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T. Rowe grows assets under management, profit in Q3

Bill Stromberg, president and CEO of T. Rowe Price. (File)

Bill Stromberg, president and CEO of T. Rowe Price. (File)

A choppy market can create opportunities for long-term investors like T. Rowe Price Group Inc., and that is what happened in the third quarter, said William J. Stromberg, the firm’s president and CEO.

Despite that continued market volatility, the Baltimore-based money manager grew its assets under management and increased net operating income during the third quarter, results Stromberg said were solid.

“I think this was a very solid quarter for T. Rowe Price at a time when there’s a lot of change and disruption in our industry,” he said.

The market has gone through daily ups and downs this year as it has responded to trade news, changes in monetary policy, presidential tweets and an impeachment inquiry. But the trend line has shown slow, incremental growth over this year.

T. Rowe has sought to take advantage of the daily churn.

“We tend to be long-term investors and not be swayed by short-term movements,” Stromberg said. “When something is at the bottom of a range, we can pick off and buy stocks and not have to be in a hurry.”

As a long-term and active investor, T. Rowe has consistently claimed that while passive funds indexed to the market tend to do well when the market is strong, the firm’s ability to find value during times of volatility is a difference maker.

“We’re not always on the right side of a trade. No firm is,” Stromberg said. “But for longer term  investors like us it is more of an opportunity than a challenge.”

Overall, the money manager’s assets under management grew to $1.126 trillion in the third quarter, up 3.9% compared to the same quarter last year.

 The firm’s net operating income grew 2.9% to $659 million from the same three-month quarter last year. 

Earnings per share fell 3% during the third quarter to $2.23 per share. But the firm realized a number of one-time savings during last year’s third quarter. Once adjusted for those one-time changes, earnings per share were up 7%, the firm said. 

The third quarter also saw increased volatility in the initial public offering market, where private companies offer some shares to the public for the first time.

This year was supposed to be a banner year for IPOs with unicorns, startups valued at $1 billion or more, like Lyft, Peloton, and Uber. Those firms have all seen their share prices fall significantly since their stock market debuts as investors have expressed concerns about these companies’ failure to turn a profit.

Other unicorns like WeWork have delayed their IPOs, with WeWork accepting a bailout from SoftBank this week.

These developments in the IPO market have been attributed in part to investors decisions not to put money into companies that have yet to prove they can turn a profit.

“By and large the discipline that’s being brought to the IPO market is a healthy thing,” Stromberg said. “It’s taken some of the expectations out of the late-stage private market, and we think that’s a healthy thing.”

T. Rowe has been a player on both sides of that market, with private investments in some of these firms before they went public.


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