- June quarter-end Book Value was a record $42.21 per share
vs. $41.22 at March 31, 2021
- AUM increased to $1.6 billion at June 30, 2021 vs. $1.5
billion at March 31, 2021
Associated Capital Group, Inc. (“AC” or the “Company”), a
diversified financial services company, today reported its
financial results for the second quarter ended June 30, 2021.
Financial Highlights ($'s in 000's except AUM and per
share data)
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
AUM - end of period (in millions)
$
1,611
$
1,305
$
1,611
$
1,305
AUM - average (in millions)
1,570
1,355
1,496
1,516
Revenues
2,489
2,067
4,814
5,029
Operating Loss
(10,411
)
(3,661
)
(16,776
)
(4,301
)
Investment and other non-operating income, net
48,615
52,837
79,297
(47,254
)
Income before income taxes
38,204
49,176
62,521
(51,555
)
Net income/(loss) to shareholders
Continuing operatings, net of NCI
29,716
35,499
48,271
(37,625
)
Discontinued Operations , net of NCI
-
(262
)
-
(493
)
Net income/(loss)
29,716
35,237
48,271
(38,118
)
Net income/(loss) per share-diluted
$
1.34
$
1.57
$
2.18
($
1.70
)
Shares outstanding at June 30, (thousands)
22,101
22,363
22,101
22,363
Book Value Per Share at June 30
$
42.21
$
38.09
$
42.21
$
38.09
Second Quarter Results
- Net income for the quarter was $29.7 million compared to $35.2
million in last year’s second quarter. Net income for the first
half ended June 30, 2021 was $48.3 million compared to a loss of
$(38.1) million in 2020.
- Earnings per share for the quarter was $1.34 per share, a
$(0.23) per share swing from $1.57 per share in the year ago second
quarter. Earnings per share for the year to date period ended June
30, 2021 was $2.18 per share, a $3.88 per share increase from the
comparable 2020 period.
- Our investment portfolio, largely reflecting mark-to-market
gains, generated non-operating income of $48.6 million in the
quarter versus $52.8 million in the prior year’s second quarter.
For the first six months, non-operating income was $79.3 million in
2021 and a loss of $(47.3 million) in 2020.
- At June 30, 2021 the book value was $42.21 per share versus
$41.22 at March 31, 2021 and $40.36 per share at December 31,
2020.
- Assets under management ended the quarter at $1.61 billion
compared to $1.49 billion at March 31, 2021, $1.35 billion at
December 31, 2020 and $1.31 billion at June 30, 2020.
Gabelli Value Plus+ Trust – August 2021 Update
On July 12, 2020, the U.K.-based Gabelli Value Plus+ Trust held
a continuation vote. The Board, influenced by activists in both the
U.K. and the U.S., wanted to liquidate. Associated Capital held
26.9 million shares and, as the largest shareholder of the Trust,
informed the board that it would vote against a dissolution of the
Fund as we believed the investment holdings would generate positive
returns. From July 1, 2020 through June 30, 2021, the Fund
appreciated 63.1% in dollar terms. Associated Capital’s $36.5
million investment increased by nearly $24 million over the last 12
months to $60.5 million market value. At the July 2021 liquidation
vote, Associated Capital abstained. The fund is now being
liquidated and Associated Capital will receive approximately 3/4 of
its investment in August and substantially all of the remaining
balance in the fourth quarter 2021.
Gabelli Value Plus+ Trust
Period NAV (£) % Return (£) NAV ($) % Return ($) 7/1/2020
1.18
1.48
6/30/2021
1.75
47.5%
2.41
63.1%
Second Quarter Overview
Second quarter revenue was $2.5 million, or $0.4 million higher
than the $2.1 million in revenue for the second quarter of 2020,
largely due to higher AUM. Operating expenses were $12.9 million in
the second quarter 2021, an increase of $7.2 million from the
comparable 2020 period primarily driven by increases in management
fee expense of $4.3 million and variable performance-based
compensation expense of $1.9 million.
Net investment and other non-operating income was $48.6 million
for the quarter, a $4.2 million decrease from the $52.8 million
generated by last year’s recovery from the market’s first quarter
COVID-19 sell off.
Our provision for income taxes was $9.0 million for the quarter
compared to $11.2 million in the comparable period of 2020.
The increase in book value per share is driven largely by
changes in mark to market values, partially offset by the impact of
accretion of redeemable non-controlling interest. The accretion
impact is expected to be temporary and will reverse in the near
future.
Direct Investing and Acquisitions
Direct Investing
We launched our direct private equity and merchant banking
activities in August 2017. They are developing along three core
pillars; the first is Gabelli Private Equity Partners, LLC
(“GPEP”), with $150 million of authorized capital as a “fund-less”
sponsor. Secondly, we added Gabelli Special Purpose Acquisition
Vehicles (“SPAC”), commencing in 2018 with the launch of the
Gabelli Value for Italy S.p.a., a general sector SPAC (VALU) that
was listed on the London Stock Exchange’s Borsa Italiana AIM
segment. VALU successfully canvassed private company opportunities
generating European deal flow to the group. Following this success,
we are pursuing US listed SPACs with sector based specializations.
Finally, Gabelli Principal Strategies Group, LLC. (“GPS”) is in
place to pursue strategic operating initiatives broadly. Our Direct
Investing efforts are organized to invest in various ways,
including growth capital, leveraged buyouts and restructurings,
with an emphasis on small and mid-sized companies. Our investment
sourcing is across a variety channels including direct owners,
private equity funds, classic agents, and corporate carve outs,
(which are positioned for accelerated growth, as businesses seek to
enhance shareholder value through financial engineering.) The
Company’s direct investing vehicles allow us to acquire companies
and create long-term value with no pre-determined exit timetable.
The SPAC vehicles leverage our capital markets expertise and act to
expand deal flow in target industries. The Company is introducing
additional SPACs in the near term to extend our direct investing
efforts.
Acquisitions
Associated Capital Group’s plan is to use its capital to focus
on private equity and to a lesser degree, late stage venture
capital. AC plans remain to focus on pursuing acquisitions with a
broad range of targets including private companies and subsidiaries
of public companies, using an array of structures to accomplish our
objectives, including SPACs.
In September 2020, AC completed the $175 million initial public
offering of its special purpose acquisition corporation, PMV
Consumer Acquisition Corp. (NYSE:PMVC).
PMV Consumer Acquisition Corp. (“PMV”) was created to pursue an
initial business combination following the consumer globally with
companies having an enterprise valuation in the range of $200
million to $3.5 billion.
Pursuant to Accounting Standards Codification (“ASC”) 810
Consolidation, AC has a controlling financial interest in PMV.
Accordingly, PMV has been included in the consolidated statement of
financial condition of AC. At June 30, 2021, AC’s total assets of
$1.2 billion include $177 million of assets relating to the
consolidation of PMV. In addition to PMV, there are several other
investment funds that are consolidated within the financial
statements due to AC having a controlling financial interest.
Assets Under Management (AUM)
Assets under management at June 30, 2021 were $1.6 billion, up
$260 million from year-end 2020 due to net inflows of $185 million
and $75 million in market appreciation.
June 30,
December 31,
June 30,
2021
2020
2020
(in millions)
Event Merger Arbitrage
$
1,364
$
1,126
$
1,147
Event-Driven Value
201
180
104
Other
46
45
54
Total AUM
$
1,611
$
1,351
$
1,305
Alternative Investment Management
- Event-Driven Asset Management
The alternative investment strategies focus on fundamental,
active, event-driven special situations and merger arbitrage which
has an absolute return focus to generate returns in excess of short
term Treasury Bills. For the second quarter 2021, merger arbitrage
generated gross returns of 3.5% (2.6% net of fees), for the year to
date period, gross returns were 7.9% (5.9% net of fees), adding to
the historical record of positive net returns in 34 of the last 36
years. A summary of our performance by strategy is as follows:
Performance*
1 Year
3 Year
5 Year
10 Year
15 Year
Inception**
Merger Arb Net
14.58
6.53
5.54
4.32
4.51
7.41
Gross
19.16
9.24
7.99
6.45
6.71
10.45
Event Driven Net
23.90
2.83
4.02
3.32
3.47
7.31
Other Credit (Net)
14.14
6.15
5.28
5.19
--
6.05
Medical (Net)
22.59
8.06
4.51
4.28
4.29
4.37
*All performance is net of fees and expenses, unless otherwise
noted. Performance shown for flagship funds in these strategies.
Other fund performance in these stategies may vary. Performance is
no guarantee of future results. **Inception Date: Merger Arb -
Feb-85, Event Driven - Jan-87, Credit - Jan-07, Medical - Jan-06
Global mergers and acquisitions activity remained vibrant in the
second quarter with $1.6 trillion in announced deals, a new record.
This brings global deal volume in the first half to $2.8 trillion,
also a record for the first half and an increase of 131% compared
to 2020 levels. Dealmaking in the U.S. was particularly strong in
the first half at $1.3 trillion, accounting for 47% of worldwide
M&A and an increase of 249% compared to the first half of 2020.
Market conditions are conducive for continued strength in M&A
including historically low interest rates, an accommodative debt
market, substantial dry powder held by private equity firms and
management teams looking to better compete in an evolving global
marketplace.
The strategy is offered domestically through partnerships as
well as to institutional investors. Internationally, the strategy
is offered through a number of vehicles, including EU regulated
UCITS structures and the London Stock Exchange listed investment
company, Gabelli Merger Plus + Trust Plc (GMP-LN).
Shareholder Dividends and Buybacks
At its meeting on May 5, 2021 the Board of Directors declared a
semi-annual dividend of $0.10 per share paid on June 29, 2021 to
shareholders of record on June 15, 2021.
During the second quarter, AC repurchased approximately 54,000
Class A shares at an average investment of $35.06 per share for a
total outlay of $1.9 million.
Since our spin-off from GBL on November 30, 2015, AC has
returned $152.2 million to shareholders through share repurchases
and exchange offers, reducing its outstanding shares by 3.4 million
shares, in addition to paying dividends of $25 million, including
the tax-free distribution of Morgan Group Holdings (MGHL) on August
5th 2020.
At June 30, 2021, there were 3.1 million Class A shares and 19.0
million Class B shares outstanding.
About Associated Capital Group, Inc.
Associated Capital Group, Inc. (NYSE:AC), based in Greenwich
Connecticut, is a diversified global financial services company
that provides alternative investment management through Gabelli
& Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli
Securities, Inc.). The proprietary capital is earmarked for our
direct investment business that invests in new and existing
businesses. The direct investment business long term plan has three
core pillars; Gabelli Private Equity Partners, LLC (“GPEP”), formed
in August 2017 with $150 million of authorized capital as a
“fund-less” sponsor; the SPAC business (Gabelli special purpose
acquisition vehicles), launched in April 2018; and, Gabelli
Principal Strategies Group, LLC (“GPS”) created to pursue strategic
operating initiatives.
Operating Loss Before Management Fee
Operating loss before management fee expense represents a
non-GAAP financial measure used by management to evaluate its
business operations. We believe this measure is useful in
illustrating the operating results of the Company as management fee
expense is based on pre-tax income before management fee expense,
which includes non-operating items including investment gains and
losses from the Company’s proprietary investment portfolio and
interest expense. The management fee is calculated based on the
year to date income before management fee and income taxes.
The reconciliation of operating loss to operating loss before
management fee expense (non-GAAP) is provided below.
Year-to-date (In thousands)
2021
2020
Operating loss before management fee
$ (9,793)
$ (4,301)
Add: management fee expense
(6,983)
-
Operating loss
$ (16,776)
$ (4,301)
Table I ASSOCIATED CAPITAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION (Dollars in thousands) June
30, December 31, June 30,
2021
2020
2020
ASSETS Cash, cash equivalents and US Treasury
Bills (a)
$ 344,264
$ 383,962
$ 69,959
Investments in securities and partnerships (a)
555,479
495,579
758,187
Investment in GAMCO stock (2,516,275, 2,756,876 and 2,931,791
shares, respectively)
63,159
48,907
39,022
Receivable from brokers (a)
38,310
24,677
18,399
Deferred tax assets
-
2,207
10,710
Other receivables
10,256
15,273
1,717
Other assets (a)
21,407
28,900
22,431
Investments in marketable securities held in trust (a)
175,076
175,040
-
Assets of discontinued operations
-
-
6,199
Total assets
$ 1,207,951
$ 1,174,545
$ 926,624
LIABILITIES AND EQUITY Payable to brokers
$ 12,234
$ 6,496
$ 7,213
Income taxes payable, including deferred tax liabilities, net
14,370
9,746
-
Compensation payable
17,018
18,567
6,064
Securities sold short, not yet purchased (a)
16,466
17,571
9,833
Accrued expenses and other liabilities (a)
5,196
7,823
2,695
Deferred underwriting fee payable (a)
6,125
6,125
-
PMV warrant liability
7,508
-
-
Liabilities of discontinued operations
-
-
954
Sub-total
78,917
66,328
26,759
Redeemable noncontrolling interests (a)
196,569
206,828
47,178
Total equity
932,465
901,389
852,687
Total liabilities and equity
$ 1,207,951
$ 1,174,545
$ 926,624
(a) Includes amounts related to consolidated variable interest
entities ("VIEs") and voting interest entities ("VOEs"), refer to
footnote D of the Condensed Consolidated Financial Statements
included in the 10-Q report to be filed for the quarter ended June
30, 2021 for more details on the impact of consolidating these
entities.
Table II ASSOCIATED CAPITAL GROUP,
INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Amounts in thousands, except per share data)
Three months ended June 30, Six months ended June 30,
2021
2020
2021
2020
Investment advisory and incentive fees
$
2,388
$
1,858
$
4,613
$
4,558
Other revenues
101
209
201
471
Total revenues
2,489
2,067
4,814
5,029
Compensation
5,023
3,148
8,891
5,380
Other operating expenses
3,557
2,580
5,716
3,950
Total expenses
8,580
5,728
14,607
9,330
Operating loss before management fee
(6,091
)
(3,661
)
(9,793
)
(4,301
)
Investment gain
42,306
51,685
73,627
(50,404
)
Interest and dividend income from GAMCO
5,127
59
5,181
118
Interest and dividend income, net
1,621
1,091
2,665
3,257
Shareholder-designed contribution
(439
)
2
(2,176
)
(225
)
Investment and other non-operating income, net
48,615
52,837
79,297
(47,254
)
Income before management fee and income taxes
42,524
49,176
69,504
(51,555
)
Management fee
4,320
-
6,983
-
Income before income taxes
38,204
49,176
62,521
(51,555
)
Income tax expense/(benefit)
9,020
11,241
14,610
(12,421
)
Income from continuing operations, net of taxes
29,184
37,935
47,911
(39,134
)
Income/(loss) from discontinued operations, net of taxes
-
(262
)
-
(493
)
Income/(loss) before noncontrolling interests
29,184
37,673
47,911
(39,627
)
Income attributable to noncontrolling interests
(532
)
2,436
(360
)
(1,509
)
Net income attributable to Associated Capital Group, Inc.
$
29,716
$
35,237
$
48,271
$
(38,118
)
Net income/(loss) per share attributable to Associated
Capital Group, Inc.: Basic- Continuing operations
$
1.34
$
1.58
$
2.18
$
(1.68
)
Basic- Discontinued operations
-
(0.01
)
-
(0.02
)
Basic - Total
$
1.34
$
1.57
$
2.18
$
(1.70
)
Diluted- Continuing operations
$
1.34
$
1.58
$
2.18
$
(1.68
)
Diluted - Discontinued operations
-
(0.01
)
-
(0.02
)
Diluted - Total
$
1.34
$
1.57
$
2.18
$
(1.70
)
Weighted average shares outstanding: Basic
22,118
22,378
22,169
22,410
Diluted
22,118
22,378
22,169
22,410
Actual shares outstanding - end of period
22,101
22,363
22,101
22,363
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
The financial results set forth in this press release are
preliminary. Our disclosure and analysis in this press release,
which do not present historical information, contain
“forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements convey our current expectations or forecasts of future
events. You can identify these statements because they do not
relate strictly to historical or current facts. They use words such
as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” and other words and terms of similar meaning. They also
appear in any discussion of future operating or financial
performance. In particular, these include statements relating to
future actions, future performance of our products, expenses, the
outcome of any legal proceedings, and financial results. Although
we believe that we are basing our expectations and beliefs on
reasonable assumptions within the bounds of what we currently know
about our business and operations, the economy and other
conditions, there can be no assurance that our actual results will
not differ materially from what we expect or believe. Therefore,
you should proceed with caution in relying on any of these
forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future
performance.
Forward-looking statements involve a number of known and unknown
risks, uncertainties and other important factors, some of which are
listed below, that are difficult to predict and could cause actual
results and outcomes to differ materially from any future results
or outcomes expressed or implied by such forward-looking
statements. Some of the factors that could cause our actual results
to differ from our expectations or beliefs include a decline in the
securities markets that adversely affect our assets under
management, negative performance of our products, the failure to
perform as required under our investment management agreements, and
a general downturn in the economy that negatively impacts our
operations. We also direct your attention to the more specific
discussions of these and other risks, uncertainties and other
important factors contained in our Form 10 and other public
filings. Other factors that could cause our actual results to
differ may emerge from time to time, and it is not possible for us
to predict all of them. We do not undertake to update publicly any
forward-looking statements if we subsequently learn that we are
unlikely to achieve our expectations whether as a result of new
information, future developments or otherwise, except as may be
required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20210805006194/en/
Timothy H. Schott Chief Financial Officer (914) 921 8351
Associated-Capital-Group.com
Associated Capital (NYSE:AC)
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