AMG executives downplay impact of junk bond fund collapse

By Tim McLaughlin

BOSTON (Reuters) - Executives at U.S. asset manager Affiliated Managers Group Inc on Tuesday sought to downplay the impact of the recent collapse of one its junk bond funds, but jittery investors continued to unload the company's stock.

AMG shares fell 5.7 percent on Tuesday after the company reported $6.8 billion in client net withdrawals during the fourth quarter. AMG's market cap has dropped by about one-third over the past three months.

The withdrawals accelerated after the Third Avenue Focused Credit Fund collapsed in early December. The junk bond fund was run by New York-based Third Avenue Management, which is majority owned by AMG.

During a conference call with investors and analysts, AMG executives said Third Avenue's remaining funds only account for about 1 percent of company earnings.

"So really, no impact to AMG's financials from their results," AMG Chairman and Chief Executive Officer Sean Healey said.

AMG executives don't see any legal exposure from the collapse of the Focused Credit Fund.

"We don't think that Third Avenue (Management) has any legal exposure around the Focused Credit fund closure," Healey added.

The junk fund is currently being liquidated after Third Avenue abruptly blocked investor redemptions in early December. AMG said it recognized 100 percent of the junk fund's assets as outflows in the fourth quarter.

The junk fund's collapse sparked client withdrawals at other funds run by Third Avenue. Total outflows at Third Avenue were almost $2.2 billion in the fourth quarter, AMG said.

AMG also reported fourth-quarter results.

"They are extremely well reserved, and so I think it is probable that there is some further redemption and shrinkage through this period," Healey said. "... But of course they are going to have to generate excellence, as they have in the past, and as they do that, we see them bottoming, and then recovering."

AMG shares fell $7.53 to $124.67 on the New York Stock Exchange after dropping as low as $123.74. The stock is off 32 percent over the past three months.

AMG, which has stakes in boutique investment firms BlueMountain Capital Management, Tweedy, Browne Co LLC, Yacktman Asset Management, had about $628 billion in assets under management at the end of December.

(Reporting by Tim McLaughlin Editing by W Simon and JS Benkoe)

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