Why Virtus Investment Partners Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Virtus Investment Partners have gained 11% today following the company's positive earnings release after yesterday's closing bell.

So what: Virtus came through with third-quarter revenue of $100.4 million, which nudged ahead of the $98.7 million consensus of three Wall Street analysts. The company's earnings of $2.56 per share were much better than expected, as analysts had been looking for $2.27 EPS. Large year-over-year gains were seen across Virtus' report -- quarterly revenue increased by 40%, assets under management rose by 32% to $55 billion, and, thanks to a 25% improvement in operating margins (or a 40% improvement on an adjusted basis), Virtus' bottom line was 83% higher this quarter than it was for the same period in 2012.

Now what: Virtus has now regained the 12-month double it lost to declines over the summer, but at a P/E of 31 with no dividend, it's a bit more dearly priced than most of its peers. It's also worth considering that asset management, so dependent on a rising market, may be in for difficult times now that the popular consensus has tilted so overwhelmingly toward bullishness. The old Buffett saw "be fearful when others are greedy" certainly applies to this industry.

Want more news and updates? Add Virtus to your Watchlist now.

How to build a Buffett-sized portfolio
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

The article Why Virtus Investment Partners Shares Soared originally appeared on Fool.com.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story