- Book Value per share ended the quarter at $41.72 per share
vs $41.22 at March 31, 2021
- Record level of AUM: $1.84 billion at March 31, 2022
compared to $1.78 billion at December 31, 2021 and $1.50 billion at
March 31, 2021
- Net AUM inflows were $76 million for the quarter
- Company continues to review staffing for a Private Equity
Fund
Associated Capital Group, Inc. (“AC” or the “Company”), a
diversified financial services company, today reported its
financial results for the first quarter ended March 31, 2022.
Financial Highlights – GAAP
basis
($’s in 000’s except AUM and per share
data)
Three months ended
(Unaudited)
March 31,
2022
2021
AUM – end of period (in millions)
$
1,839
$
1,495
AUM – average (in millions)
1,801
1,431
Revenues
2,582
2,325
Operating Loss
(3,306
)
(6,365
)
Investment and other non-operating income,
net
(15,047
)
30,682
Income/(loss) before income taxes
(18,353
)
24,317
Net income/(loss) to shareholders:
Net income/(loss)
(16,186
)
18,555
Net income/(loss) per share-diluted
$
(0.73
)
$
0.83
Class A shares outstanding (thousands)
3,088
3,192
Class B shares outstanding (thousands)
18,963
18,963
Total shares outstanding (thousands)
22,051
22,155
Book Value Per Share
$
41.72
$
41.22
First Quarter Financial Data
- At March 31, 2022 the book value was $41.72 per share versus
$41.22 per share at March 31, 2021.
- Assets under management ended the quarter at $1.84 billion
compared to $1.78 billion at December 31, 2021 and $1.50 billion at
March 31, 2021. The increase in AUM for the 1st quarter 2022 is
driven by net investor inflows of $76 million and market
appreciation of $2 million, offset by the impact of currency
fluctuations of non-US dollar classes of investment funds of $(20)
million.
First Quarter Results
First quarter revenues of $2.6 million were $0.3 million higher
than the $2.3 million in revenues for the first quarter of 2021,
largely due to higher AUM. Total operating expenses, excluding
management fee, were $5.9 million in the first quarter 2022
compared to $6.0 million in the comparable 2021 period.
Net investment and other non-operating income/(loss) was $(15.0)
million for the first quarter, a swing of $45.7 million from the
$30.7 million income generated in the first quarter of 2021. The
primary drivers included a $24.4 million decrease related to our
holdings of GBL and affiliated mutual funds as well as a decrease
of $9.7 million related to various partnership investments. This
year over year change was broadly the result of market volatility
in Q1 2022 driven by rising interest rates, accelerating inflation
and geo-political factors, which led to the S&P 500 dropping
4.6% in the first quarter of 2022 as compared to an increase of
6.2% in the first quarter of 2021.
No management fee expense was incurred in the first quarter of
2022 quarter due to a loss in the period. Management fee expense of
$2.7 million was recorded in the first quarter of 2021.
Our provision for income taxes was a benefit of $4.8 million for
the quarter compared to expense of $5.6 million in the comparable
period of 2021, primarily driven by losses in the 2022 period. The
increase in tax rate is driven by the allocation of nontaxable
income to redeemable noncontrolling interests in a period of
consolidated net losses.
Assets Under Management (AUM)
Assets under management at March 31, 2022 reached $1.84 billion,
up $58 million from year-end 2021 due to net inflows of $76 million
and market appreciation of $2 million, offset by the impact of
currency fluctuations of non-US dollar classes of investment funds
of $(20) million.
($ in millions)
March 31, 2022
December 31, 2021
March 31, 2021
Merger Arbitrage
$
1,606
$
1,542
$
1,253
Event-Driven Value(a)
191
195
196
Other
42
44
46
Total AUM
$
1,839
$
1,781
$
1,495
(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 factors.
Merger Arbitrage
For the first quarter 2022, merger arbitrage generated gross
returns of 0.85% (0.49% net of fees). A summary of our performance
is as follows:
Performance(a)
1Q ‘22
2021
2020
2019
2018
5 Year(b)
Since
Inception
(b)(c)
Merger Arb
Gross
0.85
10.81
9.45
8.55
4.35
7.69
10.33
Net
0.49
7.78
6.70
5.98
2.65
5.31
7.33
(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. Past
performance is no guarantee of future results. (b) Represents
annualized returns through March 31, 2022 (c) Inception Date:
Merger Arb - Feb-85
Merger and acquisition activity remained robust in the first
quarter of 2022, with global M&A totaling $1.0 trillion, the
seventh consecutive quarter that M&A exceeded $1.0 trillion.
Technology was the most active sector for deal making, accounting
for 25% of all deal activity in the first quarter for a total of
$259 billion. Technology was followed by Financials and Real Estate
as the most active sectors, accounting for 13% and 12% of deal
activity, respectively. Following years of record fundraising,
private equity remained very active announcing $291 billion of
acquisitions, an increase of 18% compared to 2021 and accounted for
29% of M&A in the first quarter. The U.S. remained the
preferred venue for deal making accounting for 51% of deal activity
and totaling $521 billion, although that was a decline of 19%
compared to 2021. Large deals were in vogue in the first quarter as
deals like Activision Blizzard’s $67 billion acquisition by
Microsoft and Allegheny Corp.’s $14 billion acquisition by
Berkshire Hathaway propelled deals greater than $10 billion to $254
billion, an increase of 46% compared to 2021.
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
At its meeting on May 4, 2022, the Board of Directors declared a
semi-annual dividend of $0.10 per share payable June 29, 2022 to
shareholders of record on June 15, 2022.
During the first quarter, AC repurchased 7,536 Class A shares,
for $0.3 million, at an average investment of $38.84 per share.
Since our spin-off from GBL on November 30, 2015, AC has
returned $154.0 million to shareholders through share repurchases,
and exchange offers, in addition to paying dividends of $27.7
million, including the $4.4 million tax-free distribution of Morgan
Group Holdings (MGHL) on August 5, 2020.
At March 31, 2022, 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)
2022
2021
Operating loss – GAAP
$
(3,306
)
$
(6,365
)
Add: management fee expense
-
2,663
Operating loss before management fee –
Non-GAAP
$
(3,306
)
$
(3,702
)
Table I
ASSOCIATED CAPITAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Amounts in thousands)
March 31, 2022
December 31, 2021
March 31, 2021
ASSETS
Cash, cash equivalents and US Treasury
Bills (a)
$
348,629
$
380,044
$
354,725
Investments in securities and partnerships
(a)
500,423
501,706
532,238
Investment in GAMCO stock (b)
53,451
60,389
51,129
Receivable from brokers (a)
176,898
42,478
31,412
Other receivables
6,616
18,409
2,437
Other assets (a)
23,024
25,201
24,251
Investments in marketable securities held
in trust (a)
175,151
175,109
175,074
Total assets
$
1,284,192
$
1,203,336
$
1,171,266
LIABILITIES AND EQUITY
Payable to brokers (a)
$
133,867
$
9,339
$
10,488
Income taxes payable, including deferred
tax liabilities, net
3,703
8,575
13,181
Compensation payable
6,638
19,730
9,526
Securities sold short, not yet purchased
(a)
5,812
12,905
16,702
Accrued expenses and other liabilities
(a)
2,394
3,580
4,428
Deferred underwriting fee payable (a)
6,125
6,125
6,125
PMV warrant liability (a)
2,145
5,280
-
Sub-total
$
160,684
$
65,534
$
60,450
Redeemable noncontrolling interests
(a)
205,320
202,456
195,070
Total Associated Capital Group, Inc.
equity
920,039
937,102
913,295
Noncontrolling interests
(1,851
)
(1,756
)
2,451
Total equity
918,188
935,346
915,746
Total liabilities and equity
$
1,284,192
$
1,203,336
$
1,171,266
(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 March
31, 2022 for more details on the impact of consolidating these
entities. (b) 2,417,500, 2,417,500, and 2,756,876 shares,
respectively.
Table II
ASSOCIATED CAPITAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in
thousands, except per share data)
Three Months Ended
March 31,
2022
2021
Investment advisory and incentive fees
$
2,486
$
2,225
Other
96
100
Total revenues
2,582
2,325
Compensation
3,933
3,868
Other operating expenses
1,955
2,159
Total expenses
5,888
6,027
Operating loss before management fee
(3,306
)
(3,702)
Investment gain/(loss)
(15,610
)
31,321
Interest and dividend income from
GAMCO
153
54
Interest and dividend income, net
618
1,044
Shareholder-designated contribution
(208
)
(1,737)
Investment and other non-operating
income/(expense), net
(15,047
)
30,682
Income/(loss) before management fee
expense and income taxes
(18,353
)
26,980
Management fee expense
-
2,663
Income/(loss) before income taxes
(18,353
)
24,317
Income tax expense/(benefit)
(4,848
)
5,590
Income/(loss) before noncontrolling
interests
(13,505
)
18,727
Income/(loss) attributable to
noncontrolling interests
2,681
172
Net income/(loss) attributable to
Associated Capital Group, Inc.’s (“AC”) shareholders
$
(16,186
)
$
18,555
Net income/(loss) per share attributable
to AC’s shareholders:
Basic
$
(0.73
)
$
0.83
Diluted
$
(0.73
)
$
0.83
Weighted average shares outstanding:
Basic
22,054
22,222
Diluted
22,054
22,222
Actual shares outstanding:
22,051
22,155
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504006111/en/
Timothy H. Schott Chief Financial Officer (203) 629-9595
Associated-Capital-Group.com
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