Associated Capital Group(AC) - 2024 Q4 - Annual Report

Assets Under Management (AUM) - As of December 31, 2024, the company managed approximately $1.25 billion in assets under management (AUM), a decrease from$ 1.59 billion at December 31, 2023, representing a decline of about 21.6%[26] - The AUM composition includes 80.4% from merger arbitrage ( $1.003 billion) and 16.7% from long/short value strategies ($ 209 million) as of December 31, 2024[26] - Total assets under management (AUM) decreased by 21.6% to $1,248 million as of December 31, 2024, down from$ 1,591 million in 2023[96] - The company’s revenues are highly correlated to the level of assets under management (AUM) and investment performance[112] Financial Performance - Net income for the year ended December 31, 2024, was $44.3 million, an increase from$ 37.5 million in 2023, primarily driven by higher dividend income[110] - Total revenues for 2024 were $13.2 million, a 3.9% increase from$ 12.7 million in 2023[100] - Investment advisory and incentive fees rose to $12.8 million in 2024, compared to$ 12.3 million in 2023, reflecting a 3.5% increase[101] - Total revenues for 2024 increased to $13,175,000 from$ 12,683,000 in 2023, representing a growth of 3.9%[154] - Net income attributable to Associated Capital Group, Inc.'s shareholders rose to $44,328,000 in 2024, compared to$ 37,451,000 in 2023, marking an increase of 18.7%[154] - Basic and diluted net income per share increased to $2.08 in 2024 from$ 1.72 in 2023, reflecting a growth of 20.9%[154] Cash and Investments - Cash and cash equivalents at the end of 2024 totaled $299.6 million, down from$ 317.5 million in 2023[86] - The company ended 2024 with approximately $864.1 million in cash and investments, providing flexibility for strategic objectives[94] - The company had cash and cash equivalents of$ 325.7 million at the end of 2024, down from $347.1 million at the end of 2023[112] - The company reported a net decrease in cash, cash equivalents, and restricted cash of$ 21.4 million in 2024[112] - The company had investments in U.S. Treasury Bills totaling $68.3 million as of December 31, 2024[112] Expenses and Liabilities - Management fee expense increased to$ 5.9 million in 2024 from $5.4 million in 2023[105] - Total liabilities increased to$ 36,991,000 in 2024 from $30,719,000 in 2023, an increase of 20.3%[157] - Dividends declared increased to$ 46,750,000 in 2024 from $4,346,000 in 2023, a significant rise[161] - Net cash provided by operating activities decreased to$ 26,874,000 in 2024 from $145,075,000 in 2023, a decline of 81.5%[166] - Net cash used in financing activities increased to$ 59,208,000 in 2024 from $25,039,000 in 2023, an increase of 136.1%[168] Strategic Initiatives - The company is reviewing the launch of new products, including private equity and direct investment funds, to leverage its core strengths in fundamental investing[25] - The company aims to grow its Investment Partnerships advisory operations by introducing new products and expanding internationally[31] - The company plans to pursue partnerships and joint ventures to enhance its product offerings and distribution capabilities, particularly in Asian and European markets[35] - The company has a proprietary portfolio of cash and investments aimed at expanding geographic presence and pursuing strategic acquisitions[29] Regulatory and Compliance - The company is subject to extensive regulations, including the Advisers Act, which imposes fiduciary duties and disclosure obligations on registered investment advisers[41] - The company is subject to EU regulations on OTC derivatives, requiring central clearing and reporting of all derivative contracts[55] - The company is classified as a "smaller reporting company," allowing it to take advantage of certain exemptions from various reporting requirements[59] Competition and Market Position - The company faces intense competition in the alternative asset management industry, competing with larger firms that may have greater resources[36] - The Company’s principal market is in the United States, focusing on alternative investment management[172] Employee and Organizational Structure - As of March 11, 2025, the company had a full-time staff of 24, with 9 in portfolio management, research, and trading, 7 in marketing and shareholder servicing, and 8 in finance, legal, operations, and administration[58] Investment Strategies - The Company primarily earns management fees based on a percentage of assets under management, which directly influences revenue generation[203] - Performance-based advisory fees are typically 15%-20% of investment performance, with a "high water mark" provision requiring recovery of losses before earning fees[205] - The Company charges asset-based advisory fees at a rate of 1%-1.5% per annum, recognized monthly in advance based on the net asset value of clients[205] Other Financial Metrics - The effective tax rate decreased to 15.8% in 2024 from 19.5% in 2023, primarily due to dividends received deductions[108] - Net gains from investments were$ 42.8 million in 2024, slightly down from $43.0 million in 2023[107] - The Company reported a significant investment income of$ 150 million from the distribution of GAMCO shares during the Spin-off[174] - As of December 31, 2024, the Company held 699,749 shares of GAMCO Class A common stock, a decrease from 2,386,295 shares in 2023[174]