FHI - Federated Hermes: All Eyes On Rate Hikes And Alternatives' Growth Potential

• Rate hikes are expected to reduce fee waivers and drive money market AUM growth, and this supports expectations of a double-digit percentage earnings growth for FHI this year.
• FHI's alternatives/private markets AUM increased by +20% YoY in Q4 2021, but this business contributes only a very small part of FHI's overall AUM which implies room for further growth.
• I am raising my rating for Federated Hermes from a Hold to a Buy, taking into account both short-term and long-term growth drivers.

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