August 4, 2010 / 1:07 PM / 7 years ago

UPDATE 2-DundeeWealth profit tops estimates, firm eyes deals

* Q2 EPS C$0.18 vs C$0.29 year earlier

* Revenue up at C$231.1 mln from C$187.6 mln

* Assets under management at C$38 bln

* Shares up 4.3 percent on the TSX (Adds details, comments from conference call, share price)

By John McCrank

TORONTO, Aug 4 (Reuters) - Canadian wealth management company DundeeWealth Inc (DW.TO) said on Wednesday its profit fell in the latest quarter, hurt by market volatility, but higher management fee revenue helped it beat analysts’ expectations.

The company also said it is on the lookout for acquisitions that would boost its bottom line.

Net income for the second quarter was C$27.5 million ($27 million), or 18 cents a share. That was down from C$42.1 million, or 29 cents a share, a year earlier.

Revenue rose to C$231.1 million from C$187.6 million as an increase in assets under management (AUM) led to higher management fee revenue.

Analysts were expecting diluted earnings per share of 11 Canadian cents, on revenue of C$225 million, according to Thomson Reuters I/B/E/S.

Earnings before interest, taxes, depreciation and amortization rose to C$74.5 million from C$40.8 million in the 2009 period, when the company took a charge of C$45.6 million for adjustments to the fair value of investments.

LOOKING AT POTENTIAL OPPORTUNITIES

DundeeWealth finished the quarter with C$451 million in cash and cash equivalents, up from C$223.6 million a year earlier.

David Goodman, the company’s chief executive, said on a conference call with analysts that DundeeWealth will use some of its cash to buy back its own shares, which it sees as undervalued.

“We are the fastest growing, we’ve improved our margins, we’ve delivered on all our commitments, and yet we still trade at a discount to some of our key competitors ... and so we’ve taken advantage of that in the market place, buying back some of our shares,” he said.

He added that future share buy-backs would be limited though, as the company may use its strong cash position to make acquisitions and is looking to take advantage of opportunities as they present themselves.

“We would love to make an accretive acquisition and we have been quite focused on that in the last quarter, looking at potential opportunities, but we have every intention of acting prudently in that regard,” he said.

At the end of the quarter, AUM were C$38 billion. The company said that was roughly flat compared with the previous quarter, due to widespread stock market depreciation in May and June, but up from C$36.1 billion as of Jan 1.

It said its Dynamic Funds group led the industry in total net sales.

Management fee revenue at DundeeWealth Investment rose to C$134.8 million from C$96.9 million a year earlier as a result of higher AUM levels.

DundeeWealth, a subsidiary of Dundee Corp (DCa.TO), operates in three business segments: investment management, financial advisory and capital markets.

Shares of the Toronto-based company were up 4.3 percent at C$12.45 on Wednesday afternoon on the Toronto Stock Exchange.

1=$1.02 Canadian Reporting by John McCrank; editing by Peter Galloway

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