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Update: Waddell & Reed Q4 Earnings

Waddell & Reed (WDR) reported Q4 earnings and revenue ahead of expectations. Q4 revenue increased 5.9% Y/Y to $397.2 million, which was almost $8 million ahead of analyst estimates. Diluted EPS increased 5.4% to $0.97, beating estimates by $0.08. The operating margin was down 60 basis points sequentially, and down 20 basis points over Q4 2013, as assets under management declined 4% from Q3 to $123.7 billion and 2% from the same quarter last year. WDR's CEO Hank Herrmann said that the second half of 2014 was "unusually challenging," as "sales momentum meaningfully decelerated while redemptions rose." He also said that the loss of AUM can be attributed to weakness in one of the key funds and to "the loss of investors' appetite for high-yield products."

The poor performance is probably the main reason for asset outflows. The company's funds and assets were mostly absent from the top quartile of… Read More …