APAM

Artisan is a high-quality, capital-light active equity manager being priced like a melting ice cube. FY2025 revenue of $1.20B grew 7.6% and net income of $290M grew 11.8%, with a 33.4% operating margin, 24.3% net margin, and an extraordinary 66.2% ROE — economics most companies can't touch. Yet the stock trades at just 8.6x diluted EPS of $4.05 and 2.4x sales. The five-year history shows why the multiple is depressed: revenue fell from $1.23B (2021) to a $975M trough (2023) before recovering to $1.20B, exposing how directly results track market-driven AUM. But the recovery is real and the price already discounts a permanently shrinking franchise, which the numbers do not support.

The income case is the core of the call. Artisan runs a variable-payout model — FY2025 dividends paid were $257M, up 15.8%, roughly $3.18/share against the $34.99 price, an ~9% trailing yield that is funded out of $290M of net income rather than borrowing. Capex is negligible ($371K), so nearly all earnings are distributable. Leverage is modest: $190M long-term debt (down 5.0%) against $256M cash and $439M equity (up 12.8%), with retained earnings up 19.6%. This is a business that converts profits to cash and hands them to shareholders.