Question-and-Answer Session
Operator
(Operator Instructions). And our first question will come from the line of Keith Walsh with Citi. Please proceed.
Keith Walsh
Hey good morning everybody.
Jessica Bibliowicz
Good morning, Keith.
Keith Walsh
Mark, just a question on the management fee, and I was offing on the call so I apologize if you've covered this in detail. When I think about the 48 to 50% guidance you gave last quarter and the dramatic drop we saw this quarter, I guess I know there is a lot of moving parts. But when I think about the management fee, it seems to capture the growth in the acquisitions. When I think about the 48 to 50 guidance, what kind of organic revenue growth does that really imply relative to the 5.2% you put up in the first quarter? Thanks.
Mark Biderman
Thank you, Keith. I think one of the things you may have missed is that what we said in the quarter – what I said in the call was that the first quarter was particularly impacted by two things. The absence of cash elections, which reflected the fact that the firms have a stock price for their cash elections, which is the 20 day average at the end of their incentive period. So the fourth quarter firms would have taken the incremental stock at $45, which they clearly wouldn’t have done. Firms ending their incentive periods this quarter will have a stock price of about 22.80, so it’s more likely they will take stock elections.
The other thing is that one of our firms, the new acquisitions with very high economic interest has seasonally strong earnings in the fourth and the first quarters of the year and whereas it didn’t affect the overall management fee percentage much in the fourth quarter because it’s a very seasonally strong quarter for us. The first quarter is a seasonally weak quarter, so it did impact us a lot because this firm had a lot of earnings at a very low management fee percentage. That said the first quarter is always our lowest quarter in management fee percentage because the firms tend to catch up as the year goes on particularly our wealth management firms. The management fee percentage estimate that we are using is based on a normal high single-digit same store growth rate. I don’t think it will be affected that much by the same store growth rate mid to high single-digits. I think it will just be effective by any future acquisitions we do. If it’s lower or higher it may be due to the stock election question.
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