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 $0.20 per share shareholder designated charitable contribution (“SDCC”) for registered shareholders. This was an increase from last year’s $0.15 per share contribution. Based on the program created by Warren Buffett at Berkshire Hathaway, our corporate charitable giving is unique in that the recipients of AC’s charitable contributions are chosen directly by our shareholders, rather than by our corporate officers. In the first quarter of 2024, we completed the distribution of approximately $4.0 million to various organizations selected by our shareholders for our 2023 program. Since our spin off as a public company, the shareholders of AC have donated approximately $38 million, including the most recent SDCC, to over 190 501(c)(3) organizations that address a broad range of local, national and international concerns.
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 $5.6 million compared to $7.5 million for the fourth quarter of 2022, based on lower average AUM and lower performance-based fees in 2023.
Total operating expenses, excluding management fee, were $2.1 million lower, $8.1 million in the fourth quarter 2023 compared to $10.2 million in the comparable 2022 period, principally due to lower variable performance-based compensation expense in 2023 driven by lower revenues.
Net investment and other non-operating income was $26.7 million for the fourth quarter, an increase of $7.1 million from the $19.6 million recorded in the year ago quarter, reflecting the appreciation of our equity portfolios in this year’s fourth quarter in addition to interest income in the current quarter.
The fourth quarter of 2023 includes a Management fee of $2.4 million versus none in the fourth quarter of 2022 due to losses. Our provision for income taxes was $5.6 million for the quarter compared to $2.9 million in the comparable period of 2022.
Full Year Results
Revenues for the 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.
For 2023, the operating loss before Management fee was $11.5 million compared to $11.3 million in 2022.
The 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 our holdings of our securities portfolio.
In 2023, Management fee was $5.4 million. There was no Management fee in 2022 due to pre-tax losses in that period.
Our income tax rate for the year was 19.5% compared to 24.7% for the prior year primarily driven by deferred tax benefits from a foreign investment that reduced the current period’s effective tax rate.
Assets Under Management (AUM)
Assets under management ended the year at $1.59 billion, $251 million less than year-end 2022, 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. In the merger arbitrage strategy, most of the outflows ($265 million) were tied to GAMCO Merger Arbitrage UCITS (a Luxembourg entity organized as an Undertaking for Collective Investment in Transferrable Securities). These outflows were generally driven by our clients including wealth managers, bank platforms and insurance companies reallocating funds to other asset classes.
AUM since spin-off:
December 31,
($ 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 3.19% (2.35% net of fees). For the full year, gross returns were 5.49% (3.56% net of fees), adding to its historical record of positive net returns in 37 of the last 39 years. A summary of the performance is as follows:
Full Year
Performance%(a)
4Q ’23
4Q ’22
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