Federated Hermes: Improving Equity and Credit Markets May Create Headwinds Longer Term

We've increased our fair value estimate for no-moat-rated Federated Hermes to $38 per share from $36 to account for revised near-term expectations for assets under management, revenue, and profitability since our last update. With the US equity markets rising 12% in the fourth quarter of 2023, and the credit markets also rising 7%, Federated Hermes reported a 6% increase in its AUM during the period. This left the firm in a better position than we had been expecting coming into 2024, allowing us to raise our fair value estimate 6%.