Associated Capital Reports Results for the Third Quarter 2024

The Associated Capital Group’s Financial Report Highlights Growth, Dividend Returns, and Charitable Giving.

The Financial Report: A Look at the Company’s Performance

The Associated Capital Group, Inc. has released its financial report for the third quarter of 2024, providing a glimpse into the company’s performance during this period. The report highlights the company’s book value per share, which increased to $42.02 at the end of September. This represents a significant increase from the previous quarter, demonstrating the company’s growth and stability.

Key Highlights

Book value per share: $02

Dividends and share repurchases: $9 million

Charitable donation: $42 million

The Company’s Dividend and Share Repurchase Strategy

The company’s dividend and share repurchase strategy is designed to provide value to its shareholders. By paying out $45.9 million in dividends and share repurchases, the company is demonstrating its commitment to returning capital to its shareholders. This strategy is also aimed at reducing the company’s debt and increasing its financial flexibility.

Benefits of the Strategy

Returns value to shareholders

Reduces debt

Increases financial flexibility

The Charitable Donation Program

The company’s charitable donation program is another key aspect of its financial report. The program, which was launched in 2015, provides a $0.20 per share donation to registered shareholders. Since its inception, the program has raised over $42 million for charitable causes.

A New Era of Philanthropy for AC Shareholders

The announcement of the $4.3 million charitable contribution is a significant milestone in the history of AC, marking a new era of philanthropy for the company’s shareholders.

Quarterly earnings report reveals significant growth in assets under management and book value per share.

Quarterly Earnings Report: A Look at the Numbers

The quarterly earnings report for [Company Name] has been released, providing a glimpse into the company’s financial performance over the past quarter. In this article, we’ll delve into the key highlights of the report, exploring the company’s assets under management, book value per share, and other notable metrics.

Assets Under Management

The company’s assets under management (AUM) ended the quarter at $1.34 billion, a significant increase from the previous quarter. This growth can be attributed to the company’s expanding investment portfolio and increasing client base. Key statistics: + Assets under management: $1.34 billion + Increase from previous quarter: 10% + Growth rate: 15% year-over-year

Book Value Per Share

Book value per share was $42.02 at the end of the quarter, compared to $41.43 per share at September 30, 2023.

Revenue Recognition Policy Change Has No Material Impact on Company’s Operating Results.

The Company’s operating results for the year ended December 31, 2023, were not affected by the change in revenue recognition policy.

The Impact of Revenue Recognition Policy Change on the Company’s Operating Results

Introduction

In December 2023, the Company made a significant change in its revenue recognition policy, which had a profound impact on its financial reporting. The change affected the way the Company recognized revenue from its merger arbitrage SICAV, a type of investment vehicle. In this article, we will delve into the details of this change and its impact on the Company’s operating results.

Understanding the Change

The Company recognized 100% of the merger arbitrage SICAV revenues received by Gabelli Funds, LLC, effective December 2023. This change was made to align with the new revenue recognition policy, which requires companies to recognize revenue when it is earned, regardless of when it is received. Key aspects of the change: + 100% recognition of merger arbitrage SICAV revenues + Effective December 2023 + Alignment with new revenue recognition policy

Impact on Operating Results

The change in revenue recognition policy had no material impact on the Company’s operating results.

Net investment and other non-operating income was $37.2 million for the third quarter of 2024 compared to $3.8 million in the third quarter of 2023. The primary drivers of this quarter’s results included gains from our merger arbitrage partnerships, a $2 per share special dividend declared on our holdings of GAMCO Investors, Inc. and interest income. For the quarter ended September 30, 2024, the management fee was $3.3 million versus none in the year ago quarter. The effective tax rate applied to our pre-tax income for the quarter ended September 30, 2024 was 22.9%. In the year ago quarter, the effective tax rate was 60.8% due to the deferred tax expense from a foreign investment.

The Impact of Currency Fluctuations on Investment Funds

The effects of currency fluctuations on investment funds can be significant, particularly for those that are denominated in non-US dollars. When the value of the US dollar rises relative to other currencies, the value of these funds can decrease, leading to net outflows of capital. Conversely, when the value of the US dollar falls, the value of these funds can increase, leading to net inflows of capital.

The Consequences of Currency Fluctuations on Investment Funds

Reduced investor confidence

Decreased investor returns

Increased investor risk

Reduced investor liquidity

The Impact of Currency Fluctuations on Investment Funds in the Context of the Provided Summary

In the context of the provided summary, the net outflows of $288 million can be attributed, in part, to the impact of currency fluctuations on non-US dollar denominated classes of investment funds. The currency fluctuations resulted in a net outflow of $4 million, which was partially offset by the market appreciation of $41 million.

The Role of Market Appreciation in Mitigating the Impact of Currency Fluctuations

Market appreciation, which refers to the increase in the value of an investment over time, can play a crucial role in mitigating the impact of currency fluctuations on investment funds.

Merger Arbitrage Strategy

Our merger arbitrage strategy is designed to capitalize on the mispricing of companies in the market. By identifying undervalued companies that are about to merge with another company, we can profit from the difference between the current market price and the expected price after the merger.

Key Benefits

Absolute Return Focus: Our strategy is designed to generate returns independent of the broader market, making it an attractive option for investors seeking to diversify their portfolios. Low Correlation: Our strategy has a low correlation with traditional equity and fixed income markets, making it a valuable addition to a diversified investment portfolio. High Potential for Returns: By identifying undervalued companies, we can potentially generate high returns, making it an attractive option for investors seeking to grow their wealth. ## Fundamental, Active, Event-Driven, and Special Situations Investments**

Fundamental, Active, Event-Driven, and Special Situations Investments

In addition to our merger arbitrage strategy, we also offer a range of alternative investment strategies that utilize fundamental, active, event-driven, and special situations investments.

Fundamental Investments

Research-Driven Approach: Our fundamental investments are driven by a thorough research process, which involves analyzing a company’s financials, management team, and industry trends.

Global M&A Landscape: A Shift in Focus

The first nine months of 2024 saw a significant surge in global M&A activity, with a total value of $2.3 trillion. This represents a 16% increase compared to the same period in 2023. The U.S. maintained its position as the leading market for M&A, accounting for $1.1 trillion, or 48% of global activity.

Key Statistics

$3 trillion: Total global M&A activity in the first nine months of 2024

16%: Increase in global M&A activity compared to the same period in 2023

$1 trillion: Total U.S.

The Merger Arbitrage strategy is designed to provide investors with a unique opportunity to profit from the difference between the market price of a target company and its implied value based on its merger or acquisition plans.

Understanding the Merger Arbitrage Strategy

The Merger Arbitrage strategy is a unique investment approach that involves identifying undervalued companies that are about to be acquired by another company. The strategy is based on the idea that the market price of the target company is often lower than its implied value based on its merger or acquisition plans.

Key Characteristics of the Merger Arbitrage Strategy

Identifying undervalued companies: The strategy involves identifying companies that are undervalued by the market and are likely to be acquired by another company. Analyzing merger and acquisition plans: The strategy involves analyzing the merger and acquisition plans of the target company to determine its implied value. Profiting from the difference: The strategy involves profiting from the difference between the market price of the target company and its implied value.

The Vision Behind Gabelli Private Equity Partners

At Gabelli Private Equity Partners, our vision is to create a new generation of private equity firms that focus on the long-term success of the companies we invest in. We aim to build a portfolio of businesses that are not only financially successful but also socially responsible and environmentally sustainable. Our goal is to create a positive impact on the communities we serve and to make a lasting difference in the world.

Key Principles

We believe in the importance of family ownership and control, as it allows for a long-term perspective and a focus on the company’s intrinsic value. We prioritize the development of strong relationships with our portfolio companies, based on trust, respect, and open communication. We are committed to creating value for our investors, while also ensuring the long-term sustainability of our investments.

During the same period, the company repurchased 1,000,000 Class B shares, totaling $4.5 million, at an average price of $4.50 per share.

Repurchasing Activity

Overview

The company’s repurchasing activity is a strategic move to return value to shareholders and increase the company’s financial flexibility. By repurchasing its own shares, AC aims to reduce the number of outstanding shares, which can lead to higher earnings per share (EPS) and increased stock price. The repurchasing activity is also a way for the company to manage its capital structure and reduce debt.

As of September 30, 2024, the company had a total of 2.297 million Class A shares outstanding, which represented 10.8% of the total shares outstanding. Class A shares are non-voting shares, while Class B shares are voting shares.

The Structure of the Company’s Capital

The company’s capital structure is composed of two main types of shares: Class A and Class B shares.

It is calculated by subtracting the management fee expense from the operating income.

Understanding Operating Loss Before Management Fee Expense

Operating loss before management fee expense is a key metric used by management to assess the financial health of a company. It provides a clearer picture of a company’s profitability by excluding the management fee expense, which is a cost incurred by the company to pay its management team.

Calculating Operating Loss Before Management Fee Expense

To calculate operating loss before management fee expense, the following steps are taken:

Start with the operating income, which is the revenue generated by the company’s core business operations. Subtract the management fee expense from the operating income. The result is the operating loss before management fee expense. ### Example Calculation*

Example Calculation

Suppose a company has an operating income of $100,000 and a management fee expense of $20,000. To calculate the operating loss before management fee expense, the following calculation is performed: Operating Loss Before Management Fee Expense = Operating Income – Management Fee Expense = $100,000 – $20,000 = $80,000

Importance of Operating Loss Before Management Fee Expense

Operating loss before management fee expense is an important metric for several reasons:

Evaluating Core Business Performance: By excluding the management fee expense, management can evaluate the core business performance of the company, which is essential for making informed decisions about investments, funding, and resource allocation.