BAIYU Holdings, Inc.

GLG reported Q1 2010 revenue of $53.7 million, up 4% year over year from $51.7 million. Non-GAAP adjusted net loss was $3.1 million, or $0.01 per diluted share; GAAP net loss attributable to common stockholders was $60.8 million, or $0.27 per share. The quarter included $66.4 million of acquisition-related compensation expense. Total net AUM was $23.7 billion, up $1.5 billion sequentially and $9.6 billion year over year, driven by $954 million of net inflows, $1.3 billion of positive performance, and a $753 million currency translation headwind. Management said annualized management and administration fee yield was 87 basis points, and expects it to remain in the high 80 basis point range. Looking ahead, management said roughly $500 million of net inflows are expected from managed accounts in Q2, including about $280 million from one large U.S. consultant, and said full-year 2010 comp ratio should be lower than Q1's 65%; full-year tax rate excluding one-time items was guided to 20%-25%.

Noam Gottesman emphasized that investment performance across strategies remained strong and that net inflows were accelerating after a weak period in late 2008 and early 2009. He said the firm believes the inflow cycle has begun, with momentum from UCITS, alternatives, long-only, and managed accounts, and highlighted improving progress toward high-water marks as a key setup for future fee revenue. His tone was optimistic but measured, repeatedly noting that the firm would not forecast future performance fees before they crystallize.

Jeff Rojek focused on the bridge between improving assets and earnings. He quantified the quarter at $53.7 million of revenue, $3.1 million of non-GAAP adjusted net loss, and $60.8 million of GAAP net loss, explaining that the large GAAP loss reflected $66.4 million of acquisition-related compensation expense. He also pointed to $23.7 billion of net AUM, 87 basis points of management and administration fee yield, $2.7 million of performance fees, non-GAAP CBP of $34.9 million or 65% of net revenues, and said full-year comp ratio should be lower than Q1. He added that the full-year tax rate excluding one-time items should be 20%-25%, and noted modest contributions from the UK business plus ongoing progress on Lehman-related asset recovery.

Analysts focused on the durability of performance fees, the sources of the inflows, expense discipline, consultant approvals, and the 130/30 book. Management declined to quantify next-quarter performance fee expectations, saying it was too early because fees crystallize only at quarter-end, but said market volatility and strong year-to-date performance were creating good opportunities. On flows, management said UCITS and alternatives were leading, with demand from U.S. pensions, endowments, sovereign wealth funds, and private clients, and confirmed about $500 million of managed-account inflows expected in Q2. On expenses, management said G&A should remain broadly consistent with last year with perhaps a slight uptick, and on 130/30 it said the funds were outperforming benchmarks even though some assets remained near or below high-water marks.