Part I [Business](index=5&type=section&id=Item%201%3A%20Business) Associated Capital Group, Inc. (AC) manages **$1.84 billion** in assets, focusing on alternative investment management and direct investments - The company operates through two main business lines: Alternative Investment Management, which provides advisory services for fees, and a direct investment business that utilizes the company's proprietary capital[15](index=15&type=chunk)[16](index=16&type=chunk)[21](index=21&type=chunk) Assets Under Management (AUM) Trend (2018-2022) | Strategy | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | 2019 (in millions) | 2018 (in millions) | | :--- | :--- | :--- | :--- | :--- | :--- | | Merger Arbitrage | $1,588 million | $1,542 million | $1,126 million | $1,525 million | $1,342 million | | Event-Driven Value | $222 million | $195 million | $180 million | $132 million | $118 million | | Other | $32 million | $44 million | $45 million | $59 million | $60 million | | **Total AUM** | **$1,842 million** | **$1,781 million** | **$1,351 million** | **$1,716 million** | **$1,520 million** | - The company's business strategy includes: - Continuing an active fundamental investment approach using the proprietary "Private Market Value (PMV) with a Catalyst" methodology - Growing the Investment Partnerships advisory business, including international expansion - Leveraging research capabilities to pursue acquisitions, alliances, and direct investments in operating businesses - Launching a private equity business to capitalize on market opportunities[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The company's operations are subject to extensive regulation in the U.S. by the SEC under the Advisers Act and ERISA, as well as European regulations such as AIFMD and MiFID II[33](index=33&type=chunk)[35](index=35&type=chunk)[42](index=42&type=chunk) - As of March 3, 2023, the company had **24** full-time employees[51](index=51&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A%3A%20Risk%20Factors) As a smaller reporting company, Associated Capital Group is not required to provide the information for this item - The company is a "smaller reporting company" and is exempt from providing Risk Factors disclosure[55](index=55&type=chunk) [Unresolved Staff Comments](index=12&type=section&id=Item%201B%3A%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - There are no unresolved staff comments[55](index=55&type=chunk) [Properties](index=12&type=section&id=Item%202%3A%20Properties) The company owns office properties in Greenwich, CT, and London, UK, leasing to affiliates, and subleases space in Rye, NY Lease Income and Expense with Affiliates (2021-2022) | Transaction Type | 2022 | 2021 | | :--- | :--- | :--- | | **Income from Affiliates** | | | | Greenwich, CT Lease | $116.4 thousand | $118.1 thousand | | London, UK Lease | $309.8 thousand | $275.4 thousand | | **Expense to Affiliates** | | | | Rye, NY Sublease | $72.1 thousand | $73.7 thousand | [Legal Proceedings](index=12&type=section&id=Item%203%3A%20Legal%20Proceedings) As of December 31, 2022, the company is not subject to any material legal proceedings exceeding **10%** of its consolidated assets - The company is not currently subject to any legal proceedings with claims exceeding **10%** of its consolidated assets[58](index=58&type=chunk) Part II [Market For The Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities](index=13&type=section&id=Item%205%3A%20Market%20For%20The%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20And%20Issuer%20Purchases%20Of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under 'AC', supported by an active stock repurchase program - Class A common stock trades on the NYSE under the ticker symbol AC[61](index=61&type=chunk) Class A Common Stock Repurchases (Q4 2022) | Period | Total Shares Repurchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | Oct 1 - Oct 31, 2022 | 1,305 | $39.16 | | Nov 1 - Nov 30, 2022 | 9,326 | $39.39 | | Dec 1 - Dec 31, 2022 | 2,581 | $40.87 | | **Total** | **13,212** | **$39.66** | - As of the end of Q4 2022, the maximum number of shares that may yet be purchased under the company's plans or programs was **609,352**[63](index=63&type=chunk) [Management's Discussion and Analysis ('MD&A') of Financial Condition and Results of Operations](index=13&type=section&id=Item%207%3A%20Management%27s%20Discussion%20And%20Analysis%20%28%27MD%26A%27%29%20Of%20Financial%20Condition%20And%20Results%20Of%20Operations) In 2022, the company reported a net loss of **$48.9 million** primarily due to investment losses, despite AUM growing to **$1.84 billion** Key Financial Performance Indicators (2021 vs 2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | AUM - end of period | $1,842 million | $1,781 million | | Net income/(loss) per share-diluted | $(2.22) | $2.68 | | Book value per share | $40.48 | $42.48 | - Total AUM increased by **$61 million** (**3.4%**) in 2022, driven by net investor inflows of **$100 million** and market appreciation of **$34 million**, which was partially offset by a negative currency impact of **$73 million**[78](index=78&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) Revenue Breakdown (in thousands) | Revenue Type | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Investment advisory and incentive fees | $14,801 | $20,530 | (27.9)% | | Other revenues | $427 | $394 | 8.4% | | **Total revenues** | **$15,228** | **$20,924** | **(27.2)%** | - The net loss in 2022 was primarily due to a net loss from investments of **$56.5 million**, compared to a net gain of **$93.4 million** in 2021, attributed to market volatility from rising interest rates, geo-political factors, and inflation[87](index=87&type=chunk)[90](index=90&type=chunk) - The company identifies revenue recognition, valuation of investments, consolidation of entities, and income tax accounting as its critical accounting policies requiring significant management judgment[97](index=97&type=chunk) [Financial Statements and Supplementary Data](index=23&type=section&id=Item%208%3A%20Financial%20Statements%20And%20Supplementary%20Data) This section provides the company's audited consolidated financial statements for 2022 and 2021, along with the independent auditor's report [Report of Independent Registered Public Accounting Firm](index=24&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche, LLP issued an unqualified audit opinion, highlighting the deconsolidation of PMV Consumer Acquisition Corp. as a Critical Audit Matter - The auditor, Deloitte & Touche, LLP, issued an unqualified opinion, stating the financial statements are presented fairly in all material respects[119](index=119&type=chunk) - A Critical Audit Matter was identified concerning the deconsolidation of PMV Consumer Acquisition Corp. This was due to the significant judgment involved in determining whether the company continued to have substantive control over the entity[123](index=123&type=chunk)[125](index=125&type=chunk) [Consolidated Financial Statements](index=26&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial performance and position for 2022 and 2021, showing a **$48.9 million** net loss in 2022 Consolidated Statement of Income Highlights (in thousands) | Line Item | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $15,228 | $20,924 | | Operating Loss | $(11,262) | $(19,076) | | Net gain/(loss) from investments | $(56,513) | $93,405 | | **Net income/(loss) attributable to AC shareholders** | **$(48,907)** | **$59,203** | | **Diluted EPS** | **$(2.22)** | **$2.68** | Consolidated Statement of Financial Condition Highlights (in thousands) | Line Item | Dec 31, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $218,462 | $319,048 | | Total Investments (various) | $658,294 | $623,091 | | **Total Assets** | **$927,690** | **$1,203,336** | | Total Liabilities | $27,301 | $65,534 | | **Total Associated Capital Group, Inc. equity** | **$890,196** | **$937,102** | Consolidated Statement of Cash Flows Highlights (in thousands) | Line Item | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | $(70,552) | $238,194 | | Net cash provided by investing activities | $402 | $65,285 | | Net cash used in financing activities | $(37,175) | $(14,394) | [Notes to Consolidated Financial Statements](index=35&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the deconsolidation of PMV Consumer Acquisition Corp., revenue recognition, related-party transactions, and stock repurchases - In August 2022, the company deconsolidated PMV Consumer Acquisition Corp. (PMV SPAC) and its sponsor because it no longer had a controlling financial interest, resulting in a recognized loss of **$3.6 million**[151](index=151&type=chunk)[217](index=217&type=chunk) - Performance-based advisory fees, typically **15%-20%** of investment performance, are recognized at the end of the measurement period (usually calendar year) or upon investor redemption[178](index=178&type=chunk) - The company has significant related-party transactions with its former parent, GAMCO, including holding **$36.7 million** in GAMCO stock, receiving **$7.1 million** in sub-advisory fees, and engaging in property lease agreements[252](index=252&type=chunk)[256](index=256&type=chunk)[259](index=259&type=chunk) Stock Repurchase Activity | Period | Shares Repurchased | Average Price/Share ($) | Total Cost ($) | | :--- | :--- | :--- | :--- | | 2022 | 67,792 | $37.98 | $2.6 million | | 2021 | 215,958 | $35.40 | $7.6 million | [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20And%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - The CEO and Co-CFOs concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[279](index=279&type=chunk) - Management concluded that the company maintained effective internal control over financial reporting as of December 31, 2022, based on the COSO framework[280](index=280&type=chunk)[281](index=281&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, these controls[282](index=282&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Related Party Transactions](index=63&type=section&id=Items%2010-14) Information for Items 10-14, including governance, compensation, and related party transactions, is incorporated by reference from the 2023 Proxy Statement - Information regarding Directors, Executive Officers, Corporate Governance (Item 10), Executive Compensation (Item 11), Security Ownership (Item 12), Certain Relationships and Related Transactions (Item 13), and Principal Accountant Fees (Item 14) is incorporated by reference from the Company's 2023 Proxy Statement[284](index=284&type=chunk)[287](index=287&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=63&type=section&id=Item%2015%3A%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including financial statements, notes, and a detailed list of exhibits - A list of all exhibits filed with the Form 10-K is provided, including the Separation and Distribution Agreement with GAMCO, the company's Certificate of Incorporation and Bylaws, and various executive certifications required by the Sarbanes-Oxley Act[292](index=292&type=chunk)[293](index=293&type=chunk) [Form 10-K Summary](index=65&type=section&id=Item%2016%3A%20Form%2010-K%20Summary) No Form 10-K summary is provided - No Form 10-K summary is provided[294](index=294&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Associated Capital Group, Inc. as of September 30, 2022, and for the three and nine-month periods then ended [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The company's total assets decreased to **$986.8 million** as of September 30, 2022, from **$1.20 billion** at December 31, 2021, primarily due to decreased investments and deconsolidation of marketable securities held in trust Condensed Consolidated Statements of Financial Condition (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$986,761** | **$1,203,336** | | Cash and cash equivalents | $288,178 | $319,048 | | Investments in equity securities | $238,974 | $273,087 | | Investments in marketable securities held in trust | $0 | $175,109 | | **Total Liabilities** | **$97,728** | **$65,534** | | **Total Equity** | **$879,255** | **$935,346** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q3 2022, the company reported a net loss of **$16.5 million** or **($0.75)** per share, a significant shift from Q3 2021 net income, primarily due to substantial net losses from investments Q3 Financial Performance (in thousands, except EPS) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Total Revenues | $2,562 | $2,112 | | Operating Loss | ($3,129) | ($169) | | Net (Loss)/Gain from Investments | ($19,314) | $5,676 | | Net (Loss)/Income Attributable to Shareholders | **($16,498)** | **$1,503** | | Diluted EPS | **($0.75)** | **$0.07** | Nine Months Financial Performance (in thousands, except EPS) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Total Revenues | $7,690 | $6,926 | | Operating Loss | ($8,646) | ($16,945) | | Net (Loss)/Gain from Investments | ($72,727) | $79,303 | | Net (Loss)/Income Attributable to Shareholders | **($62,571)** | **$49,774** | | Diluted EPS | **($2.84)** | **$2.25** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$30.6 million** for the nine months ended September 30, 2022, a significant decrease from the **$488.1 million** provided in the prior year, primarily due to net loss and changes in trading securities Nine-Month Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | ($30,558) | $488,071 | | Net cash provided by investing activities | $251 | $53,254 | | Net cash used in financing activities | ($5,450) | ($11,058) | | **Net (decrease)/increase in cash** | **($35,757)** | **$530,267** | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide crucial context to the financial statements, detailing the company's organization, revenue recognition, investment composition, fair value measurements, and equity structure - In August 2022, the company deconsolidated PMV Consumer Acquisition Corp. ("PMV") after determining it no longer had a controlling financial interest, resulting in a **$3.6 million** loss[30](index=30&type=chunk)[51](index=51&type=chunk) Revenue Breakdown (in thousands) | Revenue Source | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Asset-based advisory fees | $1,269 | $3,882 | | Sub-advisory fees | $1,201 | $3,481 | | Performance-based advisory fees | $2 | $46 | | **Total Inv. advisory & incentive fees** | **$2,472** | **$7,409** | - The company's stock repurchase program has an authorization for **622,564 shares** remaining as of September 30, 2022, with **54,580 shares** repurchased for a total of **$2.1 million** during the nine months ended September 30, 2022[88](index=88&type=chunk)[89](index=89&type=chunk) - Subsequent to the quarter's end, on November 11, 2022, the Board of Directors declared a semi-annual dividend of **$0.10 per share**[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant net loss for Q3 and the first nine months of 2022 primarily to mark-to-market losses in its proprietary securities portfolio, driven by market volatility, rising interest rates, and inflation [Results of Operations](index=31&type=section&id=Results%20of%20Operations) The company's results shifted from a **$1.5 million** net income to a **$16.5 million** net loss in Q3 2022, driven by a **$25 million** negative swing in net investment gains/losses - Q3 2022 operating loss increased to **$3.1 million** from **$0.2 million** in Q3 2021, partly due to a **$2.4 million** one-time credit recorded in Q3 2021[120](index=120&type=chunk) - Net investment loss was **$19.3 million** in Q3 2022 compared to a gain of **$5.7 million** in Q3 2021, attributed to market volatility from rising interest rates, geo-political factors, and inflation[125](index=125&type=chunk) - For the nine months ended Sep 30, 2022, no management fee expense was recorded due to a pre-tax loss, compared to a **$7.2 million** expense in the same period of 2021[130](index=130&type=chunk) [Assets Under Management](index=34&type=section&id=Assets%20Under%20Management) Assets Under Management (AUM) stood at **$1.75 billion** as of September 30, 2022, representing a **1.6%** decrease from year-end 2021 but a **4.3%** increase from September 30, 2021 AUM by Strategy (in millions) | Strategy | Sep 30, 2022 | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | :--- | | Merger Arbitrage | $1,518 | $1,542 | $1,438 | | Event-Driven Value | $203 | $195 | $198 | | Other | $31 | $44 | $44 | | **Total AUM** | **$1,752** | **$1,781** | **$1,680** | Q3 2022 AUM Change (in millions) | Component | Amount | | :--- | :--- | | AUM at June 30, 2022 | $1,802 | | Market Appreciation | $8 | | Foreign Currency | ($39) | | Net Inflows/(Outflows) | ($19) | | **AUM at Sep 30, 2022** | **$1,752** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, ending Q3 2022 with **$288.2 million** in cash and cash equivalents and **$133.8 million** in U.S. Treasury Bills - As of September 30, 2022, the company had cash and cash equivalents of **$288.2 million** and Investments in U.S. Treasury Bills of **$133.8 million**[140](index=140&type=chunk) - Book value per share was **$39.96** as of September 30, 2022, a decrease from **$42.48** at December 31, 2021, largely due to the net loss for the period[111](index=111&type=chunk)[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Associated Capital Group, Inc. is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[144](index=144&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Co-CFOs, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the period covered by this report - Based on an evaluation as of the end of the reporting period, the Chief Executive Officer and Co-Chief Financial Officers concluded that the company's disclosure controls and procedures were effective[144](index=144&type=chunk) - No changes in internal control over financial reporting occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[145](index=145&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not currently subject to any legal proceedings that would be material to its consolidated financial condition, operations, or cash flows as of September 30, 2022 - The company is not subject to any legal proceedings that individually or in the aggregate involved a claim for damages in excess of **10%** of its consolidated assets[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchase of its Class A stock during the third quarter of 2022, with **11,752 shares** repurchased at an average price of **$37.52 per share** Q3 2022 Share Repurchases | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2022 | 4,100 | $36.42 | | August 2022 | 695 | $39.51 | | September 2022 | 6,957 | $37.97 | | **Total Q3** | **11,752** | **$37.52** | [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and Co-CFOs and interactive data files (XBRL)

PART I. FINANCIAL INFORMATION [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Associated Capital Group, Inc. for the periods ended June 30, 2022, including statements of financial condition, income, comprehensive income, equity, and cash flows, along with detailed notes explaining the basis of presentation and significant accounting policies [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The company's total assets decreased to **$1.12 billion** as of June 30, 2022, from **$1.20 billion** at December 31, 2021, primarily driven by a reduction in the value of investments in equity securities and partnerships, while total equity also declined from **$935.3 million** to **$885.9 million** over the same period Condensed Consolidated Statements of Financial Condition (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,120,015** | **$1,203,336** | | Total Liabilities | $30,831 | $65,534 | | Redeemable noncontrolling interests | $203,327 | $202,456 | | **Total Equity** | **$885,857** | **$935,346** | | **Total Liabilities and Equity** | **$1,120,015** | **$1,203,336** | - The decrease in total assets was mainly due to a decline in the fair value of investments in equity securities, which fell from **$273.1 million** to **$247.8 million**, and investments in partnerships, which decreased from **$154.5 million** to **$146.6 million**[11](index=11&type=chunk) [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company reported a significant net loss of **$29.9 million** for Q2 2022, a sharp reversal from a net income of **$29.7 million** in Q2 2021, with the six-month net loss at **$46.1 million** in 2022 compared to a net income of **$48.3 million** in 2021, primarily driven by a substantial net loss from investments in 2022 versus a large gain in 2021 Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,546 | $2,489 | $5,128 | $4,814 | | Operating Loss | $(2,211) | $(10,411) | $(5,517) | $(16,776) | | Net gain/(loss) from investments | $(37,803) | $42,306 | $(53,413) | $73,627 | | **Net income/(loss) attributable to ACG** | **$(29,887)** | **$29,716** | **$(46,073)** | **$48,271** | | **Diluted EPS** | **$(1.36)** | **$1.34** | **$(2.09)** | **$2.18** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2022, net cash provided by operating activities was **$29.3 million**, a significant decrease from **$231.7 million** in the same period of 2021, mainly due to a net loss in 2022 compared to net income in 2021 and smaller gains from changes in investments in trading securities, while net cash used in financing activities was **$5.0 million**, primarily for dividends and stock repurchases Summary of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $29,272 | $231,661 | | Net cash provided by/(used in) investing activities | $(2,865) | $5,602 | | Net cash used in financing activities | $(5,010) | $(7,501) | | **Net increase in cash** | **$21,397** | **$229,762** | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on the company's organization, revenue streams, investment composition, consolidation of entities like the PMV SPAC, fair value measurements, income taxes, equity structure, and other commitments, including the consolidation of PMV Consumer Acquisition Corp. (a VIE), the breakdown of investment securities, and the status of the stock repurchase program - The company's business includes alternative investment management through its subsidiary GCIA and proprietary investment activities. It also consolidates PMV Consumer Acquisition Corp. (PMV), a special purpose acquisition corporation (SPAC)[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The company consolidates several Variable Interest Entities (VIEs) and Voting Interest Entities (VOEs). The consolidation of PMV and its sponsor resulted in the inclusion of **$162.0 million** of assets and **$165.0 million** of redeemable noncontrolling interests as of June 30, 2022[28](index=28&type=chunk)[46](index=46&type=chunk) - The company's investments in equity securities include a significant holding of GAMCO Investors, Inc. (GBL) stock, valued at **$50.5 million** as of June 30, 2022[11](index=11&type=chunk) Stock Repurchase Activity (Q2 2022) | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2022 | 9,332 | $39.17 | | May 2022 | 8,166 | $38.13 | | June 2022 | 17,794 | $35.97 | | **Total Q2** | **35,292** | **$37.32** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a shift from net income in 2021 to a net loss in 2022, primarily driven by mark-to-market losses on its investment portfolio amid market uncertainty, with Assets Under Management (AUM) increasing to **$1.8 billion** and the company maintaining a strong liquidity position with approximately **$885 million** in cash and investments - The company's business is divided into two main segments: Alternative Investment Management and Proprietary Capital, which includes direct investments and sponsoring SPACs like PMV Consumer Acquisition Corp[90](index=90&type=chunk)[91](index=91&type=chunk)[95](index=95&type=chunk) - The company ended Q2 2022 with a strong liquidity position, holding approximately **$885 million** in cash and investments, net of securities sold short. This provides flexibility for strategic objectives like acquisitions, seeding new strategies, and shareholder returns[107](index=107&type=chunk) Key Financial Metrics (Q2) | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | AUM - end of period (in millions) | $1,802 | $1,611 | | Net income/(loss) per share-diluted | $(1.36) | $1.34 | | Book value per share at June 30 | $40.30 | $42.21 | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) The company's results swung from a net income of **$29.7 million** in Q2 2021 to a net loss of **$29.9 million** in Q2 2022, primarily caused by a net investment loss of **$37.8 million** compared to a gain of **$42.3 million** in the prior-year quarter, reflecting market volatility, while operating loss narrowed due to the absence of management fee expense and lower compensation costs in Q2 2022 - The primary driver of the net loss in Q2 2022 was a **$(37.8) million** net loss from investments, a stark contrast to the **$42.3 million** gain in Q2 2021, attributed to market uncertainty, rising interest rates, and inflation[111](index=111&type=chunk)[116](index=116&type=chunk) - Compensation expense decreased to **$3.0 million** in Q2 2022 from **$5.0 million** in Q2 2021, mainly due to lower variable compensation tied to performance and a credit from mark-to-market changes on stock-based compensation[114](index=114&type=chunk) - No management fee expense was recorded in Q2 2022 due to a pre-tax loss for the period, compared to **$4.3 million** of expense in Q2 2021[115](index=115&type=chunk) [Assets Under Management](index=35&type=section&id=Assets%20Under%20Management) Assets Under Management (AUM) stood at **$1.802 billion** as of June 30, 2022, representing an increase of **1.2%** from year-end 2021 and **11.9%** from June 30, 2021, though during the second quarter, AUM decreased by a net **$37 million** as market depreciation and negative currency effects outweighed net inflows AUM by Strategy (in millions) | Strategy | June 30, 2022 | Dec 31, 2021 | June 30, 2021 | | :--- | :--- | :--- | :--- | | Merger Arbitrage | $1,591 | $1,542 | $1,364 | | Event-Driven Value | $174 | $195 | $201 | | Other | $37 | $44 | $46 | | **Total AUM** | **$1,802** | **$1,781** | **$1,611** | Q2 2022 AUM Change (in millions) | Component | Amount | | :--- | :--- | | AUM at March 31, 2022 | $1,839 | | Market Depreciation | $(66) | | Foreign Currency Impact | $(52) | | Net Inflows | $81 | | **AUM at June 30, 2022** | **$1,802** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$344.3 million** in cash and cash equivalents and **$25.0 million** in U.S. Treasury Bills as of June 30, 2022, while net cash from operating activities for the first six months of 2022 was **$29.3 million**, significantly lower than the **$231.7 million** generated in the same period of 2021, reflecting the company's net loss and changes in working capital - The company's principal assets include cash, short-term treasuries, marketable securities (including **2.4 million** shares of GAMCO), and interests in various funds, providing substantial liquidity[128](index=128&type=chunk) Six-Month Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating activities | $29,272 | $231,661 | | Investing activities | $(2,865) | $5,602 | | Financing activities | $(5,010) | $(7,501) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Associated Capital Group, Inc. is not required to provide the information for this item - The company is not required to provide quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company[136](index=136&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Co-CFOs, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the period, with no material changes to the internal control over financial reporting during the quarter - Based on an evaluation, the Chief Executive Officer and Co-Chief Financial Officers concluded that the company's disclosure controls and procedures were effective for the period covered by the report[134](index=134&type=chunk) - No changes occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[135](index=135&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any legal proceedings that would be material to its financial condition, operations, or cash flows, and management has determined that provisions for any probable or reasonably possible losses are not material - As of June 30, 2022, the company is not subject to any legal proceedings where a claim for damages exceeds **10%** of its consolidated assets. Management believes any potential losses from existing matters are not material to the company's financial condition[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchase of its Class A Common Stock during the second quarter of 2022, with a total of **35,292** shares repurchased at an average price of **$37.32** per share Class A Stock Repurchases (Quarter Ended June 30, 2022) | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2022 | 9,332 | $39.17 | | May 2022 | 8,166 | $38.13 | | June 2022 | 17,794 | $35.97 | | **Total** | **35,292** | **$37.32** | [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Interactive Data Files (XBRL) - The report includes standard exhibits such as CEO and Co-CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act, as well as Inline XBRL documents[143](index=143&type=chunk)[144](index=144&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss in Q1 2022, a significant downturn from prior-year net income, primarily driven by investment losses [Condensed Consolidated Statements of Financial Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to **$1.28 billion** as of March 31, 2022, while total liabilities significantly rose and total equity slightly declined Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,284,192** | **$1,203,336** | | Cash and cash equivalents | $348,629 | $319,048 | | Total Investments | $553,874 | $562,101 | | **Total Liabilities** | **$160,684** | **$65,534** | | **Total Equity** | **$918,188** | **$935,346** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company reported a **$16.2 million** net loss in Q1 2022, a sharp reversal from prior-year net income, primarily due to investment losses Q1 2022 vs Q1 2021 Income Statement (in thousands, except EPS) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total Revenues | $2,582 | $2,325 | | Operating Loss | $(3,306) | $(6,365) | | Net gain/(loss) from investments | $(15,610) | $31,321 | | **Net income/(loss) attributable to ACG** | **$(16,186)** | **$18,555** | | **Diluted EPS** | **$(0.73)** | **$0.83** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly declined in Q1 2022, while overall cash and equivalents increased during the quarter Q1 2022 vs Q1 2021 Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $28,558 | $243,568 | | Net cash provided by/(used in) investing activities | $(1,773) | $710 | | Net cash provided by/(used in) financing activities | $(779) | $(4,062) | | **Net increase in cash** | **$26,006** | **$240,216** | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business as an alternative investment manager and proprietary investor, including SPAC consolidation and dividend declaration - The company's business consists of providing **alternative investment management services** and generating investment income from its own **proprietary investments**[20](index=20&type=chunk) - The company consolidates its special purpose acquisition corporation, PMV Consumer Acquisition Corp. (PMV), which resulted in the consolidation of **$162.6 million of assets** and **$8.3 million of liabilities** as of March 31, 2022[24](index=24&type=chunk) - Subsequent to the quarter's end, on May 4, 2022, the board of directors declared a semi-annual dividend of **$0.10 per share**[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q1 2022 net loss to investment portfolio mark-to-market losses, while operating loss narrowed and AUM grew [Overview](index=20&type=section&id=Overview) The company operates in alternative investment management and direct investment, with the latter structured across three core pillars - The company's business is divided into **Alternative Investment Management** and a **direct investment business** utilizing **proprietary capital**[78](index=78&type=chunk)[79](index=79&type=chunk)[83](index=83&type=chunk) - The direct investment business operates through **three core pillars**: Gabelli Private Equity Partners, LLC (GPEP), Gabelli Special Purpose Acquisition Vehicles (SPAC), and Gabelli Principal Strategies Group, LLC (GPS)[83](index=83&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) The Q1 2022 net loss was primarily due to investment losses, while the operating loss improved due to the absence of a management fee expense - The **decrease in operating loss** from **$6.4 million** in Q1 2021 to **$3.3 million** in Q1 2022 was primarily due to the **absence of management fee expense** and **higher revenue**[99](index=99&type=chunk) - **Investment losses** were **$(15.6) million** in Q1 2022 versus **gains of $31.3 million** in Q1 2021, a decrease attributed to **market uncertainty, rising interest rates, high inflation, and geo-political conflict**[104](index=104&type=chunk) - **No management fee expense** was recorded for Q1 2022 due to a pre-tax loss, compared to a **$2.7 million expense** in Q1 2021[103](index=103&type=chunk) [Assets Under Management](index=24&type=section&id=Assets%20Under%20Management) Assets Under Management (AUM) increased to **$1.839 billion** as of March 31, 2022, driven by net inflows despite negative currency impact Assets Under Management by Strategy (in millions) | Strategy | March 31, 2022 | Dec 31, 2021 | March 31, 2021 | | :--- | :--- | :--- | :--- | | Merger Arbitrage | $1,606 | $1,542 | $1,253 | | Event-Driven Value | $191 | $195 | $196 | | Other | $42 | $44 | $46 | | **Total AUM** | **$1,839** | **$1,781** | **$1,495** | - The increase in AUM during Q1 2022 was driven by **net inflows of $76 million** and **market appreciation of $2 million**, offset by a **negative currency impact of $(20) million**[109](index=109&type=chunk)[110](index=110&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position with **$348.6 million** in cash, despite a significant decrease in operating cash flow Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Operating activities | $28,558 | $243,568 | | Investing activities | $(1,773) | $710 | | Financing activities | $(779) | $(4,062) | - As of March 31, 2022, the company had **cash and cash equivalents of $348.6 million** and **$260.4 million of investments** net of securities sold short[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative market risk disclosures - The company is **exempt** from this disclosure requirement as it qualifies as a **smaller reporting company**[118](index=118&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded that disclosure controls were effective with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[118](index=118&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[119](index=119&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is not subject to legal proceedings with claims exceeding **10%** of consolidated assets, deeming existing matters immaterial - As of March 31, 2022, the company is **not involved** in any legal proceedings with claims exceeding **10% of its consolidated assets**[124](index=124&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **7,536** Class A shares for **$0.3 million** in Q1 2022, with **669,608** shares remaining for repurchase Q1 2022 Share Repurchase Activity | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2022 | - | $- | | Feb 2022 | 7,136 | $38.76 | | Mar 2022 | 400 | $40.41 | | **Total** | **7,536** | **$38.84** | - As of March 31, 2022, the maximum number of shares that may yet be purchased under the plan is **669,608**[126](index=126&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, material agreements, and required certifications - The report includes a list of filed exhibits, such as the **Separation and Distribution Agreement**, **Amended Certificate of Incorporation**, Employment Agreement with Mario J. Gabelli, and **CEO/CFO certifications**[127](index=127&type=chunk)[128](index=128&type=chunk)

Part I [Business](index=5&type=section&id=Item%201.%20Business) Associated Capital Group, Inc. (AC) provides alternative investment management and direct investment services, focusing on active fundamental strategies and growth through acquisitions - The company operates two main business lines: **alternative investment management** and a **direct investment business**, supplemented by income from proprietary investments[14](index=14&type=chunk) Assets Under Management (AUM) as of December 31 (in millions) | Strategy | 2021 | 2020 | | :--- | :--- | :--- | | Merger Arbitrage | $1,542 | $1,126 | | Event-Driven Value | $195 | $180 | | Other | $44 | $45 | | **Total** | **$1,781** | **$1,351** | - The company's direct investment business operates through three pillars: **Gabelli Private Equity Partners (GPEP)**, **Gabelli Special Purpose Acquisition Vehicles (SPAC)**, and **Gabelli Principal Strategies Group (GPS)**[20](index=20&type=chunk) - On August 5, 2020, AC completed the spin-off of its **83.3% stake in Morgan Group Holding Co.**, with historical financial results presented as discontinued operations[24](index=24&type=chunk)[25](index=25&type=chunk) - The company's business is subject to extensive regulation in the U.S. and Europe, impacting operations and compliance costs[34](index=34&type=chunk)[35](index=35&type=chunk)[43](index=43&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is not required to disclose specific risk factors - Disclosure of risk factors is **not required** as the company qualifies as a smaller reporting company[54](index=54&type=chunk) [Unresolved Staff Comments](index=11&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are **no unresolved staff comments** as of the report date[54](index=54&type=chunk) [Properties](index=11&type=section&id=Item%202.%20Properties) The company owns office properties in Greenwich, CT, and London, UK, leasing portions to affiliates, and subleases office space in Rye, NY - Owns office property in Greenwich, CT, leasing a portion to affiliates and receiving **$118.1 thousand** in 2021[55](index=55&type=chunk) - Owns a property in London, UK, fully leased to its former parent GAMCO, generating **$275.4 thousand** in 2021[55](index=55&type=chunk) - Paid **$73.7 thousand** in 2021 to GAMCO for a sublease at its Rye, NY offices[56](index=56&type=chunk) [Legal Proceedings](index=11&type=section&id=Item%203.%20Legal%20Proceedings) The company is not subject to material legal proceedings, with management assessing potential losses as immaterial to financial condition or operations - The company is **not subject to any legal proceedings** where the claim for damages exceeds **10% of its consolidated assets**[57](index=57&type=chunk) - Management concluded that potential losses from current legal actions are **not material** to the company's financial condition, operations, or cash flows as of December 31, 2021[57](index=57&type=chunk) [Mine Safety Disclosures](index=12&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - The company has **no mine safety disclosures** to report[59](index=59&type=chunk) Part II [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=12&type=section&id=Item%205.%20Market%20for%20Registrant%E2%80%99s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under 'AC', with an active stock repurchase program that repurchased **4,302 shares** in Q4 2021 - Class A common stock is traded on the **New York Stock Exchange** under the symbol **AC**[59](index=59&type=chunk) Class A Common Stock Repurchases (Quarter Ended Dec 31, 2021) | Period | Total Shares Repurchased | Average Price Paid ($) | Shares Remaining for Repurchase | | :--- | :--- | :--- | :--- | | Oct 2021 | 2,276 | 36.86 | 679,170 | | Nov 2021 | 2,026 | 36.08 | 677,144 | | Dec 2021 | 0 | - | 677,144 | | **Total** | **4,302** | **36.49** | **677,144** | - The company's stock repurchase program **does not have an expiration date**[61](index=61&type=chunk) [Selected Financial Data](index=12&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, the company is not required to provide selected financial data - Disclosure of selected financial data is **not required** as the company qualifies as a smaller reporting company[65](index=65&type=chunk) [Management’s Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%207.%20Management%E2%80%99s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, the company's financial performance significantly improved, driven by higher investment gains and increased assets under management, leading to **$59.2 million net income** and **$1.78 billion AUM** Financial Highlights (Full Year) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | AUM - end of period (in millions) | $1,781 | $1,351 | | Net income per share-diluted | $2.68 | $0.84 | | Book Value Per Share | $42.48 | $40.36 | Year-over-Year Operating Results (in thousands) | Line Item | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $20,924 | $18,983 | 10.2% | | Compensation | $24,457 | $19,436 | 25.8% | | Management Fee | $8,426 | $3,101 | 171.7% | | Net Gain from Investments | $93,405 | $36,864 | 153.4% | | Net Income Attributable to AC | $59,203 | $18,816 | 214.6% | Change in Assets Under Management (AUM) for 2021 (in millions) | Strategy | Beginning AUM | Inflows | Outflows | Investment Return | Ending AUM | | :--- | :--- | :--- | :--- | :--- | :--- | | Merger Arbitrage | $1,126 | $566 | $(200) | $50 | $1,542 | | Event-Driven Value | $180 | $5 | $(12) | $22 | $195 | | Other | $45 | $0 | $(3) | $2 | $44 | | **Total** | **$1,351** | **$571** | **$(215)** | **$74** | **$1,781** | Summary Cash Flow Data (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Operating Activities | $238,194 | $(279,483) | | Investing Activities | $65,285 | $(174,072) | | Financing Activities | $(14,394) | $150,949 | [Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - Disclosure of quantitative and qualitative information about market risk is **not required** as the company qualifies as a smaller reporting company[120](index=120&type=chunk) [Financial Statements and Supplementary Data](index=20&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2021 and 2020, including income, financial condition, equity, and cash flows, with an unqualified opinion from Deloitte & Touche, LLP - The independent auditor, **Deloitte & Touche, LLP**, issued an **unqualified opinion** on the consolidated financial statements[123](index=123&type=chunk)[127](index=127&type=chunk) [Consolidated Statements of Income](index=23&type=section&id=Consolidated%20Statements%20of%20Income) For 2021, the company reported **$20.9 million in total revenues** and a **$19.1 million operating loss**, but achieved **$59.2 million net income** due to a **$93.4 million net gain from investments** Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenues | $20,924 | $18,983 | | Total Expenses | $40,000 | $31,452 | | Operating Loss | $(19,076) | $(12,469) | | Total Other Income, net | $100,415 | $42,352 | | Net Income Attributable to AC | $59,203 | $18,816 | | Diluted EPS | $2.68 | $0.84 | [Consolidated Statements of Financial Condition](index=25&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) As of December 31, 2021, total assets were **$1.20 billion**, primarily cash and investments, with total equity increasing to **$937.1 million** driven by net income Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $319,048 | $39,509 | | Total Investments | $623,091 | $888,939 | | Total Assets | $1,203,336 | $1,174,545 | | Total Liabilities | $65,534 | $66,328 | | Total AC Equity | $937,102 | $898,938 | [Consolidated Statements of Cash Flows](index=29&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In 2021, the company generated **$238.2 million** from operating activities, with cash and cash equivalents increasing by **$289.1 million** overall Consolidated Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from Operating Activities | $238,194 | $(279,483) | | Net cash from Investing Activities | $65,285 | $(174,072) | | Net cash from Financing Activities | $(14,394) | $150,949 | | **Net Increase in Cash** | **$289,085** | **$(302,492)** | [Notes to Consolidated Financial Statements](index=31&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial results, covering consolidation, revenue recognition, fair value measurements, related party transactions, and equity plans - The company consolidates its **PMV Consumer Acquisition Corp. (PMV SPAC)**, which held **$175.1 million** in a trust account as of December 31, 2021[146](index=146&type=chunk)[222](index=222&type=chunk) - Performance-based advisory fees, typically **20% of investment performance**, are recognized at the end of the measurement period or upon investor redemption[181](index=181&type=chunk) - The company has significant related party transactions, including a **$8.4 million management fee** paid to the Executive Chair in 2021 and affiliations with GAMCO[251](index=251&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) - The company repurchased **215,958 shares** for **$7.6 million** in 2021 and paid **$0.20 per share** in dividends, totaling **$4.4 million**[274](index=274&type=chunk)[275](index=275&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=55&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - There were **no disagreements with accountants** on accounting and financial disclosure[285](index=285&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2021, having remediated a material weakness in internal control over financial reporting - Management concluded that **disclosure controls and procedures were effective** as of December 31, 2021[286](index=286&type=chunk)[287](index=287&type=chunk) - A material weakness in internal control over financial reporting identified as of December 31, 2020, has been **remediated** as of December 31, 2021[291](index=291&type=chunk)[293](index=293&type=chunk) - Remediation efforts included hiring new personnel, implementing new policies, and enhancing controls[292](index=292&type=chunk) [Other Information](index=56&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - There is **no information to disclose** under this item[295](index=295&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=56&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2022 Annual Meeting of Stockholders proxy statement - Required information regarding directors, executive officers, and corporate governance is **incorporated by reference** from the company's Proxy Statement[296](index=296&type=chunk) [Executive Compensation](index=56&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's 2022 Annual Meeting of Stockholders proxy statement - Required information regarding executive compensation is **incorporated by reference** from the company's Proxy Statement[299](index=299&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=56&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's 2022 Annual Meeting of Stockholders proxy statement - Required information regarding security ownership is **incorporated by reference** from the company's Proxy Statement[299](index=299&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=56&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's 2022 Annual Meeting of Stockholders proxy statement - Required information regarding related transactions and director independence is **incorporated by reference** from the company's Proxy Statement[299](index=299&type=chunk) [Principal Accountant Fees and Services](index=56&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's 2022 Annual Meeting of Stockholders proxy statement - Required information regarding principal accountant fees and services is **incorporated by reference** from the company's Proxy Statement[300](index=300&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=56&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K report, including consolidated financial statements and various exhibits - This section provides an index to the consolidated financial statements and a list of all exhibits filed with the report[300](index=300&type=chunk)[303](index=303&type=chunk) [Form 10-K Summary](index=59&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - **No Form 10-K summary** is provided[305](index=305&type=chunk)

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for Associated Capital Group, Inc. show increased assets and a significant net income turnaround driven by investment gains [Condensed Consolidated Statements of Financial Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) As of June 30, 2021, total assets increased to $1.208 billion, driven by higher cash and equity investments, with corresponding increases in liabilities and equity Condensed Consolidated Statements of Financial Condition (in thousands) | Account | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$1,207,951** | **$1,174,545** | | Cash and cash equivalents | $269,271 | $39,509 | | Investments in equity securities | $284,916 | $249,887 | | Investments in U.S. Treasury Bills | $74,993 | $344,453 | | **Total Liabilities** | **$78,917** | **$66,328** | | **Total Equity** | **$932,465** | **$901,389** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the six months ended June 30, 2021, net income attributable to shareholders was $48.3 million, a significant turnaround from a prior-year loss, primarily due to substantial investment gains Key Income Statement Data (in thousands) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $2,489 | $2,067 | $4,814 | $5,029 | | Operating loss | $(10,411) | $(3,661) | $(16,776) | $(4,301) | | Net gain/(loss) from investments | $42,306 | $51,685 | $73,627 | $(50,404) | | Net income/(loss) attributable to AC | $29,716 | $35,237 | $48,271 | $(38,118) | | Diluted EPS | $1.34 | $1.57 | $2.18 | $(1.70) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash provided by operating activities significantly reversed to $231.7 million, leading to a substantial increase in cash and cash equivalents Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $231,661 | $(253,046) | | Net cash provided by/(used in) investing activities | $5,602 | $(10,016) | | Net cash provided by (used in) financing activities | $(7,501) | $(9,200) | | **Net increase in cash and cash equivalents** | **$229,762** | **$(272,262)** | | Cash and cash equivalents at end of period | $269,271 | $69,739 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, investment portfolio composition, the impact of consolidating entities like the PMV SPAC, and disclosures on revenue, taxes, equity, and discontinued operations - The company provides alternative investment management services and derives income from proprietary investments. Key corporate events include the 2020 spin-off of Morgan Group and the sponsorship of PMV Consumer Acquisition Corp., a SPAC, which is consolidated in the financial statements[34](index=34&type=chunk)[36](index=36&type=chunk)[42](index=42&type=chunk) Revenue Breakdown (in thousands) | Revenue Source | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Asset-based advisory fees | $1,249 | $1,303 | $2,432 | $3,123 | | Sub-advisory fees | $1,092 | $555 | $2,125 | $1,435 | | **Total Inv. advisory & incentive fees** | **$2,388** | **$1,858** | **$4,613** | **$4,558** | - The consolidation of PMV SPAC and its Sponsor significantly impacts the balance sheet, adding **$177.2 million** in assets and **$155.7 million** in redeemable noncontrolling interests as of June 30, 2021[38](index=38&type=chunk)[61](index=61&type=chunk) - The company's effective tax rate for the six months ended June 30, 2021 was **23.31%**, differing from the 21% U.S. corporate rate primarily due to state/local taxes and the dividends received deduction[89](index=89&type=chunk) - During the six months ended June 30, 2021, the company repurchased **0.2 million shares** for **$6.1 million**. As of June 30, 2021, **720,023 shares** remained authorized for repurchase[109](index=109&type=chunk) - The spin-off of Morgan Group was completed on August 5, 2020. Its historical financial results are presented as discontinued operations. For the six months ended June 30, 2020, discontinued operations resulted in a net loss of **$493,000** attributable to AC shareholders[43](index=43&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant improvement in net income for the first six months of 2021 to strong investment performance and AUM growth, while maintaining a robust liquidity position [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2021 net income decreased due to higher operating expenses, but the six-month period saw a significant net income turnaround driven by investment gains - **Q2 2021 vs Q2 2020:** The operating loss increased to **$10.4 million** from **$3.7 million**, primarily due to a **$4.3 million** increase in management fees and a **$1.9 million** rise in compensation costs[137](index=137&type=chunk) - **Six Months 2021 vs 2020:** The operating loss widened to **$16.8 million** from **$4.3 million**. However, a significant swing in investment performance (a **$73.6 million** gain vs a **$50.4 million** loss) led to net income of **$48.3 million** compared to a net loss of **$38.1 million** in the prior year[141](index=141&type=chunk) - Interest and dividend income for the six months of 2021 increased to **$8.0 million** from **$3.5 million** in 2020, mainly due to a special dividend from GAMCO holdings[145](index=145&type=chunk) [Assets Under Management](index=29&type=section&id=Assets%20Under%20Management) Total Assets Under Management (AUM) reached **$1.611 billion** as of June 30, 2021, driven by both market appreciation and significant net inflows Assets Under Management by Strategy (in millions) | Strategy | June 30, 2021 | Dec 31, 2020 | June 30, 2020 | | :--- | :--- | :--- | :--- | | Event Merger Arbitrage | $1,364 | $1,126 | $1,147 | | Event-Driven Value | $201 | $180 | $104 | | Other | $46 | $45 | $54 | | **Total AUM** | **$1,611** | **$1,351** | **$1,305** | - In Q2 2021, AUM increased by **$116 million**, resulting from **$75 million** in net cash flows and **$41 million** in market appreciation[149](index=149&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial cash and investments, with operating activities generating significant cash in the first half of 2021 Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Operating activities | $231,661 | $(253,046) | | Investing activities | $5,602 | $(10,016) | | Financing activities | $(7,501) | $(9,200) | [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Associated Capital Group, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[156](index=156&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2021, due to a material weakness in internal control over financial reporting stemming from insufficient technical accounting personnel - Management concluded that disclosure controls and procedures were not effective as of June 30, 2021, due to a material weakness in internal control over financial reporting[157](index=157&type=chunk) - The material weakness, identified in 2019, was caused by insufficient personnel with technical accounting skills, resulting in a lack of segregation of duties[163](index=163&type=chunk) - Remediation steps include hiring additional qualified personnel and reassigning financial reporting responsibilities. The material weakness will not be considered remediated until the new controls operate effectively for a sufficient period[165](index=165&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any legal proceedings expected to have a material impact on its consolidated financial condition, operations, or cash flows - The company is not subject to any legal proceedings where a claim for damages exceeds **10%** of its consolidated assets. Management believes any current matters are not material to the company's financial condition[169](index=169&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2021, the company repurchased **53,992 shares** of its Class A Stock for approximately **$1.9 million** as part of its stock repurchase program Class A Stock Repurchases for Q2 2021 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2021 | 33,913 | $34.44 | | May 2021 | 14,639 | $35.73 | | June 2021 | 5,440 | $37.13 | | **Total** | **53,992** | **$35.06** | [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes standard exhibits such as CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL interactive data files (101 series)[174](index=174&type=chunk)[175](index=175&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls for the reporting period [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The unaudited financial statements for Q1 2021 show a significant net income turnaround driven by investment gains and stable total assets [Condensed Consolidated Statements of Financial Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) Total assets slightly decreased to $1.171 billion, while total equity increased to $915.7 million as of March 31, 2021 Key Balance Sheet Items (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $279,725 | $39,509 | | Investments in U.S. Treasury Bills | $75,000 | $344,453 | | Total assets | $1,171,266 | $1,174,545 | | **Liabilities & Equity** | | | | Total liabilities | $60,450 | $66,328 | | Total equity | $915,746 | $901,389 | | Total liabilities and equity | $1,171,266 | $1,174,545 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company reported a net income of $18.6 million for Q1 2021, a significant improvement driven by investment gains Income Statement Summary (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Total revenues | $2,325 | $2,962 | | Total expenses | $8,690 | $3,602 | | Operating loss | $(6,365) | $(640) | | Net gain/(loss) from investments | $31,321 | $(102,089) | | Net income/(loss) attributable to ACG | $18,555 | $(73,355) | | Diluted EPS | $0.83 | $(3.27) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to $243.6 million, ending Q1 2021 with $279.7 million in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $243,568 | $27,535 | | Net cash provided by/(used in) investing activities | $710 | $(10,607) | | Net cash (used in) financing activities | $(4,062) | $(6,004) | | **Net increase in cash** | **$240,216** | **$10,006** | | Cash at end of period | $279,725 | $352,007 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, significant disclosures including SPAC consolidation, revenue breakdown, and subsequent events - The company sponsored the **$175 million IPO** of its SPAC, PMV Consumer Acquisition Corp. (NYSE:PMVC), in September 2020[33](index=33&type=chunk)[34](index=34&type=chunk) - AC consolidates PMV as it is the primary beneficiary of the Sponsor VIE, resulting in the consolidation of **$177.4 million of assets** and **$154.5 million of redeemable noncontrolling interests** as of March 31, 2021[35](index=35&type=chunk) - The spin-off of Morgan Group Holding Co. was completed on August 5, 2020, with its historical financial results presented as discontinued operations through March 31, 2020[39](index=39&type=chunk)[40](index=40&type=chunk)[96](index=96&type=chunk) Revenue Breakdown (in thousands) | Revenue Source | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Asset-based advisory fees | $1,183 | $1,820 | | Performance-based advisory fees | $9 | $0 | | Sub-advisory fees | $1,033 | $880 | | **Total Inv. advisory & incentive fees** | **$2,225** | **$2,700** | - For the three months ended March 31, 2021, the company repurchased **0.1 million shares** at an average price of **$35.24 per share** for a total of **$4.2 million**[89](index=89&type=chunk)[90](index=90&type=chunk) - As of March 31, 2021, **774,015 shares** remained available for repurchase under the program[90](index=90&type=chunk) - Subsequent to the quarter's end, on May 5, 2021, the board declared a semi-annual dividend of **$0.10 per share**[101](index=101&type=chunk) - Between April 1 and May 6, 2021, the company repurchased another **40,229 shares**[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Q1 2021 financial performance, highlighting net income growth from investment gains and AUM increase [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Operating loss widened to $6.4 million due to increased expenses, but overall profitability was driven by significant investment gains - The primary reason for the shift from a net loss of **$73.4 million** in Q1 2020 to a net income of **$18.6 million** in Q1 2021 was the mark-to-market changes in the investment portfolio, resulting in a gain of **$30.7 million** in 'Other income' versus a loss of **$100.1 million** in the prior year[125](index=125&type=chunk) - Compensation expense rose to **$3.9 million** from **$2.2 million** year-over-year, largely due to an increase in stock-based compensation from **$(0.8) million** to **$0.4 million**, reflecting the recovery of AC's stock price[127](index=127&type=chunk) - A management fee expense of **$2.7 million** was recorded in Q1 2021, payable to the Executive Chairman based on 10% of aggregate pre-tax profits, with no such fee recorded in Q1 2020 due to a pre-tax loss[128](index=128&type=chunk) [Assets Under Management](index=28&type=section&id=Assets%20Under%20Management) Assets Under Management reached $1.495 billion, increasing 10.7% from year-end 2020 due to net inflows and market appreciation AUM by Strategy (in millions) | Strategy | March 31, 2021 | Dec 31, 2020 | March 31, 2020 | | :--- | :--- | :--- | :--- | | Event Merger Arbitrage | $1,253 | $1,126 | $1,312 | | Event-Driven Value | $196 | $180 | $112 | | Other | $46 | $45 | $49 | | **Total AUM** | **$1,495** | **$1,351** | **$1,473** | AUM Flow for Q1 2021 (in millions) | Metric | Amount | | :--- | :--- | | AUM at Dec 31, 2020 | $1,351 | | Market appreciation | $33 | | Net cash flows | $111 | | **AUM at March 31, 2021** | **$1,495** | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $279.7 million in cash and significant operating cash flow - The company ended Q1 2021 with cash and cash equivalents of **$279.7 million**, Investments in U.S. Treasury Bills of **$75.0 million**, and **$566.7 million** of investments net of securities sold short[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in internal control over financial reporting, with remediation ongoing - Management concluded that disclosure controls and procedures were not effective as of March 31, 2021, due to a material weakness in internal control over financial reporting[142](index=142&type=chunk) - The material weakness, identified in 2019, was caused by insufficient personnel with technical accounting skills, leading to a lack of segregation of duties between financial statement preparation and senior management review[147](index=147&type=chunk) - Remediation steps include hiring additional qualified personnel, assigning distinct preparation and review responsibilities, and documenting these processes[150](index=150&type=chunk) - The material weakness will not be considered fully remediated until the new controls have operated effectively for a sufficient period[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details legal proceedings, unregistered sales of equity securities, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) As of March 31, 2021, the company is not subject to any legal proceedings expected to materially impact its financial condition or operations - As of March 31, 2021, the company is not subject to any legal proceedings where a claim for damages exceeds **10% of its consolidated assets**[153](index=153&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2021, the company repurchased 119,087 shares of its Class A Stock at an average price of $35.24 per share Class A Stock Repurchases for Q1 2021 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2021 | 28,026 | $34.84 | | Feb 2021 | 33,792 | $35.35 | | Mar 2021 | 57,269 | $35.39 | | **Total** | **119,087** | **$35.24** | [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files

Part I [Business](index=5&type=section&id=Item%201.%20Business) Associated Capital Group, Inc. (AC) provides alternative investment management services and operates a direct investment business through its subsidiary, Gabelli & Company Investment Advisers, Inc - The company provides alternative investment management services and operates a direct investment business, investing in new and existing businesses[16](index=16&type=chunk) - Investment management activities are conducted through its wholly-owned subsidiary Gabelli & Company Investment Advisers, Inc. (GCIA), which serves as a general partner or investment manager to various investment funds[17](index=17&type=chunk) - The company's direct investment business is structured around three pillars: Gabelli Private Equity Partners, LLC (GPEP), the SPAC business, and Gabelli Principal Strategies Group, LLC (GPS)[22](index=22&type=chunk) [Assets Under Management](index=6&type=section&id=Item%201.%20Business%20-%20Assets%20Under%20Management) As of December 31, 2020, Associated Capital Group managed approximately **$1,351 million** in assets, a decrease from **$1,716 million** at the end of 2019, primarily in Event Merger Arbitrage strategy Assets Under Management (in millions) | Strategy | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Event Merger Arbitrage | $1,126 | $1,525 | | Event-Driven Value | $180 | $132 | | Other | $45 | $59 | | **Total** | **$1,351** | **$1,716** | - Total AUM includes **$235 million** of proprietary capital as of December 31, 2020, compared to **$259 million** in the prior year[21](index=21&type=chunk) [Morgan Group Holding Co. Spin-Off](index=7&type=section&id=Item%201.%20Business%20-%20Morgan%20Group%20Holding%20Co.%20Spin-Off) The company completed the spin-off of its 83.3% stake in Morgan Group Holding Co., including its institutional research services business, on August 5, 2020 - The spin-off of Morgan Group Holding Co., which included the institutional research services business, was completed on August 5, 2020[25](index=25&type=chunk) - AC shareholders received approximately **0.022356 shares** of Morgan Group common stock for each share of AC common stock held[25](index=25&type=chunk) - The historical financial results of Morgan Group are reported as discontinued operations for all periods presented through August 5, 2020[26](index=26&type=chunk) [Business Strategy](index=7&type=section&id=Item%201.%20Business%20-%20Business%20Strategy) The company's strategy focuses on global growth through its "Private Market Value (PMV) with a Catalyst™" approach, expanding advisory business, direct investments, and international partnerships - Continuing the "Private Market Value (PMV) with a Catalyst™" investing approach, based on Graham & Dodd principles[28](index=28&type=chunk) - Growing the Investment Partnerships advisory business by introducing new products and expanding internationally[28](index=28&type=chunk) - Leveraging research capabilities to pursue acquisitions, alliances, and direct investments, such as the **$175 million** IPO of its SPAC, PMV Consumer Acquisition Corp[29](index=29&type=chunk) - Pursuing partnerships and joint ventures, particularly with firms that have Asian/European distribution capabilities[30](index=30&type=chunk) [Regulation](index=9&type=section&id=Item%201.%20Business%20-%20Regulation) The company's operations are subject to extensive U.S. and European regulations, including SEC, ERISA, FATCA, CRS, AIFMD, UCITS, and MiFID II, with Brexit adding regulatory uncertainty - The company and its U.S. subsidiaries are primarily regulated at the federal level by the SEC and the Department of Labor[36](index=36&type=chunk) - European activities are impacted by the EU's Alternative Investment Fund Managers Directive (AIFMD), which regulates managers of alternative investment funds and restricts marketing within the EEA[45](index=45&type=chunk) - The EU's revised Markets in Financial Instruments Directive (MiFID II) created new rules regarding the use of "soft dollars" to pay for research, requiring firms to pay for it from their own resources or a separate client research payment account[49](index=49&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Associated Capital Group, Inc. is not required to provide the information for this item - Smaller reporting companies are not required to provide the information required by this item[59](index=59&type=chunk) [Properties](index=12&type=section&id=Item%202.%20Properties) The company owns its main offices in Greenwich, CT, and acquired a London property in 2020, which is fully leased to its affiliate, GAMCO - The company owns its offices at 191 Mason Street, Greenwich, CT through a wholly owned subsidiary[60](index=60&type=chunk) - On March 3, 2020, AC acquired a property in London, UK, which is fully leased to GAMCO[60](index=60&type=chunk) [Legal Proceedings](index=13&type=section&id=Item%203.%20Legal%20Proceedings) The company is not subject to material legal proceedings, and management believes potential losses from current matters are not material to its financial condition as of December 31, 2020 - The company is not currently subject to any legal proceedings with claims exceeding **10%** of its consolidated assets[62](index=62&type=chunk) - Management believes that potential losses from any current legal or regulatory matters are not material to the company's financial condition as of December 31, 2020[62](index=62&type=chunk) Part II [Market For The Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities](index=13&type=section&id=Item%205.%20Market%20For%20The%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20And%20Issuer%20Purchases%20Of%20Equity%20Securities) The company's Class A Stock trades on the NYSE under 'AC', and it has an active, expanded stock repurchase program, with **58,769 shares** repurchased in Q4 2020 - The company's Class A Stock is traded on the NYSE under the symbol AC[63](index=63&type=chunk) Class A Stock Repurchases (Q4 2020) | Period | Total Shares Repurchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | Oct 2020 | 27,668 | $33.93 | | Nov 2020 | 5,064 | $35.25 | | Dec 2020 | 26,037 | $35.69 | | **Total Q4** | **58,769** | **$34.82** | - As of December 31, 2020, **893,102 shares** remained available for repurchase under the publicly announced program[65](index=65&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%207.%20Management%27s%20Discussion%20And%20Analysis%20Of%20Financial%20Condition%20And%20Results%20Of%20Operations) In 2020, the company's AUM decreased to **$1,351 million**, total revenues fell **14.5%** to **$19.0 million**, and net income decreased to **$18.8 million**, while maintaining strong liquidity - The COVID-19 pandemic and resulting economic dislocations did not have a significant adverse impact on the company's AUM or operations, with most employees working remotely without material disruption[69](index=69&type=chunk)[70](index=70&type=chunk) Financial Highlights (Year Ended Dec 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | AUM (end of period, in millions) | $1,351 | $1,716 | | Average AUM (in millions) | $1,399 | $1,621 | | Net income per share – diluted ($) | $0.84 | $1.74 | | Book Value Per Share ($) | $40.36 | $39.89 | - The company ended 2020 with approximately **$911 million** in cash and investments, providing flexibility for strategic objectives[76](index=76&type=chunk) [Assets Under Management Highlights](index=16&type=section&id=Item%207.%20MD%26A%20-%20Assets%20Under%20Management%20Highlights) Total AUM decreased by **21.3%** to **$1,351 million** in 2020, primarily due to **$450 million** net outflows from a single institutional client redemption in the Event Merger Arbitrage strategy AUM by Strategy (in millions) | Strategy | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Event Merger Arbitrage | $1,126 | $1,525 | (26.2)% | | Event-Driven Value | $180 | $132 | 36.4% | | Other | $45 | $59 | (23.7)% | | **Total** | **$1,351** | **$1,716** | **(21.3)%** | Changes in AUM during 2020 (in millions) | Strategy | Beginning AUM | Inflows | Outflows | Investment Return | Ending AUM | | :--- | :--- | :--- | :--- | :--- | :--- | | Event Merger Arbitrage | $1,525 | $212 | $(690) | $79 | $1,126 | | Event-Driven Value | $132 | $64 | $(19) | $3 | $180 | | Other | $59 | $1 | $(18) | $3 | $45 | | **Total AUM** | **$1,716** | **$277** | **$(727)** | **$85** | **$1,351** | - The decline in AUM was primarily due to a **$450 million** net outflow, largely from a redemption by one institutional client following its merger[81](index=81&type=chunk) [Operating Results (2020 vs. 2019)](index=16&type=section&id=Item%207.%20MD%26A%20-%20Operating%20Results%20(2020%20vs.%202019)) Net income decreased to **$18.8 million** in 2020 from **$39.2 million** in 2019, driven by lower net gains from investments and a **14.5%** decrease in total revenues Revenue Breakdown (in thousands) | Revenue Type | 2020 | 2019 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Investment advisory and incentive fees | $18,288 | $22,148 | $(3,860) | (17.4)% | | Other revenues | $695 | $57 | $638 | 1,119.3% | | **Total revenues** | **$18,983** | **$22,205** | **$(3,222)** | **(14.5)%** | - Compensation expense decreased by **$4.4 million** to **$19.4 million** in 2020, primarily due to lower variable payouts tied to performance fees[88](index=88&type=chunk) - Net gains from investments decreased to **$36.9 million** in 2020 from **$60.8 million** in 2019, mainly due to mark-to-market changes in the proprietary portfolio[89](index=89&type=chunk) - The effective tax rate for 2020 was **31.4%**, higher than the statutory **21%** rate, primarily due to state income taxes, a valuation allowance on charitable contributions, and foreign investments[90](index=90&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with **$39.5 million** in cash and equivalents, with net cash used in operating activities at **$279.5 million** and net cash provided by financing activities at **$150.9 million** in 2020 Summary Cash Flow Data (in thousands) | Activity | Year Ended 2020 | Year Ended 2019 | | :--- | :--- | :--- | | Operating activities (continuing) | $(279,483) | $(41,964) | | Investing activities (continuing) | $(174,072) | $(5,058) | | Financing activities (continuing) | $150,949 | $(11,584) | | **Net decrease in cash** | **$(302,492)** | **$(60,976)** | - At December 31, 2020, the company had **$39.5 million** in cash and cash equivalents, **$344.4 million** in U.S. Treasury Bills, and **$527.0 million** in other investments (net)[95](index=95&type=chunk) [Critical Accounting Policies](index=19&type=section&id=Item%207.%20MD%26A%20-%20Critical%20Accounting%20Policies) Key accounting policies involve significant judgment in revenue recognition, investment valuation, entity consolidation, and income tax accounting, with incentive fees recognized at the end of annual measurement periods - Revenue is primarily derived from investment advisory and incentive fees. Incentive fees are generally recognized at the end of an annual measurement period[102](index=102&type=chunk)[103](index=103&type=chunk) - Investments in securities are recorded at fair value, with gains and losses recorded on a trade date basis[105](index=105&type=chunk) - The company consolidates entities where it is determined to be the primary beneficiary, defined as having both the power to direct significant activities and the obligation/right to absorb significant losses/benefits[110](index=110&type=chunk) - The provision for income taxes is computed using the asset and liability method, requiring recognition of deferred tax assets and liabilities. A valuation allowance is recorded if it is more likely than not that deferred tax assets will not be realized[115](index=115&type=chunk) [Financial Statements and Supplementary Data](index=22&type=section&id=Item%208.%20Financial%20Statements%20And%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020 and 2019, including income, comprehensive income, financial condition, equity, and cash flow statements, along with detailed notes [Consolidated Statements of Income](index=24&type=section&id=Item%208.%20Financial%20Statements%20-%20Consolidated%20Statements%20of%20Income) For 2020, total revenues were **$19.0 million** and net income was **$18.8 million** (**$0.84** per diluted share), a decrease from 2019 due to lower net investment gains and advisory fees Consolidated Income Statement Highlights (in thousands) | Line Item | 2020 | 2019 | | :--- | :--- | :--- | | Total revenues | $18,983 | $22,205 | | Total expenses | $31,452 | $35,465 | | Operating loss | $(12,469) | $(13,260) | | Total other income, net | $42,352 | $70,483 | | Income before income taxes | $29,883 | $57,223 | | **Net income attributable to AC shareholders** | **$18,816** | **$39,188** | Earnings Per Share (Diluted) ($) | Category | 2020 | 2019 | | :--- | :--- | :--- | | Continuing operations | $0.87 | $1.82 | | Discontinued operations | $(0.03) | $(0.08) | | **Total** | **$0.84** | **$1.74** | [Consolidated Statements of Financial Condition](index=26&type=section&id=Item%208.%20Financial%20Statements%20-%20Consolidated%20Statements%20of%20Financial%20Condition) As of December 31, 2020, total assets increased to **$1,174.5 million** from **$1,010.9 million** in 2019, driven by investments in U.S. Treasury Bills, with total equity at **$898.9 million** Consolidated Balance Sheet Highlights (in thousands) | Line Item | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $39,509 | $342,001 | | Investments in U.S. Treasury Bills | $344,453 | $29,037 | | Investments in U.S. Treasury Bills held in trust | $175,040 | $0 | | **Total assets** | **$1,174,545** | **$1,010,906** | | **Total liabilities** | **$66,328** | **$63,086** | | **Total AC Group, Inc. equity** | **$898,938** | **$896,432** | [Notes to Consolidated Financial Statements](index=31&type=section&id=Item%208.%20Financial%20Statements%20-%20Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information on the company's organization, accounting policies, investments, fair value measurements, income taxes, related party transactions, equity, and discontinued operations - On September 22, 2020, the company's SPAC, PMV Consumer Acquisition Corp., completed a **$175 million** IPO. AC has a controlling financial interest and consolidates PMV in its financial statements (Note A)[154](index=154&type=chunk)[155](index=155&type=chunk) - The company's revenue is primarily from asset-based advisory fees, recognized over time, and performance-based fees, which are generally recognized at the end of a measurement period when uncertainty is resolved (Note C)[210](index=210&type=chunk)[211](index=211&type=chunk) - The company holds a significant investment in its affiliate, GAMCO (GBL), valued at **$48.9 million** as of December 31, 2020 (Note I)[269](index=269&type=chunk) - The spin-off of Morgan Group was completed on August 5, 2020, and its historical results are presented as discontinued operations (Note N)[289](index=289&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%209A.%20Controls%20And%20Procedures) Management concluded that disclosure controls were ineffective as of December 31, 2020, due to a material weakness from insufficient technical accounting personnel and lack of segregation of duties, with a remediation plan in place - Management concluded that disclosure controls and procedures were not effective as of December 31, 2020[295](index=295&type=chunk) - A material weakness in internal control over financial reporting was identified, caused by insufficient personnel with technical accounting skills and a resulting lack of segregation of duties[300](index=300&type=chunk) - A remediation plan is in place, which includes hiring additional qualified personnel and reassigning financial reporting responsibilities to enhance segregation of duties[303](index=303&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership](index=58&type=section&id=Items%2010-14) Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, and security ownership, is incorporated by reference from the company's 2021 Proxy Statement - Information regarding Directors, Executive Officers, Corporate Governance (Item 10), Executive Compensation (Item 11), Security Ownership (Item 12), Certain Relationships and Related Transactions (Item 13), and Principal Accountant Fees (Item 14) is incorporated by reference from the Company's 2021 Proxy Statement[305](index=305&type=chunk)[308](index=308&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=59&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Form 10-K report, including consolidated financial statements and a detailed list of exhibits, with financial statement schedules omitted as not required - This section provides a list of all documents filed as part of the report, including financial statements and exhibits[311](index=311&type=chunk) - Financial statement schedules are omitted as they are not required or applicable[311](index=311&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements present the financial position, results of operations, comprehensive income, changes in equity, and cash flows for Associated Capital Group, Inc. as of and for the three and nine months ended September 30, 2020, reflecting the consolidation of PMV Consumer Acquisition Corp. SPAC and the spin-off of Morgan Group Holding Co. as discontinued operations [Condensed Consolidated Statements of Financial Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) - Total assets increased to **$1.10 billion** as of September 30, 2020, from **$1.01 billion** at December 31, 2019, largely driven by the consolidation of a Special Purpose Acquisition Corporation (SPAC), which added **$175 million** in 'Investments in government securities held in trust'[4](index=4&type=chunk) Condensed Consolidated Balance Sheet (in thousands) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $47,331 | $342,001 | | Investments in government securities | $330,942 | $29,037 | | Investments in equity securities | $213,586 | $271,320 | | Investments in government securities held in trust | $175,002 | $0 | | **Total Assets** | **$1,100,611** | **$1,010,906** | | **Liabilities & Equity** | | | | Total liabilities | $42,280 | $63,086 | | Redeemable noncontrolling interests | $204,164 | $50,385 | | Total Associated Capital Group, Inc. equity | $852,095 | $896,432 | | **Total Liabilities and Equity** | **$1,100,611** | **$1,010,906** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) - For the nine months ended September 30, 2020, the company reported a net loss of **$32.3 million**, a significant reversal from a net income of **$28.2 million** in the same period of 2019, primarily driven by a net loss from investments of **$34.8 million** in 2020 compared to a net gain of **$42.4 million** in 2019[7](index=7&type=chunk) Income Statement Highlights (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,945 | $2,754 | $6,974 | $8,211 | | Operating Loss | ($3,552) | ($2,593) | ($7,853) | ($11,148) | | Net Gain/(Loss) from Investments | $15,603 | $7,613 | ($34,770) | $42,358 | | Net Income/(Loss) Attributable to ACG | $5,815 | $5,951 | ($32,303) | $28,166 | | Diluted EPS - Total | $0.26 | $0.26 | ($1.44) | $1.25 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) - Cash and cash equivalents decreased by **$294.7 million** during the first nine months of 2020, ending the period at **$47.3 million**, primarily due to significant cash used in operating activities (**$272.2 million**) from investments in trading securities and investing activities (**$176.8 million**) related to the funding of a SPAC trust account[13](index=13&type=chunk)[15](index=15&type=chunk) Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($272,203) | ($42,321) | | Net cash used in investing activities | ($176,792) | ($3,591) | | Net cash provided by (used in) financing activities | $154,211 | ($10,211) | | **Net decrease in cash and cash equivalents** | **($294,670)** | **($58,630)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - On September 22, 2020, the company's SPAC, PMV Consumer Acquisition Corp., completed a **$175 million IPO**, leading AC to consolidate PMV, which significantly impacts the balance sheet by adding assets held in trust and redeemable noncontrolling interests[20](index=20&type=chunk)[22](index=22&type=chunk)[52](index=52&type=chunk) - On August 5, 2020, the company completed the spin-off of Morgan Group Holding Co. to its shareholders, with its historical financial results now presented as discontinued operations[26](index=26&type=chunk)[27](index=27&type=chunk)[87](index=87&type=chunk) Revenue Breakdown - Nine Months Ended Sep 30 (in thousands) | Revenue Type | 2020 | 2019 | | :--- | :--- | :--- | | Asset-based advisory fees | $4,284 | $5,208 | | Performance-based advisory fees | $8 | $61 | | Sub-advisory fees | $2,132 | $2,930 | | **Total Investment advisory and incentive fees** | **$6,424** | **$8,199** | - The company declared dividends of $0.10 per share for the nine months ended September 30, 2020 and repurchased approximately **143,000 shares for $5.4 million** during the same period[76](index=76&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a year-to-date operating loss of **$7.9 million**, an improvement from an **$11.1 million** loss in the prior year, despite lower revenues, with the overall net loss driven by mark-to-market losses on the investment portfolio, and key strategic developments including the spin-off of Morgan Group Holding Co. and the successful **$175 million IPO** of the PMV Consumer Acquisition Corp. SPAC, while Assets Under Management (AUM) declined to **$1.25 billion** due to market depreciation and redemptions [Results of Operations](index=33&type=section&id=Results%20of%20Operations) - **Q3 2020 vs Q3 2019:** The operating loss widened to **$3.6 million** from **$2.6 million**, driven by lower revenues and higher operating expenses, however, higher net investment gains of **$15.6 million** (vs. **$7.6 million** in Q3 2019) resulted in income from continuing operations of **$6.0 million**, comparable to the prior year[123](index=123&type=chunk)[130](index=130&type=chunk) - **Nine Months 2020 vs 2019:** The operating loss narrowed to **$7.9 million** from **$11.1 million** due to lower compensation and the absence of a management fee expense, however, a significant swing in investment performance from a **$42.4 million gain** in 2019 to a **$34.8 million loss** in 2020 led to a net loss from continuing operations of **$31.7 million**[132](index=132&type=chunk)[138](index=138&type=chunk) Key Performance Indicators (in thousands) | Metric | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | | Total Revenues | $6,974 | $8,211 | | Total Expenses | $14,827 | $19,359 | | Operating Loss | ($7,853) | ($11,148) | | Net (Loss)/Gain from Investments | ($34,770) | $42,358 | | Net (Loss)/Income from Continuing Operations | ($31,671) | $30,307 | [Assets Under Management](index=36&type=section&id=Assets%20Under%20Management) - Total Assets Under Management (AUM) decreased to **$1.25 billion** as of September 30, 2020, a **27.1% decline** from year-end 2019, attributed to market depreciation and investor redemptions[142](index=142&type=chunk) AUM by Strategy (in millions) | Strategy | Sep 30, 2020 | Dec 31, 2019 | % Change | | :--- | :--- | :--- | :--- | | Event Merger Arbitrage | $1,091 | $1,525 | (28.5)% | | Event-Driven Value | $105 | $132 | (20.5)% | | Other | $55 | $59 | (6.8)% | | **Total AUM** | **$1,251** | **$1,716** | **(27.1)%** | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's cash and cash equivalents decreased significantly to **$47.3 million** from **$342.0 million** at the start of the year, mainly due to cash used in operations for purchasing trading securities (**$283.1 million**) and cash used in investing for funding the PMV SPAC trust account (**$175 million**)[147](index=147&type=chunk)[148](index=148&type=chunk) - Financing activities provided **$154.2 million** in cash, primarily from **$162.6 million** in contributions from redeemable non-controlling interests related to the SPAC IPO, which offset cash used for dividends (**$4.5 million**) and stock buybacks (**$5.4 million**)[148](index=148&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a smaller reporting company, is not required to provide this information - As a smaller reporting company, this information is not required to be provided[152](index=152&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of September 30, 2020, the company's disclosure controls and procedures were **not effective**, based on a material weakness in internal control over financial reporting identified in 2019, relating to insufficient personnel with technical accounting skills and a lack of segregation of duties, with a remediation plan in progress - Management identified a material weakness in internal control over financial reporting, concluding that controls were **not effective** as of September 30, 2020[153](index=153&type=chunk)[158](index=158&type=chunk) - The material weakness stems from not having sufficient personnel with technical accounting skills, leading to a lack of segregation of duties between financial statement preparation and senior management review[159](index=159&type=chunk) - Remediation steps include appointing additional qualified personnel, assigning distinct preparation and review responsibilities, and searching for more finance staff, though the weakness is not yet considered fully remediated[162](index=162&type=chunk)[163](index=163&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal actions and regulatory examinations from time to time, but management believes any potential losses are not material to the company's financial condition or results of operations as of September 30, 2020 - Management does not believe that any current legal proceedings or regulatory matters will have a material impact on the company's financial condition, results of operations, or cash flows[165](index=165&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the third quarter of 2020, the company repurchased a total of **29,737 shares** of its Class A Common Stock at an average price of **$37.03 per share** under its publicly announced repurchase program Share Repurchases for Q3 2020 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jul 2020 | 804 | $35.94 | | Aug 2020 | 8,607 | $38.11 | | Sep 2020 | 20,326 | $36.62 | | **Total** | **29,737** | **$37.03** | [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CAO certifications and XBRL data files - The filing includes required certifications from the CEO and CAO pursuant to Sarbanes-Oxley Act rules, as well as XBRL interactive data files[168](index=168&type=chunk)