We manage investment assets and provide services for our clients through our
subsidiaries, Westwood Management Corp. and Westwood Advisors, LLC (together,
“Westwood Management”), Westwood International Advisors Inc. (“Westwood
International”) and Westwood Trust. Westwood Management, founded in 1983,
provides investment advisory services to institutional investors, a family of
mutual funds called the Westwood Funds®, other mutual funds, an Ireland-domiciled
fund organized pursuant to the European Union’s Undertakings for Collective
Investment in Transferable Securities (“UCITS”), individual investors
and clients of Westwood Trust. Westwood International was established in 2012
and provides investment advisory services to institutional clients, the Westwood
Funds®, other mutual funds, UCITS funds and clients of Westwood Trust. Westwood
Trust, founded as a state-chartered trust company in 1974, provides trust and
custodial services and participation in self-sponsored common trust funds to
institutions and high net worth individuals. Our revenues are generally derived
from fees based on a percentage of assets under management. We were incorporated
under the laws of the State of Delaware on December 12, 2001. Our common stock
is listed on the New York Stock Exchange under the ticker symbol “WHG.”
We are a holding company whose principal assets consist of the capital stock
of Westwood Management, Westwood Trust and Westwood International.
The success of our business is very dependent on client relationships. We believe
that, in addition to investment performance, client service is paramount in
the asset management business. Accordingly, a major business focus is to build
strong relationships with clients to enhance our ability to anticipate their
needs and satisfy their investment objectives. Our team approach is designed
to deliver efficient, responsive service to our clients.
We have focused on building our foundation in terms of personnel and infrastructure
to support a larger business. We have developed investment strategies that we
expect to be desirable within our target institutional, private wealth and mutual
fund markets. Developing new investment strategies and building the organization
can result in incurring expenses before significant offsetting revenues are
realized. We continue to evaluate new strategies and resources in terms of meeting
actual and potential investor needs.
We believe that we have established a strong platform to support future growth,
deriving our strength in large part from the experience and capabilities of
our management team and skilled investment professionals. We believe that this
focused, stable team has contributed significantly to our solid investment performance,
superior client service and a growing array of investment strategies. We believe
that opportunities for future growth may come from our ability to:
generate growth from new and existing clients and consultant relationships;
attract and retain key employees;
grow assets in our existing investment strategies;
foster continued growth of the Westwood Trust platform;
expand distribution via mutual funds;
seek strategic corporate development opportunities;
pursue opportunities internationally through targeted sales and relationships
with international distributors and institutional investors;
continue to strengthen our brand name; and
develop or acquire new investment strategies.
Generate growth from new and existing clients and consultant relationships.
As our primary business objective, we intend to maintain and enhance existing
relationships with clients and investment consultants by providing solid investment
performance and attentive client service. We also intend to pursue growth via
targeted sales and marketing efforts that emphasize our investment philosophy,
performance and superior client service. New institutional client accounts are
sourced from either investment consultants or from our direct sales efforts
with institutional investors. We believe that the in-depth knowledge of our
firm, our people and our processes embedded in our consultant relationships,
as well as in existing and prospective client relationships, is a key factor
when being considered for new client investment mandates.
Attract and retain key employees. To achieve our investment performance and
client relationship objectives, we must be able to attract and retain talented
professionals. We believe that we have created a workplace environment in which
motivated, performance-driven, and client-oriented individuals can thrive. As
a public company, we offer our employees a compensation program that includes
strong equity incentives to closely align their success with that of our clients
and stockholders. We believe that these factors are critical to maintaining
a stable, client-focused environment that can support significant future growth.
Grow assets in our existing investment strategies. We have significant capacity
for additional assets across our existing range of investment strategies, which
we have continued to expand. We have developed a range of approximately 20 institutional
investment strategies by building on the core competencies of our U.S. Value
team, which has now been in place for over 30 years, as well as via the addition
of new investment teams. In 2012, we initiated our Global and Emerging Markets
Equity Team, thereby adding five new equity strategies that focus on emerging
and global markets: Emerging Markets, Emerging Markets Plus, Emerging Markets
SMid, Global Equity and Global Dividend. Our emerging markets strategies have
experienced strong investor demand, and we believe they provide additional growth
opportunities. In 2014, we established the Westwood Global Convertible Securities
Team, which manages two strategies - a long-only strategy, Global Convertibles
Securities, and a market neutral strategy, Market Neutral Income. Our U.S. Value
Team has launched four new strategies since 2014 - Concentrated LargeCap Value,
Concentrated AllCap Value, MLP Opportunities and MLP & Strategic Energy
- and in 2015 we launched our second Multi-Asset strategy, Worldwide Income
Opportunity, a global version of our very successful Income Opportunity strategy.
These recently launched offerings, in combination with our range of seasoned
investment strategies, provide significant capacity to grow assets under management.
We have the team in place to support these investment strategies and, with continuing
strong investment performance, we believe that demand for these strategies can
provide meaningful growth for our assets under management.
Foster continued growth of the Westwood Trust platform. Westwood Trust has experienced
solid growth in serving small to medium-sized institutions as well as high net
worth individuals and families. We anticipate continued interest from clients
and prospects in our diversified, highly attentive service model. A significant
percentage of new asset growth at Westwood Trust stems from referrals, as well
as gathering additional assets from existing clients. We believe that our Enhanced
Balanced® strategy, which offers diversified exposure to multiple asset
classes in a tax-efficient, comprehensive manner, along with our separately
managed portfolios, provide good opportunities for growth.
Foster expanded distribution via mutual funds. We have fifteen funds in the
Westwood Funds® family: Westwood SMidCap (WHGMX), Westwood Income Opportunity
(WHGIX), Westwood LargeCap Value (WHGLX), Westwood SmallCap Value (WHGSX), Westwood
Dividend Growth (WHGDX), Westwood SMidCap Plus+ (WHGPX),Westwood Strategic Global
Convertibles (WSGCX), Westwood Market Neutral Income (WMNIX), Westwood Worldwide
Income Opportunity (WWIOX), Westwood MLP & Strategic Energy (WMLPX), Westwood
Emerging Markets (WWEMX), Westwood Global Equity (WWGEX), Westwood Global Dividend
(WWGDX), Westwood Short Duration High Yield (WHGHX) and Westwood Opportunistic
High Yield (WWHYX). We believe that providing investors access to our mutual
funds is a key component to achieving asset growth in the defined contribution
and retirement marketplaces as well as with registered investment advisors.
With the exception of Westwood Short Duration High Yield and Westwood Opportunistic
High Yield, both of which are subadvised by SKY Harbor Capital Management, LLC,
the Westwood Funds® generally mirror our institutional strategies. All funds
offer capped expense ratios and are available in an institutional share class.
We also offer Class A shares for Westwood LargeCap Value (WWLAX), Westwood Income
Opportunity (WWIAX), Westwood Emerging Markets (WWEAX) and Westwood Short Duration
High Yield (WSDAX) in order to target No Transaction Fee (NTF) mutual fund supermarket
platforms and the broker/dealer marketplace. Westwood Market Neutral Income
(WMNUX) and Westwood Opportunistic High Yield (WHYUX) offer an Ultra share class
generally only available to institutional investors who purchase the fund directly
and for which no shareholder servicing fees are paid.
Pursue strategic corporate development opportunities. We evaluate strategic
corporate development opportunities to augment organic growth. We may pursue
various transactions, including acquisitions of asset management firms, mutual
funds or private wealth firms, as well as hiring investment professionals or
teams. We consider opportunities to enhance our existing operations, expand
our range of investment strategies and services or further develop our distribution
capabilities. By acquiring investment firms or by hiring investment professionals
or teams that successfully manage investment strategies beyond our current expertise,
we can both attract new clients and provide existing clients with an even more
diversified range of investment strategies. We may also consider forging alliances
with other financial services firms to leverage our core competency of developing
superior investment strategies with alliance partners that can provide enhanced
distribution capabilities or additional service offerings. In October 2014,
we hired our Global Convertible Securities Team to manage a new, convertible
securities strategy, and in April 2015, we acquired Woodway to grow our private-wealth
business.
The growth in our non-U.S. client base has primarily been a function of the
broadening of our range of investment strategies to include Emerging Markets
equity and Global Convertible Securities. In addition, we established a UCITS
platform in 2012 and now offer three sub-funds under the UCITS umbrella for
non-U.S. investors. We intend to continue our sales efforts outside of the U.S.
We may consider forging alliances with international financial services firms
or partners to obtain enhanced distribution capabilities and greater access
to global customers. We may also target institutional investors in specific
non-U.S. markets including Canada, the United Kingdom, Australia, Switzerland,
Scandinavia and the Netherlands.
Continue to strengthen our brand name. We believe that the strength of our brand
name has been a key component to our long-term success in the investment industry
and will be instrumental to our future success. We have developed our strong
brand name largely through excellent performance coupled with high profile coverage
in investment publications and electronic media. Several of our investment professionals
have been visible in print and electronic media, and we will continue to look
for creative ways to strengthen our brand name and reputation in our target
markets.
Develop or acquire new investment strategies. We continue to look for opportunities
to expand the range of investment strategies that we offer to existing and prospective
clients. We may consider internally-developed strategies that extend our existing
investment process to new markets and may also consider externally acquired
investment strategies. An expanded range of investment strategies offers additional
ways to serve our client base, generating more diversified revenue streams,
as well as asset and revenue growth opportunities.