APAM WACC - Weighted Average Cost of Capital
The WACC of Artisan Partners Asset Management Inc (APAM) is 8.1%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.6% | 8.35% |
| Tax rate | 19.1% - 19.8% | 19.45% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 6.9% - 9.3% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.7 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.6% |
| Tax rate | 19.1% | 19.8% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 6.9% | 9.3% |
| Selected WACC | 8.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| APAM | Artisan Partners Asset Management Inc | 0.05 | 1.17 | 1.12 |
| FHI | Federated Hermes Inc | 0.1 | 0.63 | 0.58 |
| FOCS | Focus Financial Partners Inc | 0.72 | 1.57 | 1 |
| FSK | FS KKR Capital Corp | 1.23 | 0.56 | 0.28 |
| FSKR | FS KKR Capital Corp II | 1.08 | 1.1 | 0.59 |
| HLNE | Hamilton Lane Inc | 0.04 | 1.22 | 1.18 |
| ORCC | Owl Rock Capital Corp | 1.38 | 0.88 | 0.42 |
| PSEC | Prospect Capital Corp | 1.62 | 0.47 | 0.21 |
| VRTS | Virtus Investment Partners Inc | 1.75 | 1.07 | 0.44 |
| WDR | Waddell & Reed Financial Inc | 0.06 | 1.4 | 1.33 |
| Low | High | |
| Unlevered beta | 0.53 | 0.75 |
| Relevered beta | 0.55 | 0.78 |
| Adjusted relevered beta | 0.7 | 0.85 |
APAM's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for APAM:
cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.7) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.