- September Quarter-end Book Value was $42.24 per share vs. $38.25 a year ago

- AUM increased to $1.7 billion at September 30, 2021 vs. $1.3 billion at September 30, 2020

- Launch of a Private Equity Fund approved (additional information to be provided in due course)

- Approved a $6.6 million, or $0.30 cents per share, shareholder designated contribution to 501(c)(3) organizations

Associated Capital Group, Inc. (“AC” or the “Company”), a diversified financial services company, today reported its financial results for the third quarter ended September 30, 2021.

Financial Highlights – GAAP basis

 

 

 

 

 

 

($’s in 000’s except AUM and per share data)

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

(Unaudited)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

AUM – end of period (in millions)

 

$

1,680

 

 

$

1,251

 

 

$

1,680

 

 

$

1,251

 

AUM – average (in millions)

 

1,651

 

 

1,280

 

 

1,548

 

 

1,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

2,112

 

 

 

1,945

 

 

 

6,926

 

 

 

6,974

 

Operating Loss

 

 

(169

)

 

 

(3,552

)

 

 

(16,945

)

 

 

(7,853

)

Investment and other non-operating income, net

 

 

6,157

 

 

 

14,007

 

 

 

85,454

 

 

 

(33,248

)

Income/(loss) before income taxes

 

 

5,988

 

 

 

10,455

 

 

 

68,509

 

 

 

(41,101

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) to shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations, net of NCI

 

 

1,503

 

 

 

5,954

 

 

 

49,774

 

 

 

(31,671

)

Discontinued operations, net of NCI

 

 

-

 

 

 

(139

)

 

 

-

 

 

 

(632

)

Net income/(loss)

 

 

1,503

 

 

 

5,815

 

 

 

49,774

 

 

 

(32,303

)

Net income/(loss) per share-diluted

 

$

0.07

 

 

$

0.26

 

 

$

2.25

 

 

$

(1.44

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A shares outstanding (thousands)

 

 

3,099

 

 

 

3,370

 

 

 

3,099

 

 

 

3,370

 

Class B shares outstanding (thousands)

 

 

18,963

 

 

 

18,963

 

 

 

18,963

 

 

 

18,963

 

Total shares outstanding at September 30 (thousands)

 

 

22,062

 

 

 

22,333

 

 

 

22,062

 

 

 

22,333

 

Book Value Per Share at September 30

 

$

42.24

 

 

$

38.25

 

 

$

42.24

 

 

$

38.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Giving Back to Society – (Y)our “S” in ESG

On November 5, the Board of Directors of Associated Capital approved a $0.30 per share shareholder designated charitable contribution (“SDCC”) for registered shareholders. This is an increase from last year’s $0.20 per share contribution. Including the approximate $6.6 million contribution, Associated Capital’s SDCC program of corporate giving has resulted in nearly $32 million in donations to over 160 501(c)(3) institutions across the United States since AC was created in 2015.

To be eligible for the 2021 program, shareholders must register their shares by December 1, 2021 in order to participate.

Third Quarter Financial Data

- At September 30, 2021 the book value was $42.24 per share versus $42.21 at June 30, 2021, and $40.36 per share at December 31, 2020.

- Assets under management ended the quarter at $1.68 billion compared to $1.61 billion at June 30, 2021, $1.35 billion at December 31, 2020 and $1.25 billion at September 30, 2020.

Third Quarter Results

Third quarter revenues were $2.1 million, $0.2 million higher than the $1.9 million in revenues for the third quarter of 2020, largely due to higher AUM. Operating expenses were $2.3 million in the third quarter 2021, compared to $5.5 million in the comparable 2020 period primarily due to a $2.4 million one-time credit recorded in the third quarter of 2021. Excluding the one-time item, operating expenses were $4.8 million, $0.7 million lower than 2020, which included start-up costs related to the launch of PMV SPAC.

Net investment and other non-operating income was $6.2 million for the quarter, $7.8 million lower than the $14.0 million generated in the prior year period, driven mainly by lower market performance in Q3 2021.

Our provision for income taxes was $0.5 million for the quarter compared to $3.6 million in the comparable period of 2020.

The increase in book value per share is driven by income during the period, partially offset by the impact of accretion of redeemable non-controlling interest. The discount amount related to the issuance of redeemable noncontrolling interest is being amortized over a period of 18 months through an adjustment to additional paid-in capital and noncontrolling interest (proportionate to our ownership of the SPAC Sponsor) and is also adjusted periodically for income/loss allocated to redeemable noncontrolling interest. Accumulated accretion is expected to reverse upon the consummation of a business combination, which is expected to result in the deconsolidation of PMV SPAC.

Assets Under Management (AUM)

Assets under management at September 30, 2021 were $1.7 billion, up $329 million from year-end 2020 due to net inflows of $268 million and $61 million in market appreciation.

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

September 30,

2021

 

 

December 31,

2020

 

 

September 30,

2020

 

 

 

Merger Arbitrage

 

$

1,438

 

 

$

1,126

 

 

$

1,091

 

 

 

Event-Driven Value(a)

 

 

198

 

 

 

180

 

 

 

105

 

 

 

Other

 

 

44

 

 

 

45

 

 

 

55

 

 

 

Total AUM

 

$

1,680

 

 

$

1,351

 

 

$

1,251

 

 

 

 

(a) Assets under management represent the assets invested in this strategy that are attributable to Associated Capital Group, Inc.

Alternative Investment Management

The alternative investment strategies focus on the merger arbitrage strategy which has an absolute return focus of generating returns in excess of short term Treasury Bills, as well as strategies using fundamental, active, event-driven special situations.

Merger Arbitrage

For the third quarter 2021, merger arbitrage generated gross returns of 0.27% (0.02% net of fees), for the year to date period, gross returns were 8.2% (5.9% net of fees), adding to its historical record of positive net returns in 34 of the last 36 years. A summary of our performance by strategy is as follows:

              Since   Performance(a)   3Q '21   YTD '21  

2020

 

2019

 

2018

  5 Year(b)   Inception   (b)(c) Merger Arb                 Gross  

0.27

 

8.23

 

9.45

 

8.55

 

4.35

 

7.49

 

10.38

  Net  

0.02

 

5.94

 

6.70

 

5.98

 

2.65

 

5.14

 

7.36

                   

(a) All performance is net of fees and expenses, unless otherwise noted. Performance shown for actual fund in this strategy. Other fund performance in this strategy may vary. Performance is no guarantee of future results. (b) Represents annualized returns through September 30, 2021 (c) Inception Date: Merger Arb - Feb-85

Global M&A activity continued its vigorous pace in the third quarter, with deal making reaching $4.4 trillion year to date, an increase of more than 90% compared to 2020. The first nine months of 2021 have already surpassed the full year M&A record set in 2015 at $4.3 trillion. Excluding the $550 billion in SPAC deals in 2021, M&A activity has totaled $3.85 trillion. Acquisitions by private equity funds accounted for 19% of M&A, or about $840 billion, more than double their activity in 2020. Private equity firms are taking advantage of low interest rates, accommodative debt markets, and they are looking to deploy capital from record-breaking fund raises in recent years. The U.S. remains the primary venue for deals, with targets totaling $2 trillion in announced deals, with Technology, Financials and Industrials remaining the most active sectors.

The Merger Arbitrage 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

On November 5, 2021, AC’s board of directors declared a semi-annual dividend of $0.10 per share, which is payable on December 15, 2021 to class A and class B shareholders of record on December 1, 2021.

During the third quarter, AC repurchased approximately 38,577 Class A shares, for $1.4 million, at an average investment of $36.19 per share.

Since our spin-off from GBL on November 30, 2015, AC has returned $153.6 million to shareholders through share repurchases, exchange offers, and dividends of $25 million, including the $4.4 million tax-free distribution of Morgan Group Holdings (MGHL) on August 5, 2020.

At September 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.

 

 

 

 

 

 

 

Year-to-date

 

 

($ in 000’s)

 

2021

 

 

2020

 

 

Operating loss – GAAP

 

$

(16,945

)

 

$

(7,853

)

 

Add: management fee expense

 

 

7,209

 

 

 

-

 

 

Operating loss before management fee – Non-GAAP

 

$

(9,736

)

 

$

(7,853

)

 

Table I

ASSOCIATED CAPITAL GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Amounts in thousands)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

 

September 30,

2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and US Treasury Bills (a)

 

$

619,772

 

 

$

383,962

 

 

$

47,331

 

Investments in securities and partnerships (a)

 

 

500,367

 

 

 

495,579

 

 

 

784,963

 

Investment in GAMCO stock (b)

 

 

65,578

 

 

 

48,907

 

 

 

33,921

 

Receivable from brokers (a)

 

 

43,481

 

 

 

24,677

 

 

 

21,065

 

Deferred tax assets

 

 

-

 

 

 

2,207

 

 

 

10,059

 

Other receivables

 

7,071

 

 

15,273

 

 

7,227

 

Other assets (a)

 

 

22,879

 

 

 

28,900

 

 

 

21,043

 

Investments in marketable securities held in trust (a)

 

 

175,085

 

 

 

175,040

 

 

 

175,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,434,233

 

 

$

1,174,545

 

 

$

1,100,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable to brokers

 

$

243,282

 

 

$

6,496

 

 

$

8,443

 

Income taxes payable, including deferred tax liabilities, net

 

 

12,406

 

 

 

9,746

 

 

 

897

 

Compensation payable

 

 

17,307

 

 

 

18,567

 

 

 

7,445

 

Securities sold short, not yet purchased (a)

 

 

13,603

 

 

 

17,571

 

 

 

12,827

 

Accrued expenses and other liabilities (a)

 

 

4,939

 

 

 

7,823

 

 

 

12,668

 

Deferred underwriting fee payable (a)

 

 

6,125

 

 

 

6,125

 

 

 

-

 

PMV warrant liability

 

 

5,590

 

 

 

-

 

 

 

 

 

Sub-total

 

$

303,252

 

 

$

66,328

 

 

$

42,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests (a)

 

 

199,793

 

 

 

206,828

 

 

 

204,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

931,188

 

 

 

901,389

 

 

 

854,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

1,434,233

 

 

$

1,174,545

 

 

$

1,100,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 September 30, 2021 for more details on the impact of consolidating these entities. (b) 2,485,900, 2,756,876 and 2,931,791 shares, respectively.

Table II

ASSOCIATED CAPITAL GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory and incentive fees

 

$

2,014

 

 

$

1,865

 

 

$

6,627

 

 

$

6,424

 

Other

 

 

98

 

 

 

80

 

 

 

299

 

 

 

550

 

Total revenues

 

 

2,112

 

 

 

1,945

 

 

 

6,926

 

 

 

6,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation costs

 

 

2,819

 

 

 

3,026

 

 

 

11,710

 

 

 

8,405

 

Other operating expenses

 

 

(764

)

 

 

2,471

 

 

 

4,952

 

 

 

6,422

 

Total expenses

 

 

2,055

 

 

 

5,497

 

 

 

16,662

 

 

 

14,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income/(loss) before management fee

 

 

57

 

 

(3,552

)

 

 

(9,736

)

 

 

(7,853

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment gain/(loss)

 

 

5,676

 

 

 

15,603

 

 

 

79,303

 

 

 

(34,770

)

Interest and dividend income from GAMCO

 

 

107

 

 

 

59

 

 

 

5,288

 

 

 

177

Interest and dividend income, net

 

 

915

 

 

 

1,127

 

 

 

3,580

 

 

 

4,352

 

Shareholder-designated contribution

 

 

(541

)

 

 

(2,782

)

 

 

(2,717

)

 

 

(3,007

)

Investment and other non-operating income/(expense), net

 

 

6,157

 

 

14,007

 

 

 

85,454

 

 

(33,248

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) before management fee and income taxes

 

 

6,214

 

 

 

10,455

 

 

 

75,718

 

 

 

(41,101

)

Management fee

 

 

226

 

 

 

-

 

 

 

7,209

 

 

 

-

Income/(loss) before income taxes

 

 

5,988

 

 

 

10,455

 

 

 

68,509

 

 

 

(41,101

)

Income tax expense/(benefit)

 

 

484

 

 

 

3,564

 

 

15,094

 

 

 

(8,858

)

Income/(loss) from continuing operations, net of taxes

 

 

5,504

 

 

 

6,891

 

 

 

53,415

 

 

 

(32,243

)

Income/(loss) from discontinued operations, net of taxes

 

 

-

 

 

(139

)

 

 

-

 

 

(632

)

Income/(loss) before noncontrolling interests

 

 

5,504

 

 

 

6,752

 

 

 

53,415

 

 

 

(32,875

)

Income/(loss) attributable to noncontrolling interests

 

 

4,001

 

 

 

937

 

 

 

3,641

 

 

 

(572

)

Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders

 

$

1,503

 

 

$

5,815

 

 

$

49,774

 

 

$

(32,303

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) per share attributable to Associated Capital Group, Inc.’s shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic - Continuing operations

 

$

0.07

 

 

$

0.27

 

 

$

2.25

 

 

$

(1.41

)

Basic - Discontinued operations

 

 

-

 

 

 

(0.01

)

 

 

-

 

 

 

(0.03

)

Basic – Total

 

$

0.07

 

 

$

0.26

 

 

$

2.25

 

 

$

(1.44

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted - Continuing operations

 

$

0.07

 

 

$

0.27

 

 

$

2.25

 

 

$

(1.41

)

Diluted - Discontinued operations

 

 

-

 

 

 

(0.01

)

 

 

-

 

 

 

(0.03

)

Diluted - Total

 

$

0.07

 

 

$

0.26

 

 

$

2.25

 

 

$

(1.44

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

22,084

 

 

 

22,354

 

 

 

22,141

 

 

 

22,391

 

Diluted

 

 

22,084

 

 

 

22,354

 

 

 

22,141

 

 

 

22,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual shares outstanding – end of period

 

 

22,062

 

 

 

22,333

 

 

 

22,062

 

 

 

22,333

 

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.

Timothy H. Schott Chief Financial Officer (914) 921 8351 Associated-Capital-Group.com

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