable investments totaled 87 million, up from 70 million last year.

Let me briefly discuss a couple of items to consider for 2006. First our effective tax rate. As mentioned on our last call we projected a 40% effective tax rate for the fourth quarter of 2005 and including the equity pickup from our 50% investment in Houlihan Rovers as a component of pretax income, that is about where we wound up. We expect our effective tax rate to be about 40% for the first half of 2006 as well. In addition, we will receive a cash benefit in the first quarter of approximately $8 million resulting from the delivery of the first tranche of vested restricted stock units that were granted at the time of our initial public offering.

Finally as a reminder, effective January 1st of this year we recognized the seven basis point increase in the advisory fee of one of our closed-end bonds. Cohen Steers Advantage Income Realty fund resulting from the expiration of the the waiver. Now let me turn it back to Bob to wrap up.

Great. Thanks,Matt. To finish up,I would like to summarize some of our goals for the coming year.

First and foremost, we aim to maintain our record of strong investment performance across all of our disciplines, both new and old. Second, we are working hard to refocus the Cohen & Steers brand to encompass our new investment capabilities and our favorable outlook for the dividend for dividend growth-oriented strategies. Third, we are highly focused on generating potentially recurring internal growth through improved productivity from both our institutional and retail sales team. As our assets grow we obviously hope to see our newer strategies become an ever larger percentage of our assets under management.

So in sum, the Cohen & Steers 2006 will be a year of executing the game plan which we put in place over this past year.

At this point I'm going to stop and open the floor to questions.

(OPERATOR INSTRUCTIONS) Cynthia Mayer of Merrill Lynch.

Good morning. Wondering if you could give a little more color on the four new accounts and where you are seeing interest? Are those U.S. clients? Non U.S. clients? And what's the pipeline looking like?

Really, the new clients span the gamut of our investment strategies. They are primarily REITs and I think half is about international and half is domestic REITs. Essentially large pension and endowment funds. We've had great success in Japan, through our association with [Giwa] which is continuing to find most of the pension there the international or global real estate securities strategies.

As far as the pipeline goes, we always have a pipeline of possibilities. There is nothing to report but as we mentioned on the call last quarter we are starting to see some of the fruits of our building our institutional sales department. And we are very hopeful that we will continue to see more progress in this year.

I guess you are seeing a little less rebalancing too, given the way REITs have been behaving.

We are getting a little rebalancing still, but it is not as much as it used to be. What we are getting is some of our clients are switching from domestic to international. As you know, the domestic REIT market has been essentially so strong over the past five years we are very fortunate that we have another strategy for them, if they want to reduce their domestic exposure. Some of them are transferring that money into the international arena.

Great. And the rollout of the advisory fee, I'm sorry you said that begins when exactly?

January 1st. It began.

So it began already?

Yes. And that is the first of a series of as the next several years go by. That particular fund will have waivers reduced over the next four years and other funds will start having their waivers burn off. But there's a schedule in our 10-K of last year and now it's starting to have an impact on our revenues.

Last question. I know it's lumpy but do you have any visibility of banking for this quarter or next quarter?

We wish we did. As you know, it is a very lumpy business and they are working very hard and that is all I can say because we just don't know where -- when their pipeline starts to produce revenue.

The only thing I would add to that is we do expect to see the mix of business going forward continue to be more oriented towards M&A activity.

James Fotheringham of Goldman Sachs.

Just getting back to the investment banking side of things. Can you describe the synergies with any other part of the business and what you envision investment banking adding to the overall franchise? And beyond increasing the optimistic view for M&A business, is there any way that it is contributing to other parts of your franchise at all in any synergies or connections?

I think as we have said in the past we don't view the banking group here as providing tremendous synergies. We think it's a great and very profitable business for us. There are times when it has acted as a counterbalance to trends in the asset management business. But beyond that particularly, keeping in mind that Chinese wall issues there are very few investments synergies between the two groups.

Very good and in terms of realization rate given changes in the advisory fees, can you give us any outlook more specific than what you've given already in terms of what we can expect that rate to get to and how significant a change we could expect in '06?

Is the question related to what is the direction of fees?

Yes, but more the magnitude of the change as well as the direction.

I will just make a couple of broad comments and one is, longer-term, the burn off of the closed-end fund waivers will have a meaningful impact on both average fees and revenues. Secondly, the more we see assets -- the asset mix shift from strictly U.S. REITs to global or international mandates, those particular strategies because of the complexities involved at the investment and administrative levels have meaningfully higher fees so we are optimistic certainly that, in an environment where there is pressure on fees, we have a number of things going on that should help us.

Should we consider that I guess what I am asking, should we consider that a bit of a wash or if there is a net negative impact, how large an impact would that be?

I don't think I mentioned any negative impact. I see the fact that we have extraordinarily strong performance across all of our funds which is how you earn a good fee, I see the mix shifting to hire the products. I see fee waivers burning off. So I don't see any -- other than what the rest of the industry is experiencing, we are not seeing any negatives out there.

Michael [Carrier] from UBS.

(indiscernible) funds. Just a couple of questions. Can you just explain about process behind when the preferreds are issued and outlook going forward and also any update on that global power fund?

With respect to the Global Power Fund the closed-end fund window has somewhat started to close and we don't want to come out with an offering that is not going to be very well-received. So we were hoping to have that in the marketplace but right now there's no prospect currently. So that could change.

The thought process on the preferred, issuing the preferreds is we like to maintain a certain leverage ratio. Our prospectus permits us to maintain 35% leverage, and based on the performance of REITs and utilities our leverage ratio came down significantly below that at that point. If we feel that we can fund investment opportunities that could justify the cost of borrowing additional capital, that is what will drive our decision to add leverage. We added some leverage in one of our funds in the fourth quarter and that was in our utility funds. And based on the performance of utilities and our outlook for them and the investment individual securities that we can buy, we thought that it was a very opportune strategy that could benefit that fund's shareholders.

Then just more a broader picture question. Given your history in the business and in the improving REIT markets, any outlook on the retail or open-end fund given the kind of sluggish trends lately?

We are seeing many of the same forces affecting the open-end fund business as we are institutionally in that we are seeing profit taking and rebalancing and -- as one factor. On the other hand we are seeing record growth sales for us. So and a lot of that is being driven both by our four and five star type performance but also having we believe by a wide margin the largest global research and investing team for real estate securities and I think that is what is driving the large flows into our international funds.

So the key I think for us going forward in the open-end fund business is, we have been and we continue to expand our sales force. We continue to have leading-edge products so we hope to continue to drive growth sales and a big swing factor will be to the extent that the rebalancing phenomenon begins to diminish.

Andrew Lee of Bear Stearns.

Most of my questions are answered but just a couple of brief questions. Can you give us some color on the status in regards to some of the European economies adopting REIT structures and how it may impact your business going forward?

There's been substantial growth in both the European and Asian markets. In fact the market capitalization of REITs in Asia and Europe has increased by a couple of hundred billion in the past two years, which is far greater -- a far greater increase than the U.S. REIT market. In fact today the non U.S. REIT market is about 50% greater than the U.S. REIT market. We see that continuing.

In Europe, it's not so much a function of the strong economies, but it's a transfer of ownership taking place from private to public companies. The two countries that are the most widely anticipated to adopt REIT legislation are Germany and the UK. And we think in the next 12 months, we are going to see legislation in both of those countries.

The UK has it on the drawing board. Germany does as well but I think there are problems with some of the German funds is going -- it is going to be a catalyst to accelerate their adoption of REIT legislation. In order to create (indiscernible) liquidity opportunity for basically with $100 billion worth of investments in property there. So we are very optimistic about that and we are all over Europe with our analysts there.

In Asia, some have suggested that just Hong Kong alone will have 10 ICOs this year. The Singapore REITs have come into the modern age and are attracting a great deal of capital. Some of the Hong Kong companies are investing in the Mainland China -- the [Circle] PRC. We just see Japan is starting to evidence of an economic recovery and a switch from deflation to inflation albeit modest. But in Japan there are a couple of IPOs in the pipeline for several J-REIT's or Japanese REITs.

So we see the market cap growing dramatically. Now that is in contrast to the U.S. where over the past year and a half or so, $38 billion has been removed from the REIT market. And that's due to companies that have been taken over or acquired. Most of those companies are being acquired by private entities so the market cap has essentially disappeared. That suggests to us that the REIT market in the U.S. is probably decently valued, fair to undervalued, because it is attracting M&A.

As Bob mentioned even our bankers are seeing -- a lot of the activity they are seeing is in the M&A front. So we think international is going to be a great driver of growth for us. And it's attracting a huge amount of attention on the part of investors. Individuals and institutions.

That's very helpful. And just finally on the -- on your utility portfolio, can you give us what the year-end AUM level is and what was the sequential quarter performance?

It will take a second to get that. We have that number. Why don't we go to the next question and we will announce that number when we -- .

1.6 billion, utilities. 1.6 billion. You're talking about the closed-end, right?

You're talking about the utilities in general?

In general.

Why don't we go onto the next question and unless you have something more to add to that and then we'll get that data out in a minute or two.

That's all I have.

(OPERATOR INSTRUCTIONS) Aaron Kiddell of [Hode Capital].

Can you just give us a detail again? I didn't quite catch what you said about the cash benefit in the first quarter on the delivery of the first tranche of restricted stock from the IPO.

First let me just get back to the utility question real quick. Utilities from '04 to '05 which would be not sequential but it would be quarter-over-quarter is up 15%. The asset level is 2.2 billion versus 1.9 billion in the December 31 quarter and it was 2 points -- this is pretty much flat sequentially. As an asset class. So flat sequentially and up 15% from the quarter last year.

With respect to the deferred assets, the Company recorded a deferred tax benefit when the shares were issued because they were vested shares. When the shares get delivered the Company gets the benefit, based upon the value of the shares when they are delivered. So if you look at the appreciation and the stocks (indiscernible) from there I would kill price to now. The value that would be delivered on January 31st, that is going to give the Company an $8 million benefit which we can apply against its tax payments to the government. So we'll be able to have that cash to invest.

So what would be the income statement of that transaction?

The income statement is flat. It simply moves from deferred to current on the provision line. So it won't move at all because we recorded that already. The extra 5 million incremental will go through paid and capital.

Then the restricted stock units that were taken inside of fourth quarter this year and in future quarters would your plan be to reflect those as expenses on the income statement after, I believe it's -- I don't not know what the FASB date is now -- it's second quarter or third quarter next year. But would there be a change that you would expect once option expense is required to be recorded?

Are you referring to the new grants that we made at year-end?

Yes.

Those grants will amortize in pro rata over a period of time.

What's the amortization period?

Five years and the impact of that in '06 would be about $0.035.

Okay.

[Routable] throughout the year.

So $0.035 divided evenly and roughly among the four quarters.

That is correct.

Then, lastly, can you give any update on your plans for the secondary and I would maybe address to either Mr. Cohen or Mr. Steers, how are you thinking about -- I'm sure you get questions from people who say I would love to be in the stock, but it's not very liquid. You control a lot of it. So how are you thinking about the level that you would maybe like to get liquidity yourselves or assist providing additional liquidity for institutional holders?

As you know we filed our S3 and that allows us to be opportunistic. I would say that at this point we don't have any plans for a fully marketed secondary offering. On the other hand, I think that it -- you shouldn't be surprised if this year, more than a year after having gone public, there will be some likely -- depending on market conditions -- some insider selling. So I think that is about as much as we can share with you at the moment.

Would you say that would be more likely first? I think -- maybe I'm wrong but I thought that there was some comment that that might occur in the first quarter of '06?

It's possible. I think rather than thinking that there might be some large capital raise and stock issuance, that type transaction. I think like many companies you might just simply see over time programmatic type sales that are designed to provide diversification for the sellers but have minimal market impact and I think that's the likely course of events.

So you [save] for that over a marketed secondary?

I wouldn't rule anything out ever. We want to keep all of our options open. I would say, currently, that's probably more likely.

Cynthia Mayer of Merrill Lynch.

I just wanted to doublecheck on what you had said about comps in the quarter which dropped so much sequentially. Did you say that you've really altered the comp structure so that that would carry forward other than the new grant which, obviously, is amortized over five years you said? How much of that dip, the sequential dip would carry forward to 1Q?

It would be pro rata so you'd take the $0.035 and spread it evenly over the four quarters. So it would be a little under a penny.

Right but other than -- I guess what I'm asking is, was there anything else in that comp line that would have caused it to dip sequentially?

(MULTIPLE SPEAKERS)

Which wouldn't recur in '06?

No. I think what the adjustment that was made was to alter the mix of stock and cash; so the fourth quarter would not be a DEA proxy, just a model for '06 because it's got that adjustment in there that I alluded to in my points. But I think that where we got to for the year is what we think is the right mix going forward, and this $0.035 that would go in (indiscernible) through the '06 -- each of the 4 quarters is the impact of the stock issuance at year-end.

So it's a full year basically?

That's right. So, the fourth quarter is not a proxy for what the first quarter would look like because it has that adjustment in there. However the mix that we have achieved in '05 is something that we feel good about carrying forward.

Okay; and the fourth quarter did include the full impact of the equity team in Seattle and Hong Kong researchers. Right?

That's correct.

Thanks for clarifying.

Howard Flinker of Flinker and Company.

I got two big picture questions. One, do I infer correctly that competition for staff has become more expensive of late?

I think that's an issue throughout the industry. A good count is always expensive and it's sought after. Right now we are very comfortable with our entire professional staff and -- with no exceptions -- and we don't have any major hires on the investment side and on the drawing boards right now, which would be a budget buster.

No. That didn't concern me. I just thought that because you changed your compensation formula you would have to step up somehow to match what's going on in the rest of the street.

It was really a matter of really getting in mind with being a public company, how well the financial service companies operate and, frankly, I will tell you that our employees all over the Company have welcomed the opportunity to be equity owners and it's been good for morale and (MULTIPLE SPEAKERS).

And the second relates to competition for new business industrywide. You are not the only one who wants to expand into Europe or into Asia. What is your marketing pitch that says we can do it better than Ben Franklin or Franklin Mutual or whatever?

That's a good question. There's a number of -- I wouldn't call them marketing pitches, I would say there's a number of things that we bring to the table that really catapult us to the head of the class. Obviously we start with the North American franchise that I think virtually no one can touch, whether it is the size of our investment staff or the commitment that we made here or our record of performance.

Secondly we catapulted ourselves to the head of the class in Europe through the acquisition of 50% of Houlihan Rovers, where Joe and Gary are widely recognized as having been like ourselves the pioneers of investing in real estate stocks in Europe. Joe Houlihan has been investing there as long as we've been investing here. They've built a nice organization and we together have been substantially expanding on that organization, building on their strength -- one of which is their exceptional track record, as well.

I hate to divulge a secret but Marty goes back a long way in real estate stock.

About 100 years. Lastly in Hong Kong we in very short order pulled together what we think is the world's leading team there to cover on a research investing and [short league] trading bases. The Asia-Pacific marketplace. But I would say perhaps most importantly, our edge is how we pulled it all together because as you rightly point out there are many institutions that are scrambling just to bolt together various capabilities and in various regions. But the key is knowing how to pull it together in a seamless investment process and that is what we've been able to do.

We hope to demonstrate this year maybe sooner than later that the marketplace has, in fact, identified us as the leading factor and time will tell but that's our goal and that is our expectation.

And that's where you think the growth opportunity is and probably attached to that you can do it better alone than being part of some -- I don't know -- alliance capital where you'd be buried as another division.

Specialty managers generally speaking, I think rule versus broad-based financial conglomerates. If we can't do it better, then we don't deserve to be in the business.

I'm not showing any further questions from the phone lines at this time so I'll turn the call back to management.

Thank you all very much for dialing in today and we will speak to you next quarter.

Thank you. This concludes today's Cohen & Steers conference call.