Fiera Capital Springs back from a bad Winter

   Fiera Capital has been covered on my Workathon and Blogdaleupsome websites many times.These include blogs on Blogdaleupsome (02/01/2019) and (08/06/2018).But Fiera started out as a relatively small operation.It has grown in assets and revenues over the last 5 to 6 years.In fact, it has grown considerably since 2016 when it had $856 million in assets and $258 million in revenues;  in 2019 assets had grown to $1.5 billion and revenues more than doubled to $541 million.More importantly assets under management (AUM) had grown 40%- from $125 billion in 2016 to $169 billion in 2019.This was caused by FSZ in 2018 and 2019 making quite a few acquisitions. At the start of the year it was trading at $13 a share but the winter was hard on Fiera Capital (FSZ).In March it's shareholders found it trading at $4.75 a share for a 66% drop.But Fiera has bounced back lately and partly due to a good first quarter.
        Acquisitions
      In 2018 Fiera Capital made partial acquisitions of Natcan and CGOV Asset Management.It made further expenditures on these acquisitions in 2019 for both and had a full year of revenues from both.It also acquired two smaller British companies called Clearwater Capital and Charlemagne Capital.They are involved in real estate assets.In addition, in 2019 it made four new acquisitions including 80% of Palmer Capital Partners in the United Kingdom.The other 3 were Forester's Asset Management and Integrated Asset Management plus Natixis Canada.It is not clear what the  FSZ ownership interest  in  these 3 is.And the total  acquisition costs are not given but are likely paid for with equity arrangements.         

  

       Financial Indicators
       As was stated above part of the bounce back was due to the first quarter performance.Q1 performance indicators were all quite strong in comparison to Q3 2019 and Q4 2018.Fiera showed a 28% increase in revenues from Q3  2019 to $205 million and 30% increase from Q4 2018.Net earnings were $53 million compared to a $4.6 million loss in Q3 and $1.6 million loss in Q4 2018.More importantly e.p.s were $.03 compared to a loss of $.05 in Q3 2019 and $.02 in Q4 2018.Another important indicator was adjusted EBITDA which was $62 million compared to $47 million in Q3 and $39 million in Q4 of 2018.
      The dividend stayed at $.84 annually providing a yield of 11.6%.While their credit rating changed from BBB to A.And the payout ratio was 68% which is still fairly conservative.

                         Q2 to Q4
Fiera Capital made quite a few acquisitions in 2018 and again in 2019. At least 3 of them in the United Kingdom which makes the new company harder to manage.Also 3 or 4  of their  2019 acquisitions for which this blog feels they only have partial ownership.Also because of it's rapid growth and difficulty in managing diversified assets it sold the rights to manage all of the FSZ retail mutual funds to Canoe Financial.Canoe only has assets of $6 billion so it is likely that Fiera has substantial ownership here as well.The acquisition costs caused Fiera to show  small  losses in Q3 2019 and Q4 of 2018.It only showed positive earnings in Q4 of 2019 -a healthy gain of $53 million.                     

        Blogdaleupsome encourages investors to be cautious here.Fiera showed e.p.s. of $.03 in the first quarter but had losses in the two quarters preceding it.A repeat of this performance in Q2 and Q3  2020 likely means that it's acquisition problems are behind it.Then annual e.p.s. will be in the neighbourhood of $.12 to $.16 and the stock price will be heading back to the $9-$10 area.But investors need to see whether their spring performance can be repeated this winter.