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Analyst Blog

On April 2, 2014, we issued an updated research report on SEI Investments Co. (SEIC - Analyst Report). The company’s efficient capital deployment activities and robust asset inflows remain its key strengths. Moreover, SEI Investments reported better-than-expected fourth-quarter 2013 results.

Amid the sluggish economic scenario, SEI Investments has recorded a consistent rise in revenues over the last few years on the back of improvement in assets under management (AUM). With further improvement in the equity market, we believe that asset inflows will continue to support the company’s top-line growth in the coming quarters.

Further, since 2011, SEI Investments has been regularly raising its semi-annual payouts twice a year. We believe the company is an attractive pick for yield-seeking investors, given the continuous dividend hikes and steady share repurchase activities.

Over the last 30 days, the Zacks Consensus Estimate for 2014 and 2015 remained unchanged at $1.68 per share and $1.92 per share respectively. SEI Investments now has a Zacks Rank #3 (Hold).

Nevertheless, we remain skeptical about SEI Investments’ increased dependence on fee based revenues. Also, the company is highly exposed to regulatory changes, market fluctuations and volatility in foreign exchange rates, which tend to weigh on AUM growth.

Moreover, SEI Investment is faced with the challenge of rising expenses. Going forward, we believe that the expenses will remain at an elevated level as the company continues to build its operational infrastructure.

Stocks That Warrant a Look

Other investment managers worth considering include AllianceBernstein Holding L.P. (AB - Snapshot Report), Lazard Ltd. (LAZ - Analyst Report) and Fortress Investment Group LLC (FIG - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

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