Important disclosures please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and the use of recording devices is also not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. All right. Thanks, everyone, for joining us at the Morgan Stanley Financials Conference. I'm Michael Cyprys, Equity Analyst, Covering Brokers, Asset Managers, and Exchanges for Morgan Stanley Research. It's my pleasure to welcome George R. Aylward, CEO of Virtus Investment Partners. Virtus is a multi-boutique asset manager with $163 billion of assets under management across 11 affiliated managers and a number of sub-advisory relationships. George, welcome. Thanks for joining us.
Thank you for having me.
I guess the $163, it's probably a little higher today, and an update for the release this morning.
Yes, we did release this morning with an update for the month.
A little bit higher on the AUM side.
Yeah.
Well, let's start off with the market environment. continues to be weighed by the macro, some of the uncertainty, whether it's the banking turmoil in March, adding some of the volatility here. Just how are you managing the business today in the current environment? Maybe talk a little bit about some of the priorities that you have for the business today.
Well, the priorities I don't think fundamentally changed. It's just really where the focus is in a given point in time. On the retail side, you know, right now you're really sort of dealing with what does a retail investor do in this environment, right? They got spooked a little bit. They now have for the first time in many years, the ability to invest in cash or T-bills and generate good returns. A lot of the focus on the retail side is really just sort of reminding those investors that you're not gonna get to your long-term goals simply by being in cash. I actually think it creates a good opportunity, because whenever cash accumulates, eventually it has to be redeployed.
A lot of the conversations there are about how to redeploy once they're ready to redeploy into a risk asset. Institutional, again, because they take a much longer time frame, that's been a little more straightforward because there hasn't been as much of that fear and concern, but it has driven a little bit of reallocations. I think the good news is, for some of the categories that had great runs and then had a horrible fourth quarter, people are looking for entry points again, which is always nice to see.
Just given the backdrop, maybe you could update us on the overall growth strategy for Virtus, and what's likely be the biggest drivers for growth for Virtus, would you say, over the next five years? Are there products, channels, vehicles? What has the most room to run?
Yeah, and, you know, one thing we always try to say, our growth strategy, you know, we focus on having an organic growth strategy. I'm sure we'll talk about M&A separately, but for us, when we develop our long-term plans and our goals, it's all about how do we get there organically. The fundamental model really is to have the collection of differentiated managers, and then to try to bring them to as many markets and as many clients through vehicles. A lot of what we've been doing has been a combination of accumulating managers. We've had two or three acquisitions in the last few years. At the same time, we've really done a lot of work behind the scenes on two things: One, which is building out distribution, particularly on the institutional side. We have a long history of successful retail.
Institutional has been a big investment for us. Then also building out the vehicles. We've solely, you know, built out UCITS capabilities as well as ETFs. All those really kind of come together as we have additional managers and a different distribution, they have additional resources.
We are gonna dive into many of those pieces. You know, what would you say are some of the steps you guys are taking to unlock some of the growth there and the full potential?
I think the opportunities in institutional, particularly non-U.S., because of the lack of historical penetration there, is a high opportunity for us, and I think it's through additional vehicles. You know, retail separate accounts has been a business we've been in since the nineties. We have a long legacy of that. There's a lot more strategies, I think, that are becoming more and more attractive in the retail separate as opposed to the open-end fund. We have almost 100 mutual funds. We cover every space, so a lot of our efforts are really in, you know, incubating or launching strategies in the SMA side or in the ETF side, or increasingly on the UCITS side.
ETFs, mutual funds, or ETFs, SMAs.
UCITS.
UCITS, which gets to the international-
Right
-from a vehicle standpoint. Okay. Big picture on organic growth, you guys have had quite some strong years back in 2020 and 2021, clocking in around 3%-5% organic growth, but the flows have been a bit more challenging over the past six quarters or so. How much of the strength that you had back then and now the softness that we're seeing is more environmental versus more firm specific? As you look out over the medium term, what sort of pace of growth do you think is ultimately achievable for Virtus? Is that 3%-5% that you did in 2021, is that still achievable, do you think, over the medium to long term?
I think it is, and going back towards that history. I think most of that experience was environmental as opposed to firm specific, right? For those periods where you saw the 3%-5% organic growth, that was a good alignment of, you know, strong performing managers, particularly on growth equity, quality growth, maybe more aggressive growth, during an environment when that was in demand, and the open-end mutual fund retail investor was buying funds. If you take sort of the numbers since then, actually, institutional and retail separate accounts, I think other than one quarter, retail separate accounts have maintained being positive or flat, and institutional has generally been positive over the last few years.
You just had this oversized growth in the open-end funds, and then the reverse of that in the fourth quarter in particular, which then improved significantly, in the first quarter. Again, we're feeling a lot better about the environment post first quarter than we were, as we indicated on our call.
On the last earnings call, you mentioned very strong institutional pipeline. Maybe you could just help quantify the magnitude of, and the mix of the pipeline, how that's trending, and what sort of timing do you usually anticipate for these mandates to fund? I would also add to that, the strong flows that look like were implied in your AUM this morning. Any sense of how much maybe of that was due to some of the pipeline coming through?
Well, everything you see in the institutional, you know, the timing is never quite certain, and it's always a longer tail than on the retail side. As we're giving any kind of update on the pipeline, we're really looking out, like, three months. Anything you're seeing now is from what we would have been referring to as previously in the pipeline. 'Cause, you know, in most searches between the initial search, the due diligence, the operational research, that's all gonna take two or three quarters before you're actually gonna have. Some institutional clients take a year. I think we've had some that have taken over a year because their process is so rigorous. Increasingly on the international side as well. Yeah, we put out numbers this morning.
I think in your write-up, you indicated you saw those were positive, so that is really the result of the growth on the institutional side.
When you look at what's remaining in the pipeline, just has that come down meaningfully? What's sort of the mix of what's in there when you look at it by strategy, what's resonating?
Yeah, the reason that we commented specifically about it, because, you know, when we look at the pipeline, it's not just what are the total dollars in the pipeline and the probability of them funding, but it's really the composition. What was really worthy of being called out last quarter was the diversity by asset class, by manager, by vehicle, because we do sub-advisory as well as direct accounts, and then by geographic area. It was, it was a nice dispersion across equity, fixed income, U.S. clients, non-U.S. clients, which has increasingly It's gone from 5% of our business to 10%- 16% or 17% of our business as we sit here today. That was what was so attractive about it.
It wasn't just one super well-performing strategy, you know, attractive to one type of institutional investor.
While we're on the topic of institutional, maybe we could peel the onion back just a little bit on your process and sales approach on the institutional side. As a multi-boutique, you have a number of franchises with institutional distribution, I believe, run at each affiliate level that has distribution on the institutional side. Maybe just talk about the approach there and how you compete in the marketplace with firms that run more integrated multi-asset sales teams?
Our approach has evolved actually quite a bit over the years. It's always been very affiliate-centric in that we think it's very important that institutional clients, particularly in the U.S., really are facing off with the affiliate. They have had their capabilities and their relationships in that space. Starting about five years ago, we started investing in building out consultant relations and support efforts to support the individual affiliate. At the same time, we also had the beginnings of our, what's now our non-U.S. institutional. Through the transaction with RidgeWorth, we had the beginnings of non-U.S. institutional distribution resources. More recently, with Stone Harbor, we had an incredible additive resource that was able to sell multiple managers. We have sort of been building out all sorts of support for them.
Outside the U.S., in particular, you know, we're representing multiple managers. Where the managers already have the relationships, and we're just there to support them, and they can do their stuff.
With the international, is that residing with Stone Harbor, or is that at the center?
No, those resources, just like RidgeWorth, so we've taken those resources, they're now part of Virtus' shared institutional distribution services.
For international as well?
Exactly. They're representing every affiliate, and they've been quite eager to learn more about our new affiliates, and some of the fundings that you've even seen have actually been generated by that team, even though it's only been a year and a half since we did that transaction.
How are they working, collaborating with the Stone Harbor team, which is overseas? That was, I think, your first overseas acquisition affiliate, or in terms of large overseas customer set coming through?
They probably had the largest. No, for them, I think it was seamless because they were there really representing the emerging market debt and the MAC capabilities of Stone Harbor. When Stone Harbor became part of Virtus, they really just had another array of additional affiliates.
Did those people come over to the center, or are they still at Stone Harbor on the international?
No, all of the international distribution people are part of Virtus.
Compensation practices. Maybe talk a little bit about how you incentivize your sales teams, both on the institutional and the retail side, and how that has been evolving over the past couple of years.
Yeah, I, you know, compensation, particularly in retail, you know, evolves a lot. I've been involved in one way, shape, or form with wholesaler compensation since 1997, so it evolves. Generally, they always want to be paid more, and generally, we want to align interests. I think the changes that you've kind of seen over time is retail has generally been a very, primarily sales-based kind of compensation model, but I think firms like ours and our peers have all determined there's other attributes that we want in terms of longevity. I think there's been an evolution, and it ebbs and flows on how much of it is really kind of sales-based versus how much is really activity or behavioral-based.
I think you're seeing some of the same things on the institutional side, where generally, I think because of some of the long, sales cycles, you know, in order to incent people, it can't be only, you know, a percentage of the revenue of the mandates that they fund, that there really is more of a structured approach in terms of activity, relationship building, and then pipeline success.
Where are we, you think, as an industry on sort of migrating comp to be paying on net versus gross sales?
Well, you know, because paying on retail, paying on net is the big bugaboo, right? Because if everyone's in net outflows, how do you pay on net? I think the way that people have sort of evolved in looking at that is including, like we do, components based on AUM, right? There's the alignment as assets go up and down, market or outflows. You get to also the behavior, right? You know, the worst thing to do is to pay nothing on gross sales, is to pay only on gross sales because you could be hemorrhaging, your assets could be going down, and your comp is high. I think most firms have now adopted a model where there's a combination.
There is a sales incentive because you want to align them to raise money. You have something that's either retentive-based, could be pure AUM, or a lot of times it'll be behavioral in terms of supporting whatever efforts the company has.
Maybe, shifting a little bit more over to the retail intermediary side, which is the key distribution channel for you. Can you talk about how you're servicing and interacting with that, distribution, channel, with the retail wealth intermediaries, and how your sort of approach has been evolving to that, intermediary channel?
I mean, our approach has always been, you know, we want to be as valuable as a partner as we possibly can be, because we compete against a lot of larger firms with a lot more resources. We've always said, you know, we have to compete with the quality of our managers and with the type of support that we provide. You know, our goal is to go the extra mile and to really be a better partner with them. The other thing is we also don't push product. You know, we pride ourselves because we have such an array of managers and capabilities, is, you know, we're in this for the long term, right? We generally don't push something just because it has four or five stars, even though we have a lot of funds with four and five stars.
It really is about having a consultative approach. I think the thing that's evolved over the last few years is it's become so competitive, right? None of the intermediaries are expanding shelf space. They're shrinking shelf space, is that you really need to bring more to the table than just really good products and really good wholesalers. They're looking for advice, they're looking for ideas, you know, they're looking for value adds. We continue to look for ways where, you know, we can be a good partner to those firms.
Retail SMAs, it's been a strong area for you guys over the past couple of years. Maybe you could talk a little bit about how you see this as a growth driver for Virtus as you look out over the next couple of years. Maybe give us a flavor of, you know, how many strategies or what portion are in SMA today, and the steps you're taking to expand the strategies that you offer within retail SMAs.
Yeah, we've been successful, and a lot of that success has been on the equity side, and particularly in the, in the small, mid, and mid area. We've been very successful with that. I think the way we want to sort of expand that even further is increasingly adding more strategies to the SMA portfolio. We have a couple of fixed income SMAs. There are a few more that we currently have in development. Our goal. They're harder to do, right? The fixed incomes are much harder to do that way.
We've been spending a lot of our time trying to, again, going back to our primary strategy, which is we have a good manager, let's find an investment capability of theirs and find a way to get it into a vehicle, increasingly being, how can we offer it in an SMA that's competitive, and that makes sense, and it's cost efficient or UCITS , et cetera.
The opportunity may be more for fixed income in an SMA?
Other flavors of, you know, even in non-correlated strategies like AlphaSimplex, right? Again, you know, the reason the our last few acquisitions have been focused in on the less correlated capabilities is. Our view is you shouldn't have a portfolio that's entirely equity and fixed income, because then you're going to live and die by those two indices, so that there does need to be other non-correlated strategies. I think there are other ways that we might be able to introduce that and models, in the SMA wrapper.
How do you think about, like, the fee differential? Like, for example, the non-correlated strategies today come in at, like, around 100 basis points or so, I believe. Whereas if you're driving growth in SMA, I think that's a bit lower for you.
Yep.
From a fee rate standpoint, but is it a little bit higher, somewhere in between?
You'd have to design a different product, because there's other reasons why there's certain things that you can do in a commingled, which would be hard to do in a tailored SMA. There's other approaches that you can do that would have a different fee structure, but also a different return profile.
Okay. Maybe shifting to private wealth. This is one of your businesses that doesn't get much attention.
Mm-hmm.
It's about $7 billion of AUM, growing pretty consistently, I think about 4% organic growth over the past four years. Maybe talk about how this fits into the overall franchise, what's unique about your private wealth business, and how you think about accelerating the growth from here and scaling it.
Yeah, very, very few people even bring up or ask questions about that part of the business. That's really a Kayne Anderson Rudnick. You know, they have a, which is our L.A.-based affiliate. They've had historically, since the beginning of our relationship, a very strong private client business. That has continued to grow, and for them, it is a great way to combine not only their skill in managing assets, you know, primarily on the equity side, but other things that they do that people aren't aware of in terms of municipals, as well as providing financial planning, et cetera. That has actually been an area of consistent positive flows, generally for multiple years, and that's been an area where we have built out additional wealth advisors to take advantage of that opportunity. It's also very sticky.
You know, the other thing that's good about that business, is generally the holding periods for those high net worth clients is significantly longer than the holding periods of the traditional retail investor.
How do you think about the opportunity to maybe further accelerate that growth, whether it's allocating capital for more aggressive recruiting or for M&A, as we've seen some others in the industry do?
All those things are on the table. Again, we're very supportive of continuing to grow that business, and to grow that business the right way, which is consistent with their brand and sort of how they're seen in the marketplace. Again, they've done very well. They generally show up in Barron's, you know, top list on an annual basis. They're very good at what they do, and I think there's continues to be great growth opportunity there.
Okay. Maybe turning to fixed income. You have a number of fixed income strategies.
Mm-hmm.
A number of your affiliates. Plus, have been a little bit choppy, at what point do you think this can turn? Maybe thinking about the current rate environment and potential for increased demand for the asset class.
Yeah. I mean, we're hopeful that there should be an increased demand for that asset class. Again, one of the challenges that you have when people go through some of the turmoil we had earlier in the year is, you know, they just feel a little bit better sitting in money markets or T-bills for a period of time. But I do think fundamentally that as people re-envision how they want to do their portfolio, you know, how they want to approach fixed income, I think is an opportunity for us 'cause we have managers that sort of focus on different subsets of the fixed income universe. We have Newfleet, which is really multi-sector.
We have Seix, which offers both a leveraged fund loan type of product as well as an investment-grade product, and then Stone Harbor, which is emerging market debt. You know, those are the areas where increasingly we wish people would look at it as a great entry point into that. Going back to the wrappers, the other thing I think is changing a little bit in fixed income is I think there's a little bit more of an acceptance and movement into the actively managed ETFs. You've seen a few firms. We have several actively managed fixed income ETFs and others that we'll be doing.
I think that's become something that people are more comfortable with, saying that might be the way that those strategies are accessed as opposed to maybe, you know, a traditional open-end mutual fund or a retail separate account.
You think fixed income ETFs could be a bigger part of the business as you look out five years from now?
I think there's a great opportunity for that. I think if you look at the filings, a lot of our peers have been launching those types of products. The last one we did was we actually did an EM debt high yield strategy. Before that, we did a loan one. You're seeing more opportunity there. I think we're hearing more and more interest in that. I think, you know, the ETF has really sort of evolved in some portfolios to not just be the tactical way to access, you know, a specific exposure. I think people are looking at them a little more fundamentally. I think fixed income is one of the opportunities.
Are there any challenges or hurdles that one needs to navigate as you think about that opportunity, whether it's around portfolio construction with the underlying ETF strategies or even more broadly from a distribution side?
You know, the thing is, I think from the distribution side, is really educational, right? There are structural differences, and people always intuitively think that there's more of a liquidity issue when you're doing activity within an ETF as opposed to an open-end fund. Some of that is just a misunderstanding of actually how it works. Some of it is realistic. I think the proper way to use the ETF in lieu of another vehicle is just one of the things we're obligated to teach financial advisors to inform their clients about.
Okay. AlphaSimplex, that was an acquisition you had closed in April of this year, which adds to your alternative strategies. Maybe you could talk a little bit about how AlphaSimplex, their strategies are performing in this backdrop, and what are some of the ways that you can accelerate growth at that franchise?
Their, you know, their strategies. You know, when the market was horrible last year, you know, they had significant outperformance. I think when we had originally announced the transaction, it was probably at the third quarter mark, and they had, you know, huge outperformance. You know, their strategies will sort of move in line with, you know, the indices, like the SG CTA Index and some others. They'll generally go along with their current trend following managed future strategy, which is in the fund. We'll sort of follow that index, so when there's some challenges in the markets, there were some in March, some last November, they're gonna track with that.
I think fundamentally, though, you know, while that has been their flagship strategy since from the day we first met them, our view wasn't that they were, you know, limited to the trend following, successful mutual fund and institutional strategies that they had, but just the intellectual capabilities of that team and the research that they do, we believe are very leverageable. Again, not necessarily doing the same strategies, the trend following managed futures fund, but taking some of the incredible research that they've done and looking for other ways to make them available. Again, that will also be something generally could be another wrapper. You know, they do have the intellectual property that might be leverageable in one way, shape, or form in an ETF or into, as I indicated before, into an SMA.
It would not be a clone of the trend following fund, but there's just a rich breadth of research and property there that, you know, we continue to have conversations about ways to help grow them.
Not exactly a clone, but some iteration of what they're doing and putting it in another wrapper or vehicle.
It may not even be trend following, right? You know, it doesn't have to be limited to that. It will be liquid, it'll be quantitative, you know, or systematic and non-correlated. But it could even be sector specific or it could be name specific. There's other ways to apply their abilities.
Well, speaking of alternatives, you acquired Westchester Capital back in late 2021, which brought event-driven.
Yeah
strategies to Virtus. How are those strategies holding up in the current backdrop, and how do you think about enhancing the growth profile of Westchester?
It, you know, it's similar to AlphaSimplex, except, you know, with the difference with AlphaSimplex is because they're research-driven and systematic, there's other ways that you can take pieces of their ability and make them available on other vehicles. What Westchester does is just very specific in terms of their merger arb and increasingly the other strategy which they're doing, which is, you know, the pure event-driven, and then on the credit side. I think there are ways. I think a lot of that for us is, you know, right now hasn't been the perfect market for some of those strategies. You know, having people understand, you know, you can't have a 60/40 portfolio, you really do need to be introducing things that are less correlated. Here's how a strategy like merger arb would fit into that.
I think that is something we'll be continuing to educate people on.
Well, I think one commonality is M&A, as we've seen.
Yep
both of those transactions. Why don't we shift and talk about that? It's been a key part of your growth lever driver over the past couple of years, in addition to the organic-
Mm-hmm
-as, as you mentioned before. Maybe talk a little bit about some of the lessons you've learned over the years from these deals that have gotten done. You've done quite a number over the past, like, five years. You've integrated them. What lessons have you learned from the deals you've done, but also the ones you've passed on, too?
Yeah, well, I mean, the best lessons, at least I learned, were lessons I learned earlier in my career. You know, the predecessor of my firm did a lot of acquisitions as well, and not all of them worked out well. I learned earlier in my career, you know, what are some of the essential building blocks, which really gets down to things like you know. Of course, you need to have a good strategy and good performance, but things like cultural alignment are absolutely critical and, you know, similar expectations of outcomes. You know, the only ones that would drive us maybe not to be interested in a manager with great strategy or great performance, if we didn't think that they wanted the same thing we wanted from the relationship.
You have to make sure you have common culture in that you each respect each other, make sure you have a similar goal and objective in terms of what you want to do going forward, and understanding of ways that you can help them be successful and know the way that they can be aligned to Virtus' shareholders. I always say one of the most important meetings is that face-to-face meeting, getting to know the people, because you could have the greatest performance, but if we don't think the same way, it's probably not going to work.
On the alignment, how do you sort of assess that? How do you measure? What do you look for?
Well, you have.
How do you drive that?
You have a dialogue. You know, we're very focused on being totally transparent of what we expect from a relationship, what our model is, because our model is not the same as several of our peers. We're very transparent about, "Hey, this is what we will do. This is the kinds of things that will be important to us. You know, we need to be comfortable that they understand what that model is, and it's something that they want." Then in terms of working together on other things, particularly like institutional retail, articulating what we believe, you know, will be how we want it to work, and making sure that they agree with the same thing. The relationships that generally wouldn't work for us is where someone just wants a check and be totally left alone.
Again, we think an important part of our business model is providing a value proposition in terms of either making things easier for them, from a day-to-day perspective, maybe helping them in areas of distribution, particularly on the retail distribution side. That's an important part for us.
When you think about your approach and your process today, how is that different from five or 10 years ago? You think about lessons learned along that time frame. I think things are a little bit differently maybe.
I think people, I mean, I think firms have changed. What was really interesting is years and years ago, you know, everyone wanted to just get a big check and then to just get access to your retail distribution, but manage it themselves. So that you had to sort of say, "Well, no, you know, in retail distribution, it really there's one point access, so we can do that, but here's what it's going to look like." People were much more reticent to touch anything else in their business.
I think as costs have gone up, it's really been hard to focus on, and compliance has become more and more burdensome, there's more and more interest in things like, "Hey, can you provide this service for us?" You know, "Can we access a certain system via you that's cheaper than we do it ourselves?" I see much more of a curiosity and an interest in those things that will just help them, you know, on the day-to-day side of their business, which years ago, you know, no one wanted anything other than retail distribution.
When we look at Virtus' platform today, what would you say are some of the products or distribution areas that could make sense to maybe build out, further accelerate, where M&A could be helpful?
Well, I institutional in general, non-U.S., obviously in particular, I think those are areas and, you know, that's a big bowl of different items. Some of that is pure individual mandate stuff, which is what the shared Virtus institutional resources are doing. Then there's also the opportunity within the offshore funds, so the UCITS, which right now, generally for us, are majority institutional clients. There's a retail opportunity there, which we do a little bit of work on the offshore markets here in the U.S. or in Latin America, but that's an area where we just don't have the distribution for more of a retail distribution of the offshore funds.
Just.
Outside the U.S., like a European, right? You're asking, like, what things would be interesting. The ability to retail wholesale some of all those products outside the U.S.
That's on the distribution side. Anything on the product side? I mean, you've done a number of alts related tuck-ins. Is there still more to do there or other asset classes, strategies?
I think we have very good coverage on the traditional, long-only asset classes. I think, you know, the last two were really for strategies that were less correlated. I think there's a great opportunity for retail investors to access even less correlated strategies and less liquid strategies. You go into some of the pure alts. That continues to be an area of interest for us.
less correlated and broadly in that way.
It may be less liquid, so it may not even be a daily liquid product.
Which you've not done to this day.
Which we have not.
How do you think about the complexity, the differences on those platforms versus what you have today? How would you think about overcoming any sort of challenges, hurdles associated with that?
Well, you need a different vehicle, right? Again, you would need sort of like a different approaches. As other firms have tried to successfully bring, you know, direct credit, PE, and real assets to the market, they have to use other structures, That's what it would be. It would be other vehicles.
How do you think about approaching that through sub-advisory versus an acquisition?
You know, things like that, again, we have some sub-advisory. We're very select. We only sub-advise with people where there is a business relationship, and we think they're the best provider. Our number of sub-advisors is actually smaller at this point, and it's really about a relationship. I think for alts, in particular, it will be critical that there be some kind of a relationship, and which could be a joint venture, could be all different types of structures. Again, it gets back to the alignment of interest, making sure that, you know, we're working with someone who has the same objective, right? Which, in that case, would be for us to be providing retail distribution.
Given the market backdrop and volatility, that we've seen over the past 12 months, what does the market look like for M&A today? How's that evolving? Maybe talk about some of the deals you see come across your desk.
Yeah. You know, it's. The market for M&A, there's always conversations, right? We don't talk about the kinds of conversations we have or how often we have them, but we're having as many conversations as we've ever had, right? I think what changes in any given year, depending on the market cycle, is the nature of the conversations. You know, are those conversations, you know, broad and theoretical, or conversations really more strategic and more relationship-oriented? I think in the last few years, I think the industry has seen more of the latter and less of the former, which kind of makes sense.
I think as the industry continues to go through consolidation, which it has been going through, I think it has really been moving towards a view of, you know, the transactions themselves should be strategic. Hopefully, for public companies, the shareholders will actually appreciate the strategic nature of those transactions.
Okay, last minute we have left, any questions in the room? Questions in the room? Maybe just last one from me. Just maybe how much time are you spending on M&A today, and would you be surprised if you don't announce something in the next 12 months?
I never predict. again, I'm spending as much time as I have spent in generally most of the last 7- 10 years of doing this. We don't feel the need to absolutely do a transaction unless it absolutely. We have enough other things to do with our capital, other things to do in terms of growth. We'll only do it if we think it makes a lot of sense.
All right. Well, why don't we leave it there, George? Great. Thank you very much.
Thank you.