Good day, ladies and gentlemen. And welcome to the Fourth Quarter 2018 Westwood Holdings Group Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to introduce your host for today Ms. Julie Gerron, General Counsel and Chief Compliance Officer. Ma’am you may begin.

Thank you. Good afternoon. And welcome to our fourth quarter 2018 earnings conference call. The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those contemplated by the forward-looking statements. Additional information concerning the factors that could cause such difference is included in our press release issued earlier today, as well as in our Form 10-K for the quarter ended December 31, 2018, that is filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on forward-looking statements. In addition, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today. On the call today we have Brian Casey; our President and Chief Executive Officer; and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey.

Good afternoon, and thanks for taking time to listen to our fourth quarter earnings call. I’ll start with some comments on the investment environment and then dive deeper into our investment performance and business. In the U.S., fears that had been present all year, including the risk of a fed policy mistake, an expectation for moderating economic data due to continued trade tensions with China, finally tipped the markets into a steep decline. Equities moved sharply lower as the S&P 500 posted one of the worst quarters in the last 50 years. Nearly every asset class posted a loss, and we saw the worst performance across asset classes in more than 100 years. Risk assets, like equities, remain susceptible to bouts of volatility as late-cycle fears linger, and upcoming events, such as a conclusion to the Mueller investigation, the March 01, trade deadline with China, Congress mulling ratifying the new USMCA report, Brexit and other events will inevitably be a distraction and potentially disruptive to the markets. Ultimately, we believe the net impact of these actions will continue to shift the investing landscape towards a more bifurcated market where losers are identified and punished and winners prevail. This landscape benefits active managers, as does higher volatility, which provides more mispriced securities and asymmetric reward/risk outcomes to invest in and lines up well with the way we’ve managed money for 35 years. Our U.S. Value products were not immune to the market pressures with our larger market cap strategies doing better than our smaller-cap strategies. Our LargeCap Value product outperformed against its primary benchmark, the Russell 1000 Value, for the eighth straight quarter. It finished the year 300 basis points ahead of the benchmark with strong top-quartile peer rankings for the year as well as over the last three year and…

Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $26.1 million for the fourth quarter of 2018 compared to $33.9 million in the prior year’s fourth quarter and $29.9 million in the third quarter of 2018. The decrease from the prior year was due to lower average assets under management, resulting from net outflows, market depreciation and the sale of the Omaha-based component of our Private Wealth business. The decrease from the prior quarter was due to lower average assets under management. Fourth quarter net income of $5.4 million or $0.64 per share compared to $2.9 million or $0.34 per share in the prior year’s fourth quarter. The increase primarily related to a $3.4 million incremental tax expense incurred as a result of tax reform recorded in the prior year fourth quarter, coupled with current-quarter foreign currency transaction gains, lower compensation costs and a decrease in the federal tax rate. Economic earnings, a non-GAAP metric, was $9.5 million for the current quarter or $1.12 per share compared to $7.6 million or $0.89 per share in the fourth quarter of 2017. Fourth quarter net income of $5.4 million was flat with the third quarter of 2018. The current quarter benefited from foreign currency transaction gains and lower employee compensation expense offset by lower total revenues. Economic earnings was also flat at $9.5 million or $1.12 per share in the current quarter versus $1.11 per share in the third quarter. For fiscal 2018, total revenues of $122.3 million compared to $133.8 million in 2017. The decrease was due to lower average assets under management during the current year, partially offset by a $1.6 million increase in performance-based advisory fees earned in 2018. Net income of $26.8 million or $3.13 per share compared to $20 million or $2.38 per share…

[Operator Instructions] Our first question comes from Mac Sykes with Gabelli. Your line is now open.

Good afternoon everyone. So I have two questions mainly around your Select product. Can you just talk about which channels you’re currently in with that product? And then as you expand distribution next year on the back of the performance, which channels do you hope to see the most traction?

Okay. Well, there’s – the name Select could be confusing because we actually have two products. So one of the products is our taxable Select product, and that is a product that’s managed out of our Houston office. And it is designed for individuals, and it is a high-quality, low-turnover, tax-efficient portfolio. The second version of Select is our formerly known as LargeCap Concentrated products. We have had that in the garage for the last five years, incubating alongside our traditional LargeCap product. The results have been spectacular there in the top percentile over that five-year period of time, and we’re excited to roll it out. So it is really not in any channels currently. Where we do intend to roll it out, first and foremost, is with what we will call sensible pricing, which will be a performance-based-fee type of structure that we will be able – that we’ll announce here shortly. We’re working on a white paper, and you’ll see more information on our website during the next few weeks. We also intend to introduce that into the managed accounts channel as Harvey and his group starts to get rolling and building our intermediary sales effort.

Okay. And then on that intermediary channel aspect, I mean, you certainly satisfy in terms of performance, but how should we think about other aspects that you may need to bring to the table in order to get further penetration in terms of maybe enhanced marketing, turn to scale, model delivery, technology, etcetera? So any color on that would be helpful.

Harvey has only been here a couple of months, but he has a really, I think, grand vision of using data and analytics to help us be more efficient with our prospecting effort. He intends to add up to four more wholesalers around the country to help build out the intermediary sales effort. And anytime you bring in somebody new, they tend to have connections at places that you have not been previously. So we’re excited to see what he is going to be able to build over the next year, and we should have a much broader effort in terms of marketing our products.

Okay. And then the last question just on capital allocation. I saw that you bought back some shares in the quarter. And it looks like the cash balance stayed consistent quarter-over-quarter. Should we think of that as being opportunistic? Or kind of to balance out some of the potential grants that may be coming to the new employees?

Yes. Well, two questions. I guess, I would view historically our cash, we’ve always been very conservative. We’ve never had a penny of debt, so it’s always been a conservative standpoint. And we’ve been criticized over the years when the market is roaring straight ahead. And I think at times like the fourth quarter, it’s nice to not have that debt clock ticking in the background. As far as comp, we’ve accrued comp throughout the year and will pay that out in February here in a couple of weeks. We did pull back our comp accrual in the fourth quarter by a meaningful amount, so that’s part of what’s in our – this quarter’s earnings.

Great. Thank you very much.

Thanks for question, Mac. Are there any other questions on line?

[Operator Instructions] And I am not showing any further questions at this time. I would now like to turn the call back over to Brian Casey for any further remarks.

Okay, great. Well, thank you for your – for listening to the call today. If you have any further questions, please feel free to follow up with me or Terry or visit our website at westwoodgroup.com. Thanks so much.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program, and you may all disconnect. Everyone, have a wonderful day.