Acadian Asset Management Inc. (AAMI) stock intrinsic value fair value estimate & owner earnings analysis

Acadian Asset Management runs systematic (quantitative) investment strategies for institutional clients and earns fees on the assets it manages. Client assets were $177.5 billion at the end of 2025, and about 75% of 2025 management fees ($389.3 million of $517.7 million) came from U.S. clients, the rest from clients outside the United States. Since selling its other asset-manager affiliates (proceeds received in 2021), Acadian is essentially this one firm, so we measure the business from 2022 onward. What the business earns. On our measure (cash from operations, minus the swings in receivables and accruals, minus the cost of stock and similar awards to employees, minus the capital spending needed just to keep the business running), earnings per share were about $2.12 in 2022, $1.46 in 2023, $2.02 in 2024 and $2.29 in 2025. The median of these four post-sale years is about $2.07 per share, which we use as the normal level. We left out cash flow tied to the consolidated investment funds, because it is not the company's own earnings. We did not credit 2022's negative stock-award expense (a $30.3 million reversal from revalued legacy awards) as income. Employee stock and incentive awards are treated as a real cost: they rose from $7.4 million in 2023 to $53.8 million in 2025. Growth check. Per-share earnings grew about 13% in 2025 ($2.02 to $2.29). The base case assumes no further growth from the 2025 level, so it starts below the trailing rate. Fee revenue depends on market levels and on clients staying, so we do not project either higher. Base case: about $29 per share. Earnings hold at about $2.28 per share, roughly 2025's level, for 25 years, then stop. Why this is reasonable: management fees rose 20% in 2025 on the assets already in the firm, and the year-end asset base of $177.5 billion follows net client inflows of $29.4 billion in 2025 (a company record, against $1.8 billion in 2024 and net outflows of $2.3 billion in 2023). Performance fees, which are earned only when strategies beat benchmarks, are valued at their 2025 low of about $31 million rather than the $71.4 million earned in 2024. We give no credit for additional inflows, since only one year of strong inflows is on record, and no credit for market gains. Bear case: about $14 per share. Earnings fall back to the 2023 level of about $1.46 per share and last only 15 years. This reflects a business whose fees depend on beating benchmarks and holding clients (2023 saw net outflows, and performance fees swung from $50.4 million in 2023 to $71.4 million in 2024 to about $31 million in 2025), plus rising employee award costs. Bull case: about $42 per share. Earnings reach about $3.10 per share, which is the 2025 level plus performance fees returning to the 2024 level of $71.4 million (roughly $40 million more before tax, or about $0.85 per share after tax), and last 30 years. This uses only a result the firm has already delivered, in 2024. Debt. The company repaid its $275 million 4.80% senior notes in December 2025, and it has been reducing its share count (diluted shares fell from about 43.2 million in 2022 to 36.2 million in 2025). Interest is already reflected in the cash flow used, so no separate debt deduction is made. First half of 2026. Reported revenue was $352.1 million against $247.3 million a year earlier, and net income $51.6 million against $30.2 million. This is consistent with our level but is not enough to raise it. We would want several more quarters before moving the normal level. What could make this wrong. Fees fall if clients redeem after weak relative performance or if market declines shrink the assets managed; the firm depends on a small group of key investment personnel; and the firm has only four years of results since the affiliate sales. The $29 estimate rests on 2025's fee level holding, and that level has not yet been tested through a market downturn.