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Gerald Sheff, Co-Founder & Chairman - Gluskin Sheff + Associates Inc.Fernando Morales/The Globe and Mail

Investors will be looking for asset manager Gluskin Sheff + Associates Inc. to pay a bigger-than-forecast special dividend after announcing performance fees that blew past expectations.

Gluskin shares were halted late Thursday afternoon as the firm announced that its performance fees in the most recent quarter were $98-million, more than double what some analysts were expecting.

The Toronto-based firm runs hedge funds that pay fees to the firm when they hit certain performance benchmarks. The end of the year must have been very kind to the managers at Gluskin.

Canaccord Genuity analyst Scott Chan recently predicted $40-million of performance fees in the quarter, which would equate to a special dividend of 60 cents a share. GMP Securities analyst Stephen Boland was also forecasting $40-million for this quarter, expecting a special dividend likely in the 50- to 60-cent range.

Gluskin has traditionally paid out its performance fees in large special dividends to shareholders when they pile up. The firm usually declares specials after the second and fourth quarters. In the two quarters since the firm's last special dividend, it has now racked up $100-million in performance fees.

Not all that goes to shareholders. There are taxes to be paid, and some of the fees will go into the bonus pool for the fund managers whose investment picks resulted in the fund performance.

In addition to the dividend, the performance fees should help the stock. Analysts attribute roughly a quarter of the firm's value to the performance fees it can earn, with the rest coming from the underlying value of the rest of the business.

With the performance fees tracking well ahead of expectations, look for upgrades on the stock as analysts update their valuations to reflect the vastly higher numbers.

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