Associated Capital Group(AC) - 2021 Q4 - Annual Report

Part I Business 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] 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] - 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][25] - The company's business is subject to extensive regulation in the U.S. and Europe, impacting operations and compliance costs[34][35][43] Risk Factors 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] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments as of the report date[54] Properties 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] - Owns a property in London, UK, fully leased to its former parent GAMCO, generating $275.4 thousand in 2021[55] - Paid $73.7 thousand in 2021 to GAMCO for a sublease at its Rye, NY offices[56] Legal Proceedings The company is not subject to material legal proceedings, with management assessing potential losses as immaterial to financial condition or operations - The company is not subject to any legal proceedings where the claim for damages exceeds 10% of its consolidated assets[57] - Management concluded that potential losses from current legal actions are not material to the company's financial condition, operations, or cash flows as of December 31, 2021[57] Mine Safety Disclosures This item is not applicable to the company - The company has no mine safety disclosures to report[59] Part II Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A common stock trades on the NYSE under 'AC', with an active stock repurchase program that repurchased 4,302 shares in Q4 2021 - Class A common stock is traded on the New York Stock Exchange under the symbol AC[59] Class A Common Stock Repurchases (Quarter Ended Dec 31, 2021) | Period | Total Shares Repurchased | Average Price Paid ($) | 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] Selected Financial Data 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] Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 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] Financial Statements and Supplementary Data 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][127] Consolidated Statements of Income 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 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 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 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][222] - Performance-based advisory fees, typically 20% of investment performance, are recognized at the end of the measurement period or upon investor redemption[181] - 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][256][258] - 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][275] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 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] Controls and Procedures 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][287] - A material weakness in internal control over financial reporting identified as of December 31, 2020, has been remediated as of December 31, 2021[291][293] - Remediation efforts included hiring new personnel, implementing new policies, and enhancing controls[292] Other Information The company reports no other information for this item - There is no information to disclose under this item[295] Part III Directors, Executive Officers and Corporate Governance 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] Executive Compensation 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] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 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] Certain Relationships and Related Transactions, and Director Independence 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] Principal Accountant Fees and Services 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] Part IV Exhibits, Financial Statement Schedules 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][303] Form 10-K Summary The company reports no summary for this item - No Form 10-K summary is provided[305]