Associated Capital Group, Inc. Reports Fourth Quarter and Full Year Results
- Book Value per share increased to $42.11 at year-end 2023 from $40.48 a year ago.
- Assets under management (AUM) declined to $1.59 billion at December 31, 2023, from $1.84 billion at December 31, 2022.
- Revenues for the full year-ended 2023 were $12.7 million compared to $15.2 million in 2022, based on lower average AUM and lower performance-based fees in 2023.
- The company reported a net income of $37.451 million for the full year 2023 compared to a net loss of $48.907 million in 2022.
- The company has donated approximately $38 million to over 190 501(c)(3) organizations since its spin-off in 2015.
- Net income per share was $1.72 in 2023 compared to a net loss per share of $2.22 in 2022.
- Assets under management ended the year at $1.59 billion, reflecting net outflows of $325 million, offset partially by market appreciation of $68 million and the impact of currency fluctuations in non-US dollar denominated classes of investment funds of $6 million.
- Full year 2023 net investment and other non-operating income swung from a loss of $49.2 million in 2022 to a $63.8 million gain, primarily due to mark-to-market changes in the company's holdings of its securities portfolio.
Insights
The year-end financial results for Associated Capital Group, Inc. (AC) reveal several key metrics that are critical for evaluating the company's performance. A notable point is the increase in book value per share from $40.48 to $42.11, indicating a growth in the company's net assets or a decrease in liabilities. However, this must be contextualized with the decline in Assets Under Management (AUM) from $1.84 billion to $1.59 billion, which may reflect investor sentiment and could impact future management fee revenue.
AC's net income also showed a significant recovery from a loss of $48.9 million in 2022 to a gain of $37.4 million in 2023. This turnaround is largely attributed to the positive non-operating income, which swung from a substantial loss to a gain. The net income per share-diluted has accordingly improved from a loss of $2.22 to a gain of $1.72. The repurchase authorization of an additional 350,000 shares could signal confidence from the Board in the company's valuation and a potential upside for shareholders, although it may also reduce the equity base and increase earnings per share in the short-term.
The decrease in AUM year-over-year suggests a challenging environment for AC's investment strategies, particularly the merger arbitrage strategy. It is important to note that the outflows from the GAMCO Merger Arbitrage UCITS account for a significant portion of the AUM reduction. This could indicate a broader trend of wealth managers, bank platforms and insurance companies reallocating funds away from merger arbitrage, which may be perceived as less favorable under current market conditions.
Additionally, the report highlights a strategic focus on alternative investment management and mentions the plan to pursue acquisitions and alliances. This diversification strategy could mitigate the impact of AUM outflows and contribute to revenue streams. The historical performance of AC's merger arbitrage strategy, which has outperformed 90-day T-Bills, suggests a strong track record, although past performance is not indicative of future results. The recent uptick in M&A activity in Q4 2023, particularly in the US, may provide a more favorable backdrop for AC's merger arbitrage strategy going forward.
The financial results of AC reflect broader economic trends, such as the fluctuating M&A market and varying investor risk appetites. The reported decrease in AUM could be symptomatic of economic uncertainty, potentially leading to risk aversion among institutional clients. The increase in book value per share, on the other hand, suggests a solid balance sheet that could withstand economic headwinds.
The company's tax rate reduction from 24.7% to 19.5% is also notable, as it has positively influenced net income. This reduction could be due to strategic tax planning or the realization of deferred tax benefits, which are important factors for investors to consider when assessing the company's financial health and management effectiveness.
Lastly, the company's charitable contributions, aligned with ESG principles, may enhance its corporate image and appeal to socially conscious investors, potentially impacting investor sentiment and the company's stock performance in a secondary manner.
- Book Value was
$42.11 per share at year-end 2023 vs.$40.48 a year ago - Year-end AUM:
$1.59 billion at December 31, 2023 vs.$1.84 billion at December 31, 2022 $4.0 million of donations completed in January 2024 to shareholder designated 501(c)(3) charitable organizations brought the total giving to$38 million since our spin-off in 2015- The Board of Directors authorized the repurchase of up to an additional 350,000 shares
GREENWICH, Conn., Feb. 06, 2024 (GLOBE NEWSWIRE) -- Associated Capital Group, Inc. (“AC” or the “Company”), a diversified financial services company, today reported its financial results for the fourth quarter and full year-ended December 31, 2023.
| Financial Highlights – GAAP basis | ||||||||||||||||
| ($’s in 000’s except AUM and per share data) | ||||||||||||||||
| Fourth Quarter | Full Year | |||||||||||||||
| (Unaudited) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| AUM – end of period (in millions) | $ | 1,591 | $ | 1,842 | $ | 1,591 | $ | 1,842 | ||||||||
| AUM – average (in millions) | 1,581 | 1,811 | 1,659 | 1,817 | ||||||||||||
| Revenues | 5,636 | 7,538 | 12,683 | 15,228 | ||||||||||||
| Operating loss before management fee (Non-GAAP) | (2,451 | ) | (2,616 | ) | (11,501 | ) | (11,262 | ) | ||||||||
| Investment and other non-operating income/(loss), net | 26,672 | 19,550 | 63,812 | (49,203 | ) | |||||||||||
| Income/(loss) before income taxes | 21,850 | 16,934 | 46,865 | (60,465 | ) | |||||||||||
| Net income/(loss) | 16,342 | 13,664 | 37,451 | (48,907 | ) | |||||||||||
| Net income/(loss) per share-diluted | $ | 0.76 | $ | 0.62 | $ | 1.72 | $ | (2.22 | ) | |||||||
| Class A shares outstanding (000’s) | 2,587 | 3,027 | 2,587 | 3,027 | ||||||||||||
| Class B “ “ | 18,951 | 18,963 | 18,951 | 18,963 | ||||||||||||
| Total “ “ | 21,538 | 21,990 | 21,538 | 21,990 | ||||||||||||
| Book Value per share | $ | 42.11 | $ | 40.48 | $ | 42.11 | $ | 40.48 | ||||||||
Giving Back to Society – (Y)our “S” in ESG
AC seeks to be a good corporate citizen by supporting our community through sponsoring local organizations. On August 9, 2023, the Board of Directors approved a
Fourth Quarter Financial Data
- Assets under management ended the quarter at
$1.59 billion , in line with September 30, 2023 and compared to$1.84 billion at December 31, 2022. - At December 31, 2023, book value per share was
$42.11 per share versus$41.43 per share at September 30, 2023 and$40.48 per share at December 31, 2022.
Fourth Quarter Results
Fourth quarter revenues were
Total operating expenses, excluding management fee, were
Net investment and other non-operating income was
The fourth quarter of 2023 includes a Management fee of
Full Year Results
Revenues for the year-ended 2023 were
For 2023, the operating loss before Management fee was
The full year 2023 net investment and other non-operating income swung from a loss of
In 2023, Management fee was
Our income tax rate for the year was
Assets Under Management (AUM)
Assets under management ended the year at
AUM since spin-off:
| December 31, | ||||||||||||||||||||||||||||||||||
| ($ in millions) | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||||||
| Merger Arbitrage | $ | 1,312 | $ | 1,588 | $ | 1,542 | $ | 1,126 | $ | 1,525 | $ | 1,342 | $ | 1,384 | $ | 1,076 | $ | 869 | ||||||||||||||||
| Long/Short Value(a) | 244 | 222 | 195 | 180 | 132 | 118 | 91 | 133 | 145 | |||||||||||||||||||||||||
| Other | 35 | 32 | 44 | 45 | 59 | 60 | 66 | 63 | 66 | |||||||||||||||||||||||||
| Total AUM | $ | 1,591 | $ | 1,842 | $ | 1,781 | $ | 1,351 | $ | 1,716 | $ | 1,520 | $ | 1,541 | $ | 1,272 | $ | 1,080 | ||||||||||||||||
(a) Assets under management represent the assets invested in this strategy that are attributable to AC.
Alternative Investment Management
The alternative investment strategy offerings center around our merger arbitrage strategy which has an absolute return focus of generating returns independent of the broad equity and fixed income markets. We also offer strategies utilizing fundamental, active, event-driven and special situations investments.
Merger Arbitrage
For the fourth quarter 2023, our longest continuously offered fund in the merger arbitrage strategy generated gross returns of
| Full Year | ||||||||||||||||||||||||||||||||||||
| Performance%(a) | 4Q '23 | 4Q '22 | 2023 | 2022 | 2021 | 2020 | 2019 | 5 Year(b) | Since 1985(b)(c) | |||||||||||||||||||||||||||
| Merger Arb | ||||||||||||||||||||||||||||||||||||
| Gross | 3.19 | 4.40 | 5.49 | 4.47 | 10.81 | 9.45 | 8.55 | 7.73 | 10.08 | |||||||||||||||||||||||||||
| Net | 2.35 | 3.45 | 3.56 | 2.75 | 7.78 | 6.70 | 5.98 | 5.33 | 7.14 | |||||||||||||||||||||||||||
(a) Net performance is net of fees and expenses, unless otherwise noted. Performance shown is for an actual fund in this strategy. The performance of other funds in this strategy may vary. Past performance is no guarantee of future results.
(b) Represents annualized returns through December 31, 2023
(c) Inception Date: February 1985
Merger Arbitrage returns are driven in part by deal activity. In 2023, worldwide M&A totaled
Since inception in 1985, our longest continuously offered fund in the merger arbitrage strategy has consistently outperformed the return on 90-day T-Bills. The summary historical performance is as follows:
| Merger Arbitrage(1) | |||||
| Percent Return (%) | |||||
| Year | Gross Return | Net Return | 90 Day T-Bills | ||
| 2023 | 5.49 | 3.56 | 5.26 | ||
| 2022 | 4.47 | 2.75 | 1.50 | ||
| 2021 | 10.81 | 7.78 | 0.05 | ||
| 2020 | 9.45 | 6.70 | 0.58 | ||
| 2019 | 8.55 | 5.98 | 2.25 | ||
| 2018 | 4.35 | 2.65 | 1.86 | ||
| 2017 | 4.69 | 2.92 | 0.84 | ||
| 2016 | 9.13 | 6.44 | 0.27 | ||
| 2015 | 5.33 | 3.43 | 0.03 | ||
| 2014 | 3.89 | 2.29 | 0.03 | ||
| 2013 | 5.33 | 3.43 | 0.05 | ||
| 2012 | 4.32 | 2.63 | 0.07 | ||
| 2011 | 4.89 | 3.07 | 0.08 | ||
| 2010 | 9.07 | 6.35 | 0.13 | ||
| 2009 | 12.40 | 9.15 | 0.16 | ||
| 2008 | 0.06 | -0.94 | 1.80 | ||
| 2007 | 6.39 | 4.26 | 4.74 | ||
| 2006 | 12.39 | 8.96 | 4.76 | ||
| 2005 | 9.40 | 6.63 | 3.00 | ||
| 2004 | 5.49 | 3.69 | 1.24 | ||
| 2003 | 8.90 | 6.26 | 1.07 | ||
| 2002 | 4.56 | 2.45 | 1.70 | ||
| 2001 | 7.11 | 4.56 | 4.09 | ||
| 2000 | 18.10 | 13.57 | 5.96 | ||
| 1999 | 16.61 | 12.31 | 4.74 | ||
| 1998 | 10.10 | 7.21 | 5.06 | ||
| 1997 | 12.69 | 9.21 | 5.25 | ||
| 1996 | 12.14 | 8.84 | 5.25 | ||
| 1995 | 14.06 | 10.27 | 5.75 | ||
| 1994 | 7.90 | 5.53 | 4.24 | ||
| 1993 | 12.29 | 8.91 | 3.09 | ||
| 1992 | 7.05 | 4.78 | 3.62 | ||
| 1991 | 12.00 | 8.76 | 5.75 | ||
| 1990 | 9.43 | 6.67 | 7.92 | ||
| 1989 | 23.00 | 17.55 | 8.63 | ||
| 1988 | 45.84 | 35.66 | 6.76 | ||
| 1987 | -13.67 | -14.54 | 5.90 | ||
| 1986 | 33.40 | 26.14 | 6.24 | ||
| 1985 | 30.47 | 22.64 | 7.82 | ||
| Average | 10.46 | 7.40 | 3.27 | ||
(1) The performance above refers to our longest continuously offered fund in the merger arbitrage strategy (net and gross returns). Net returns are net of management and incentive fees. Individual investment returns may differ due to timing of investment and other factors. Past performance is not indicative of future results.
The Merger Arbitrage strategy is offered by mandate and client type through partnerships and offshore corporations serving accredited as well as institutional investors. The strategy is also offered in separately managed accounts, a Luxembourg UCITS and a London Stock Exchange listed investment company, Gabelli Merger Plus+ Trust Plc (GMP-LN).
Acquisitions
Associated Capital Group's plan is to accelerate the use of its capital. We intend to leverage our research and investment capabilities by pursuing acquisitions and alliances that will broaden our product offerings and add new sources of distribution. In addition, we may make direct investments in operating businesses using a variety of techniques and structures to accomplish our objectives.
Shareholder Dividends and Buybacks
At its meeting on November 8, 2023, the Board of Directors declared a semi-annual dividend of
During the fourth quarter, AC repurchased 85,342 Class A shares, for
On February 6, 2024, the Board of Directors authorized the repurchase of up to an additional 350,000 shares. The Company intends to continue to repurchase additional shares, but share repurchases may vary from time to time and will take into account macroeconomic issues, market trends, and other factors that the Company deems appropriate.
Since our spin-off from GAMCO on November 30, 2015, AC has returned
At December 31, 2023, there were 2.587 million Class A shares and 18.951 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”). We have also earmarked proprietary capital for our direct investment business that invests in new and existing businesses. The direct investment business is developing along several core pillars, including Gabelli Private Equity Partners, LLC (“GPEP”), formed in August 2017 with
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) | 2023 | 2022 | ||||||
| Operating loss – GAAP | $ | (16,947 | ) | $ | (11,262 | ) | ||
| Add: management fee expense(1) | 5,446 | - | ||||||
| Operating loss before management fee – Non-GAAP | $ | (11,501 | ) | $ | (11,262 | ) | ||
(1) Management fee expense is incentive-based and is equal to
Table I
| ASSOCIATED CAPITAL GROUP, INC. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
| (Amounts in thousands) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Cash, cash equivalents and US Treasury Bills | $ | 406,642 | $ | 404,463 | ||||
| Investments in securities and partnerships | 420,706 | 435,610 | ||||||
| Investment in GAMCO stock | 45,602 | 36,683 | ||||||
| Receivable from brokers | 16,005 | 12,072 | ||||||
| Receivable from brokers (cash held for real estate purchase) | 14,263 | - | ||||||
| Income taxes receivable, including deferred tax assets, net | 8,474 | 10,320 | ||||||
| Other receivables | 5,587 | 6,324 | ||||||
| Other assets | 26,518 | 22,218 | ||||||
| Total assets | $ | 943,797 | $ | 927,690 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Payable to brokers | $ | 4,459 | $ | 7,784 | ||||
| Compensation payable | 15,196 | 13,936 | ||||||
| Securities sold short, not yet purchased | 5,918 | 2,874 | ||||||
| Accrued expenses and other liabilities | 5,173 | 2,707 | ||||||
| Sub-total | $ | 30,719 | $ | 27,301 | ||||
| Redeemable noncontrolling interests | 6,103 | 10,193 | ||||||
| Total Associated Capital Group, Inc. equity | 906,975 | 890,196 | ||||||
| Total liabilities and equity | $ | 943,797 | $ | 927,690 | ||||
Notes:
(1) Certain captions include amounts related to a consolidated variable interest entity ("VIE") and voting interest entity ("VOE"). Refer to the Consolidated Financial Statements included in the 10-K report to be filed for the year ended December 31, 2023 for more details on the impact of consolidating these entities.
(2) Investment in GAMCO stock: 2,386,295 and 2,407,000 shares, respectively.
Table II
| ASSOCIATED CAPITAL GROUP, INC. | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Investment advisory and incentive fees | $ | 5,535 | $ | 7,392 | $ | 12,324 | $ | 14,801 | ||||||||
| Other | 101 | 146 | 359 | 427 | ||||||||||||
| Total revenues | 5,636 | 7,538 | 12,683 | 15,228 | ||||||||||||
| Compensation | 5,809 | 8,352 | 17,246 | 18,883 | ||||||||||||
| Other operating expenses | 2,278 | 1,802 | 6,938 | 7,607 | ||||||||||||
| Total expenses | 8,087 | 10,154 | 24,184 | 26,490 | ||||||||||||
| Operating loss before management fee | (2,451 | ) | (2,616 | ) | (11,501 | ) | (11,262 | ) | ||||||||
| Investment gain/(loss) | 21,398 | 16,214 | 43,033 | (56,513 | ) | |||||||||||
| Interest and dividend income from GAMCO | 96 | 97 | 384 | 446 | ||||||||||||
| Interest and dividend income, net | 7,591 | 4,952 | 24,412 | 9,971 | ||||||||||||
| Shareholder-designated contribution | (2,413 | ) | (1,713 | ) | (4,017 | ) | (3,127 | ) | ||||||||
| Investment and other non-operating income/(expense), net | 26,672 | 19,550 | 63,812 | (49,203 | ) | |||||||||||
| Income/(loss) before management fee and income taxes | 24,221 | 16,934 | 52,311 | (60,465 | ) | |||||||||||
| Management fee | 2,371 | - | 5,446 | - | ||||||||||||
| Income/(loss) before income taxes | 21,850 | 16,934 | 46,865 | (60,465 | ) | |||||||||||
| Income tax expense/(benefit) | 5,551 | 2,855 | 9,137 | (14,943 | ) | |||||||||||
| Income/(loss) before noncontrolling interests | 16,299 | 14,079 | 37,728 | (45,522 | ) | |||||||||||
| Income/(loss) attributable to noncontrolling interests | (43 | ) | 415 | 277 | 3,385 | |||||||||||
| Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders | $ | 16,342 | $ | 13,664 | $ | 37,451 | $ | (48,907 | ) | |||||||
| Net income/(loss) per share attributable to Associated Capital Group, Inc.’s shareholders: | ||||||||||||||||
| Basic | $ | 0.76 | $ | 0.62 | $ | 1.72 | $ | (2.22 | ) | |||||||
| Diluted | $ | 0.76 | $ | 0.62 | $ | 1.72 | $ | (2.22 | ) | |||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 21,576 | 21,998 | 21,771 | 22,024 | ||||||||||||
| Diluted | 21,576 | 21,998 | 21,771 | 22,024 | ||||||||||||
| Actual shares outstanding – end of period | 21,538 | 21,990 | 21,538 | 21,990 | ||||||||||||
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.
| Ian J. McAdams Chief Financial Officer (914) 921-5078 Associated-Capital-Group.com |
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FAQ
What was the book value per share at year-end 2023?
How much did the company donate to charitable organizations since its spin-off in 2015?
What was the total giving to charitable organizations in January 2024?
What was the net income for the full year 2023?
How many shares did the Board of Directors authorize the repurchase of on February 6, 2024?
