Invesco Ltd. (IVZ-N)

They manage $1.47 trillion in assets, 40% being passive ETF investing. Margins are tepid at 15%. Trades at 8x EBIT, average for an asset manager. But Blackrock's margins are nearly double, though their multiple is higher (it's worth it)

A really interesting business. They straddle 2 businesses. There is an active money manager business and then there is a path of ETF’s. Power Shares is the 4^th largest ETF platform in the world. They have a very strong and growing organic active business, and a terrific growing ETF business. Dividend yield of 3.5%. Thinks the stock should trade upwards of $40. (Analysts’ price target is $36.)

(A Top Pick Jan 28/14. Up 22.7%.) Has a very big active management and real estate business in the US and Europe. A nice platform, because they don’t have too much fixed income. Pretty much a leveraged play on the global market overall.

Feels there is materially less regulatory risk with asset managers. These stocks performed well in 2013 but should continue to benefit in 2014. Like some of the other large public managers, it only has about 30% of its assets in fixed income and about half in stocks. During the great financial crisis of 2008-2009, close to $900 billion in the US alone came out of equity mandates and only $100 billion of that has gone back in. We are only now starting to see a trickle of investors returning back into the equity markets and this company should be a nice play on that. Dividend yield of 2.69%.