Friday, December 22, 2006

AG Edwards Just Another Asset Manager

A.G. Edwards, Inc. (NYSE: AGE) announced results for the third quarter and first nine months. Earnings improved substantially which usually is a good sign. The press release included very little commentary about operations or market conditions. But the results must be very real, look at the whopping income tax increase of 89% in the recent quarter and 65% in the nine months YTD.

Asset management and service fees are becoming increasingly more important as they surge past commissions. This normally would mean more stability of income. The question becomes how do they rank in the performance measurement game. Investors should be able to do simple arithmetic and compare performance. To produce results will A.G. Edwards start to take risks to beat the averages and look good when easily compared to similar offerings? In the meantime look for a cultural conflict as AGE wrestles with the required change.