Eaton Vance Corp. (EV) is one of the oldest investment management firms in existence today. The asset management giant was founded in 1924, and is based in Boston, Massachusetts. The company, along with its subsidiaries, engages in the management of investment funds and products and provides investment management and advisory services to institutions and high-net-worth individuals. The group’s principal business involves sustaining expertise across a range of different investment vehicles, and offering investment products and services through various distribution channels. Through its subsidiaries Eaton Vance Management and Atlanta Capital Management LLC, the company is able to maintain active strategies across a wide array of platforms that include income and alternative strategies, such as U.S equities and international equities, municipal bonds, and high yield and investment grade bonds. At June 30, 2014, Eaton had more than $293 billion in assets under management, making it one of the larger corporations in the world.
A Prosperous Start To The Year
Eaton Vance derives its revenue primarily from investment advisory, administrative, distribution and service fees. In 2013, the investment manager was aided by prevailing market conditions that sent the S&P 500 up 27% over the course of the year. However, because of Eaton’s well-managed operational abilities, the company was able to boost assets under management by 41%, with the average investment fund climbing more than 30%. Indeed, Eaton Vance also got off to a quick start in fiscal 2014, with earnings growing 31% over the first six months of the year. Further, we believe that the firm should continue to prosper even as the Federal Reserve ends its bond buying, most likely later this year. In addition, short-term interest rates are likely to remain near zero until sometime in 2015, which should augur well for the company’s principal business segment.
The company focuses on developing and sustaining its investment expertise, as well as expanding its products into new channels and geographic markets. In 2012, Eaton Vance acquired a 49% stake in Hexavest, a Montreal-based investment advisor with $11 billion in managed assets, expanding its emerging market capabilities. Later in the year, the company acquired Minneapolis-based Clifton, which specialized in the futures and options markets, as well as custom risk management solutions to institutional investors. Clifton’s assets under management have grown from $35 billion in December of 2012 to over $46 billion currently. Indeed, the investment manager has also introduced a dozen new funds over the past 18 months with an emphasis on broadening its institutional client base and sustaining future growth prospectus.
There are a number of institutions that have competed with Eaton Vance over the last several years. Some of these include T. Rowe Price (TROW), LeggMason (LM), and Franklin Resources (BEN). However, because of Eaton’s sustained distribution channels, tenured history, and long-running bout of success, the company isn’t likely to be disrupted anytime soon. In addition, we believe that current market conditions augur well for the company’s future, as investors start to ease back into a stock market that has reached a succession of new highs in 2014.
At this juncture, we believe Eaton Vance is well positioned to thrive, given its extensive array of products and services, as well as its coverage across the globe. Moreover, we think that within its peer group, Eaton seems to be trading at a reasonable valuation. The company is also growing at a healthy clip, and could be on the lookout for further acquisitions, all of which makes this equity an appealing choice for the long haul. For a more detailed report on Eaton Vance, including long-term analysis and forecasts, subscribers should examine our full page report in The Value Line Investment Survey.