AFFILIATED MANAGERS GROUP, INC. (AMG) stock intrinsic value fair value estimate & owner earnings analysis

Affiliated Managers Group (AMG) is a holding company that owns equity stakes -- usually a majority interest, with day-to-day investment decisions left to the founders -- in a roster of independent investment managers ("Affiliates") spanning private markets, liquid alternatives, and traditional long-only equity and fixed income strategies. AMG collects its share of each Affiliate's profits and periodically recycles capital by buying stakes in new Affiliates, selling down older ones, and repurchasing its own stock. We build our estimate of owner earnings from AMG's actual operating cash flow, after removing the effect of working-capital swings and stock/equity-based compensation, and after deducting maintenance capital spending (AMG is asset-light; capital spending is under 1% of revenue in every year we reviewed). Owner earnings per share has been surprisingly stable over the last decade -- roughly $16 to $25 per share every year -- even though the total dollars of owner earnings the business generates has not grown much (it was actually lower in 2025 than in 2016); per-share value has grown mainly because AMG has shrunk its share count by more than 40% since 2017 through buybacks. We used the median of the last ten fiscal years (2016-2025), about $20.51 per share, as the normalized starting point for our valuation, rather than the most recent year, because the business is cyclical with the AUM and fee base and 2025's actual owner earnings were pulled down by a one-time compensation item (see below) and a favorable working-capital swing the year before it that will not repeat. One accounting judgment worth flagging: 2025's reported owner earnings fell about 9% per share from 2024, even though revenue, aggregate fees, and net income all grew that year. The main culprit was a jump in Affiliate equity-based compensation, about a third of which the company disclosed was a one-time reclassification of certain awards following a mid-2025 contract change at one Affiliate, not a permanent increase in the underlying cost of running the business. We treated the full increase as a real, deducted cost (we do not pick and choose which non-cash charges to add back), but we accounted for its partly one-time nature in how fast we expect earnings to recover in the near term. Our three cases: Bear case: the ongoing shift away from actively managed equity strategies (AMG's Affiliates saw roughly $88 billion of gross redemptions from equity strategies in 2025 alone) accelerates and is not fully offset by continued growth in private markets and liquid alternatives; the 2025 rise in compensation costs proves durable rather than one-time; and AMG's roughly $2.7 billion of long-term debt limits the pace of new Affiliate investments and buybacks if profitability softens. Owner earnings per share steps down over the next several years and does not recover. Base case: the business continues on its recent trajectory -- moderate growth from new Affiliate partnerships in private markets and liquid alternatives (AMG completed six new minority investments across 2025 and early 2026) roughly offsetting continued equity-strategy outflows, with modest further per-share growth from continued buybacks, decelerating over time as the business matures. Bull case: the new private-markets and liquid-alternatives partnerships scale faster than expected, equity outflows moderate, the 2025 compensation increase mostly reverses, and AMG's private-markets book (about 18% of assets under management) begins meaningfully contributing performance-based ("carried interest") income as those funds mature. On these assumptions, discounting at a standard 6% rate over a 10-year explicit period plus a reasoned view of value beyond that, we estimate AMG's per-share value at roughly $255 in the bear case, $457 in the base case, and $640 in the bull case. In each case, the value attributable to years beyond the 10-year forecast is a majority of the total (55-66%), reflecting that AMG's Affiliate ownership stakes are open-ended economic interests rather than assets with a fixed expiration -- but this also means the valuation leans heavily on AMG continuing to be able to redeploy capital into good new partnerships over the long run, which is a real, if historically well-demonstrated, capability rather than a certainty. Given the width of the range between our bear and base cases, the margin-of-safety price sits at a meaningful discount to our base-case estimate, at approximately $323 per share. That price also assumes a subsequent quarterly filing confirms that the 2025 rise in Affiliate compensation expense is not becoming permanent and that redemptions from equity strategies are not accelerating beyond their 2025 pace. We found nothing in AMG's filings suggesting China exposure, cannabis or cryptocurrency operations, shell-company status, delisting risk, or a going-concern qualification.