SEI Investments Company (NASDAQ:SEIC) reported first-quarter earnings after the market closed on Wednesday, April 19th, and on the surface, the results were mixed with the company reporting earnings of $0.55 per share (beating estimates by $0.03) on revenue of $360M (missing estimates by $3.3M). The stock hardly moved immediately after it reported earnings, moving higher by 0.1%. Before I begin to parse through an income statement, balance sheet, or cash flow statement, I like to check out how the segment revenues did and see if there was anything glaring. Below is a table showing how the company did during the quarter compared to last year.

Segment Revenues (in thousands)

Mar-16

Mar-17

Y/Y

Asset management, administration and distribution fees

$251,437

$278,565

10.8%

Information processing and software servicing fees

$73,399

$74,763

1.9%

Transaction-based and trade execution fees

$9,427

$6,656

-29.4%

Total Revenues

$334,263

$359,984

7.7%

Overall revenues were higher from this time last year by 7.7% on the overall improvement of the asset management side of the house which constitutes roughly 77.4% of its revenue streams. As an investor, I would like to see a bit more diversification than having this product mix right now, but it is nice to see double-digit percentage gains in the category. The second biggest leg of the stool, Information Processing, accounts for 20.8% of the business revenues and that saw a paltry increase of 1.9% from the prior year. The company made some accounting changes during the quarter which helped reduce the tax rate from 35% to 31% but is going to create fluctuations in the guidance going forward according to CFO Dennis McGonigle. It may have been that bit of uncertainty that rocked the stock 2% the day after the earnings announcement.

I actually initiated my position in SEI in late February of 2017 and have been pretty unhappy about the purchase thus far. I will only purchase shares of SEI if they get below $47 because I believe that is where it offers additional value. I’ve selected $47 because it is the middle of the stock’s 52-week range.

I swapped out of Eaton Vance (NYSE:EV) in favor of SEI during the 2017 first-quarter portfolio change-out because I ended up turning a profit in the name (16.9%, or 88.1% annualized) and wanted to lock in those profits. So far, I have saved on some massive losses on the swap. For now, here is a chart to compare how SEI and Eaton Vance have fared against each other and the S&P 500 since I swapped the names.

Source: Google Finance

At the end of the day, it only matters what a stock has done for one’s portfolio. For me, SEI is one of my mid-sized positions and has done poorly, as I’m down 1.4% on the name, while it occupies roughly 7.2% of my portfolio. I continue to believe in the name as a dividend growth stock. I own the stock for the dividend growth portion of my portfolio, and I will continue to hold onto the stock for now.

I am up 17.2% since the inception of my portfolio, while the S&P 500 is up 12.9%. For 2017, my portfolio is up 6.7% while the market is up 4.9%. Below is a quick glance of my portfolio and how each position therein is performing. Thanks for reading, and I look forward to your comments.

Company

Ticker

% change incl. DIV

% of Portfolio

Facebook, Inc.

(NASDAQ: FB)

18.2%

10.0%

AbbVie Inc.

(NYSE:ABBV)

9.3%

4.0%

Wyndham Worldwide Corporation

(NYSE: WYN)

7.1%

3.9%

PulteGroup, Inc.

(NYSE: PHM)

6.0%

3.9%

3M Company

(NYSE: MMM)

2.3%

3.7%

O’Reilly Automotive, Inc.

(NASDAQ: ORLY)

-1.0%

5.2%

SEI Investments Company

-1.4%

7.2%

General Electric Company

(NYSE: GE)

-3.0%

8.7%

Silver Wheaton Corp.

(NYSE: SLW)

-3.2%

10.3%

Valero Energy Corporation

(NYSE: VLO)

-5.4%

3.5%

Gilead Sciences Inc.

(NASDAQ: GILD)

-17.9%

18.6%

VFC MAY 19 2017 52.50 PUT

(NYSE: VFC)

-61.7%

0.2%

Cash

$

20.65%

Disclaimer: This article is in no way a recommendation to buy or sell any stock mentioned. This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!

Disclosure: I am/we are long SEIC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.



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