Acadian Asset Management stock closed at US$86.49, up 3% on the day, as investors cheered a set of Q2 numbers that spoke directly to the core of an asset manager’s story. The key headline is margin power. Economic net income operating margin reached 40.3%, helped by strong management fee revenue of US$177 million on a much larger asset base.

That is the short term reaction. The longer term question for you is whether a P/E of 30.4x on trailing earnings still makes sense if margins stay closer to this new level or drift back toward last year’s 15.2% net profit margin.

Is Acadian Asset Management’s 30.4x P/E simply reflecting temporary margin strength, or does it imply the market is assuming more than current earnings support?…