Westwood Holdings ((WHG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Westwood Holdings Group recently held its second quarter earnings call, revealing a generally positive sentiment despite facing some challenges. The company celebrated several achievements, including its addition to the Russell 2000 Index and notable growth in assets under management (AUM). However, these successes were somewhat overshadowed by market volatility and net outflows, reflecting a balanced but optimistic outlook for the future.
Addition to the Russell 2000 Index
Westwood Holdings Group’s inclusion in the Russell 2000 Index marks a significant milestone, enhancing the company’s institutional accessibility. This move is expected to increase the visibility and attractiveness of Westwood’s offerings to a broader range of institutional investors.
Significant AUM Growth
The company reported a substantial increase in assets under management, reaching $18.3 billion, up 9% from $16.8 billion in the same quarter last year. This growth underscores Westwood’s successful strategies in asset management and its ability to attract and retain investor interest.
ETF Strategy Success
Westwood’s ETF strategy has proven successful, with its MDST ETF surpassing the $100 million AUM milestone. This achievement validates the company’s strategic focus on ETFs, which offer an annualized distribution rate of 10.2%, appealing to investors seeking yield and diversification.
Strong Institutional Channel Performance
The institutional channel delivered impressive results with $251 million in gross sales, although it experienced net outflows of $60 million due to sub-advisory rebalancing. This performance highlights the channel’s strength and the ongoing adjustments in response to market conditions.
Improved Financial Performance
Westwood reported a second quarter income of $1 million or $0.12 per share, a notable improvement from the previous year’s second quarter loss of $2.2 million or $0.27 per share. This turnaround reflects the company’s effective cost management and revenue-generating strategies.
Market Volatility Impact
The earnings call acknowledged the significant market volatility experienced during the quarter, including a sharp decline in early April and the worst two-day market meltdown since March 2020. This volatility posed challenges but also underscored the resilience of Westwood’s investment strategies.
Net Outflows in Wealth Management
The wealth management segment faced net outflows of $0.2 billion in assets under management over the quarter. This trend highlights the competitive and dynamic nature of the wealth management industry.
Revenue Stagnation
Westwood’s total revenues for Q2 2025 were $23.1 million, remaining flat compared to $23.3 million in Q1 and $22.7 million in Q2 2024. This stagnation suggests a need for strategic initiatives to drive future revenue growth.
Forward-Looking Guidance
Looking ahead, Westwood Holdings Group is transitioning to a multifamily office model to better serve ultra-high net worth families, aligning with client demand and industry trends. The company maintains a solid cash position with $33.1 million in cash and liquid investments and announced a regular cash dividend of $0.15 per common share. These strategic moves are expected to enhance Westwood’s market position and drive future growth.
In conclusion, Westwood Holdings Group’s earnings call reflected a positive sentiment with notable achievements, such as its addition to the Russell 2000 Index and significant AUM growth. Despite challenges like market volatility and net outflows, the company is poised for future success with strategic initiatives and a strong financial foundation.