UPDATE 4-AGF results top estimates as revenue, assets jump

* Q4 EPS ex-items C$0.40 vs C$0.20 yr ago

* Analysts forecast profit of C$0.29

* AGF Trust boosts profit as loan losses fall

* AUM up 25.5 pct in 2009 on institutional gains
(Adds details)

TORONTO, Jan 27 (BestGrowthStock) – AGF Management Ltd (AGFb.TO: )
posted a stronger than expected quarterly profit on Wednesday
as revenue and assets under management jumped, sending shares
of Canada’s third-largest publicly traded fund manager up 6
percent.

Plunging stock markets and asset values sideswiped fund
managers around the world early in 2009, but AGF, like its
rivals, started to rebound later in the year and picked up
momentum in its fourth quarter.

In a strong signal to investors, Toronto-based AGF also
said it was boosting its dividend, saying it was confident of
future growth after a difficult year.

The company showed a net profit for the three months ended
Nov. 30 after posting a net loss a year earlier. Stripping out
one-time items, profit nearly doubled, topping analysts
expectations on aggressive cost cutting.

“The primary source of the beat was lower than forecast
SG&A expense at the investment management division,” RBC
Dominion Securities analyst Geoffrey Kwan said in a research
note.

BMO Capital Markets analyst John Reucassel said selling,
general and administrative expenses came in about C$10 million
lower than expected, mainly due to lower severance costs and
lower incentive compensation.

After one-time items are excluded, AGF reported its profit
rose to C$35.7 million ($33.5 million), or 40 Canadian cents a
share, in the quarter ended Nov. 30, up from C$18.4 million, or
20 Canadian cents a share, a year earlier.

That surpassed average analyst expectations for a profit of
a 29 Canadian cents a share, according to Thomson Reuters
I/B/E/S.

Net income was C$45.5 million, or 50 Canadian cents a
share, in the fourth quarter compared with a year-earlier loss
of C$19.3 million, or 21 Canadian cents a share.

The results included a C$9.8 million reduction in income
taxes in the latest quarter and an impairment charge in the
year-earlier period.

AGF said revenues rose 3.6 percent in the fourth quarter
from a year earlier, while assets under management rose 25.5
percent in the year as a whole.

“I believe our strategy is right on track, but our stock is
undervalued,” Chief Executive Blake Goldring told analysts on a
conference call, pointing to the “extraordinary instability”
that rocked financial markets early in 2009.

AGF shares rose 95 Canadian cents, or 6.25 percent, to
C$16.15 on the Toronto Stock Exchange on Wednesday afternoon.
The stock hit a 52-week low of C$6.74 in February 2009, a small
fraction of its C$40 value in 2007, but steadily recovered to
hit a 52-week high of C$17.90 in December.

Reucassel said his target price is C$16.50.

Asked on a conference call how much of the cost cutting
could be maintained, Chief Financial Officer Greg Henderson
said much of the expenses were linked to asset levels, and
would fluctuate depending on AGF’s growth.

But he noted the cost savings achieved through job cuts had
been painful, so management would be reluctant to boost
staffing until they were certain of durable growth.

Last year, the fund manager opened a Boston office, and
said it was targeting institutional growth and the U.S. retail
market, broadening its appeal beyond Canadian retail clients,
advisers and wealthy individuals.

“AGF is well positioned in 2010 as we leverage our
world-class investment management expertise across target
markets in both the retail and institutional space,” Goldring
said in a statement.

Strong results at AGF Trust helped power the profit, AGF
said in a statement.

The fund manager said it intends to increase its quarterly
dividend on class A voting common and class B nonvoting shares
to 26 Canadian cents a share from 25 Canadian cents, effective
in March.

($1=$1.07 Canadian)

Stock Market

(Reporting by Andrea Hopkins; editing by Rob Wilson)

UPDATE 4-AGF results top estimates as revenue, assets jump