Virtus Investment Partners, Inc. (VRTS) Earnings Call Transcript & Summary

For 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 Mike Cyprys, equity analyst covering brokers, asset managers and exchanges from Morgan Stanley Research. And it's my pleasure to welcome George 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 billion is probably a little higher today 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?

Yes.

Yes. 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. So 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 change. It's just really where the focus is at a given point in time. So on the retail side, right now, you're really sort of dealing with what does the retail investor do in this environment, right? So 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. So a lot of the focus on the retail side is really just sort of reminding those investors that you're not going to get to your long-term goals simply by being in cash. So I actually think it creates a good opportunity because whenever cash accumulates, eventually it has to be redeployed. So a lot of the conversations there 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. But 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.

And just given the backdrop, maybe you could update us on the overall growth strategy for Virtus. And what's likely the biggest -- the biggest drivers for growth for Virtus, would you say, over the next 5 years? Are there products, channels, vehicles, what has the most room to run?

Yes. And one thing we always try to say, our growth strategy, 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. And 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. So a lot of what we've been doing has been a combination of accumulating managers. We've had 2 or 3 acquisitions in the last few years. But at the same time, we've really done a lot of work behind the scenes on 2 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 and then also building out the vehicles. So we've solely built out UCIT capabilities as well as ETFs. And all of those really some kind of come together as we have additional managers and additional distribution, they have additional resources.

And we are going to dive into many of those pieces. But 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. So retail separate accounts has been a business we've been in since the '90s. We have a long legacy of that, but 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 incubating or launching strategies in the SMA side or on the ETF side or in the increasingly on the UCIT side.

So ETFs, mutual funds -- or ETFs, SMAs, and UCITS, which gets to the international Virtus standpoint.

R Right.

Okay. Big picture on organic growth, you guys have had quite some strong years back in 2020 and '21, clocking in around 3% to 5% organic growth, but the flows have been a bit more challenging over the past 6 quarters or so. 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. And 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% to 5% that you did in 2021? Is that still achievable you think, over the medium to long term?

Well, I think it is, and going back towards that history. So I think most of that experience was environmental as opposed to firm specific, right? And so for those periods where you saw the 3% to 5% organic growth, that was the -- a good alignment of strong performing managers, particularly on growth equity, quality growth, more -- maybe more aggressive growth during an environment when that was in demand and the open-end mutual fund retail investor was buying funds. Because if you take the sort of the numbers since then, actually institutional and retail separate accounts I think other than 1 quarter, retail separate accounts have maintained being positive or flat and institutional has generally been positive over the last few years. So you just had this oversized growth in the open-end funds. And then the reverse of that in the fourth quarter, in particular, was then improved significantly in the first quarter. And again, we're feeling a lot better about the environment post first quarter than we were as we indicated on our call.

And then on the last earnings call, you mentioned very strong institutional pipeline. Maybe you could just help quantify the magnitude and the mix of the pipeline, how that's trending and what sort of timing do you usually anticipate for these mandates to fund? And I would also add to that the strong flows that looked 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.

Yes. Well, everything you see in the institutional -- the timing is never quite certain and it's always a longer tail than on the retail side. So as we're giving any kind of update on the pipeline, we're really looking out like 3 months. So anything you're seeing now is from what we would have been referring to as previously in the pipeline because in most searches between the initial search, the due diligence, the operational research, that's all going to take 2 or 3 quarters before you're actually going to have. And 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. So yes, we put out numbers this morning. I think, and you're right that you indicated you saw those were positive. So that is really the result of the growth on the institutional side.

And when you look at what's remaining in the pipeline, just has that come down meaningfully? And what's sort of the mix of what's in there when you look at it by strategy, what's resonating?

The reason that we commented specifically about it because 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. So what was really worthy of being called out last quarter was the diversity by asset class, by manager, by vehicle because we do subadvisory as well as direct accounts. And then by geographic area. So it was a nice dispersion across equity, fixed income, U.S. clients, non-U.S. clients, which has increasingly become -- it's gone from 5% of our business to 10% to 16% or 17% of our business as we sit here today. So that was what was so attractive about it. It wasn't just one, super well-performing strategy attractive to one type of institutional investor.

While we're on the topic of institutional, so 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.

Well, our approach has evolved actually quite a bit over the year. So 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. So they have had their capabilities and their relationships in that space. But starting about 5 years ago, we started investing in building out consultant relations and support efforts to support the individual affiliate. Then 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. And then more recently with Stone Harbor, we had an incredible additive resource that was able to sell multiple managers. So we have sort of been building out all sorts of support for them. So outside the U.S., in particular, we're representing multiple managers. But where the managers already have the relationships and we're just there to support them, and they can do their stuff.

And with the international, is that residing with Stone Harbor or is that at the center?

Now 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. So 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 1.5 years since we did that transaction.

And how are they working collaborating with the Stone Harbor team, which is overseas. That was, I think, your first overseas acquisition affiliate ever or in terms of large overseas customer set coming through?

They probably have the -- yes. So they had the largest. So now for them, I think it was seamless because they were there really -- they were located in London and Asia and other places and they were representing the emerging market debt and the math capabilities of Stone Harbor. So when Stone Harbor became part of Virtus, they really just had another array of additional affiliates.

And did those people come over to the center? Or are they still at Stone Harbor on the international?

All of the international distribution people are part of Virtus.

Okay. 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?

Yes. Compensation, particularly in retail, evolved a lot, and I've been involved in one way shape or form with wholesaler did the compensation since 1997, so it evolves. Generally, they always want to be paid more. And generally, we want to align interest. 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. So I think there's been an evolution and it ebbs and flows on how much of it is really kind of sales base 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 in order to incent people, it can't be only a percentage of the revenue of mandates that they fund that there really is more of a structured approach in terms of activity, relationship building and then pipeline success.

And where we, you think, as an industry on sort of migrating comp to be paying on net versus gross sales?

Well, because paying -- on retail paying on net is the big bugaboo, right? Because if everyone in the net outflows, how do you pay on net. So I think the way that people have sort of evolved in looking at that is including like we do components based on AUM, right is the alignment as assets go up and down market or outflows. But then you get to also the behavior, right? So the worst thing to do is to pay nothing on gross sales is to pay only on core sales because you could be hemorrhaging, your assets could be going down and your comp is high. So 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, but then you have something that's either retentive based could be a pure AUM or a lot of times, it will 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 a 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?

Yes. I mean, our approach has always been 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. So we've always said we have to compete with the quality of our managers and with the type of support that we provide. So 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. We pride ourselves because we have such an array of managers and capabilities is we're in this for the long term, right? So we generally don't push something success 4 or 5 stars, even though we have a lot of funds with 4 and 5 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? And 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. So they're looking for advice. They're looking for ideas. They're looking for value adds. So we continue to look for ways where we can be a good partner to all 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 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?

Yes. So we've been successful, and a lot of that success has been on the equity side and particularly in the small, SMID and mid area. So 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. So we have a couple of fixed income SMAs. There are a few more that we currently have in development. So our goal -- and they're harder to do, right? The fixed incomes are much harder to do that way. So 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 is finding investment capability of theirs and find a way to get it into a vehicle, increasingly being how can we offer an SMA that's competitive and that makes sense and it's suppose to [indiscernible] or UCIT, et cetera?

So the opportunity may be more for fixed income than SMA?

Or other flavors of -- even in non-correlated strategies like AlphaSimplex, right? Again, the reason there are less few acquisitions have been focused 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 2 indices so that there does need to be other noncorrelated strategies. So I think there are other ways that we might be able to introduce that in models in the SMA wrapper.

And 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 from a fee rate standpoint but is it a little bit higher, somewhere in between...?

Well, you have to design a different product because there's other reasons why there are certain things that you can do in a co-mingled which would be hard to do in tailored SMA. But there's just -- 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. It's about $7 billion of AUM growing pretty consistently, I think about 4% organic growth over the past 4 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?

Yes. And very few people even bring up or ask questions about that part of the business. So that's really Kayne Anderson Rudnick, They have a -- which is our LA-based affiliate, they've had historically since the beginning of our relationship, a very strong private client business. And that has continued to grow. And for them, it is a great way to combine not only their skill in managing assets, 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. So 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 advisers to take advantage of that opportunity. It's also very sticky. The other thing that's good about that business is generally the holding periods for those high net worth clients is significantly longer in 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. So 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 sort of seeing in the marketplace. And again, they've done very well. They generally show up in Barron's top list on an annual basis. So they're very good at what they do. And I think this continues to be great growth opportunity there.

Okay. Maybe turning to fixed income. You have a number of fixed income strategies across a number of your affiliates plus there've been a little bit choppy. But at what point do you think this can turn and maybe thinking about the current rate environment and potential for increased demand for the asset class.

Yes. 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 terminal we had earlier in the year is 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 do they want to do their portfolio, how they want to approach fixed income, I think, is an opportunity for us because we have managers that sort of focus on different subsets of the fixed income universe. So we have a new fleet, which is really multisector. We have sites which offers both a leverage in loan type of product as well as an investment-grade product and then Stone Harbor, which is emerging market debt. So those are the areas where increasingly we wish people would look at it as a great entry point into that. And then going back to the wrapper, 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. So 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, that might be the way that, that -- those strategies are accessed as opposed to maybe a traditional open-end mutual fund or a retail separate account.

So do you think fixed income ETFs could be a bigger part of the business as you look out 5 years from now?

I think there's a great opportunity for that. And I think if you look at the filings, a lot of our peers have been launching those types of products. We -- the last one we did was we actually did an EM debt high-yield strategy before that we did a loan one, and you're seeing more opportunity there. And I think we're hearing more and more interest in that. I think the ETF has really sort of evolved in some portfolios to not just be the technical way to access a specific exposure, I think people will look at them a little more fundamentally. And 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?

Yes. The thing is, I think, from the distribution side is really educational, right, because there are structural differences and people always intuitively think that there is more of a liquidity issue when you're doing activity within an ETF as opposed to an open-end fund. And some of that is just a misunderstanding of actually how it works. Some of it is realistic. So 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 advisers 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. So maybe you could talk a little bit about how AlphaSimplex, their strategies are performing in this backdrop. And what are some of the ways you can accelerate growth at that franchise?

Yes. So their strategy is they had -- when the market was horrible last year, they had significant outperformance. I think when we had originally announced the transaction, it was probably at the third quarter mark and they had a huge outperformance. But their strategies will sort of move in line with the indices like the SG CTA index and some others. So they'll generally go along with their current trend following managed future strategy, which is in the fund, will sort of follow that index. So when there are some challenges in the markets, they were some in March, some last November, they're going to track with that. I think fundamentally, though, while that has been their flagship strategy since from the day we first met them, our view wasn't that they were 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. So again, not necessarily doing the same strategy 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. And again, that will also be something generally could be another wrapper. So 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 it's just a rich breadth of research and property there that we're very excited to learn more about, we continue to have conversations about ways to help grow them.

So not exactly a clone, but some iteration of what they're doing and putting it in another wrapper or vehicle?

And it may not even be trend following, right? So it doesn't have to be limited to that. It will be liquid, it will be quantitative or systematic and noncorrelated, 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 '21, which brought event-driven 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's similar to AlphaSimplex, except with the difference with AlphaSimplex is because there 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 we're doing, which is the pure event-driven and then on the credit side. So I think there are ways -- I think a lot of that for us is right now hasn't been the perfect market for some of those strategies. But having people understand, 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. So I think that is something we'll be continuing to educate people on.

Well, I think 1 commonality is M&A, as we've seen across both of those transactions. So you want to me 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 as you mentioned before. So maybe you can 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 5 years. You've integrated them. What lessons have you learned from the deals you've done, but also the ones you've passed on to?

Yes. Well, I mean the best lessons at least I learned were lessons I learned earlier in my career, the predecessor of my firm did a lot of acquisitions as well, and not all of them worked out well. So I learned earlier in my career, what are some of the essential building blocks which really gets down to things like -- so of course, you need to have a good strategy and good performance, but things like cultural alignment are absolutely critical and similar expectations of outcomes. The only ones that would drive us maybe not 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. So you have to make sure you have common culture in that you 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 in the way that they can be aligned to Virtus' shareholders. So 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.

And on the alignment, how do you sort of assess that? How do you measure? What do you look for [indiscernible] you drive that?

You have a dialogue. 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. So we're very transparent about, okay, this is what we will do. This is the kind of things that will be important to us then we need to be comfortable that they understand what that model is and it's something that they want. And then in terms of working together on other things, particularly like institutional retail, articulating what we believe will be how we wanted 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 to check and be totally left alone because, 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. So that's an important part for us.

And when you think about your approach and your process today, how is that different from 5 or 10 years ago? And you think about lessons learned along that time frame -- I imagine things are a little differently...

I think people -- I mean I think firms have changed. What was really interesting is years and years ago, everyone wanted to just get a big check and then to just get access to your retail distribution and manage it themselves. And so that you had to sort of say, well, no, in retail distribution, really, there's one point access. So we can do that, but here's what it's going to look like. And people were much more reticent to touch anything else in their business. I think as costs have gone up, and 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? Or can we access a certain system via you that's cheaper than we do with ourselves. So I see much more of a curiosity and an interest in those things that will just help them on the day-to-day side of their business, which years ago, no one wanted anything other than retail distribution.

And 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, institutional in general, non-U.S., obviously, in particular, I think those are areas. And that's a big ball of different items. So some of that is pure individual mandate stuff, which is what the shared Virtus institutional resources are doing. But then there's also the opportunity within the offshore funds, so the UCITs, which right now, generally for us are majority institutional clients. But 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 the retail distribution of the offshore funds outside the U.S., like a European, right? So you're asking like what things would be interesting, the ability to retail wholesale some of those products outside the U.S.

And 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 the last 2 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. So you go into some of the pure alts. So that continues to be an area of interest for us.

So less correlated and broadly [indiscernible].

And it may be less liquid, so it may not even be the only liquid product .

Which you've not done to this date.

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? So again, you would need sort of like a different approach as other firms have tried to successfully bring direct credit, PE and real assets to the market, they have to use other structures. So that's what it would be will be other vehicles.

And how do you think about approaching that through sub-advisory versus an acquisition?

Things like that, again, we have some sub-advisory, we're very selective. We only subadvise with people where there is a business relationship, and we think they're the best provider. So our number of sub-advisers actually getting smaller at this point and it's really about our relationship. I think for alts, in particular, it will be critical that there be some kind of relationship and which could be a joint venture, it could be all different types of structures. But again, it gets back to the alignment of interest, making sure that we're working with someone who has the same objective, right, which, in that case, would be for us to be providing retail distribution.

And given the market backdrop volatility that we've seen over the past 12 months, what does the market look like for M&A today? How is that evolving? And maybe talk about some of the deals you see come across your desk?

Yes. It's -- the market for M&A, there's always conversations, right? I'm having -- we're having as many. 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. Are those conversations broadened theoretical or conversations really more strategic and more relationship oriented. And 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 the transactions themselves should be strategic. And 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 room -- maybe just last 1 for 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 to 10 years of doing this. But 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. So 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.