- AUM:
$1 .55 billion at March 31, 2024 compared to$1 .59 billion atDecember 31, 2023 - Book Value per share ended the quarter at
$42.80 per share vs$42 .11 atDecember 31, 2023
Financial Highlights
($ in 000's except AUM and per share data)
(Unaudited) | Three Months Ended | |||||||
2024 | 2023 | |||||||
AUM - end of period (in millions) | $ | 1,549 | $ | 1,799 | ||||
AUM - average (in millions) | 1,556 | 1,841 | ||||||
Revenues | 3,011 | 2,465 | ||||||
Operating loss before management fee (Non-GAAP) | (2,988 | ) | (2,590 | ) | ||||
Investment and other non-operating income/(loss), net | 22,625 | 24,735 | ||||||
Income/(loss) before income taxes | 17,655 | 19,602 | ||||||
Net income/(loss) | 13,821 | 17,754 | ||||||
Net income/(loss) per share-diluted | 0.64 | 0.81 | ||||||
Class A shares outstanding (000's) | 2,469 | 2,975 | ||||||
Class B " " | 18,951 | 18,963 | ||||||
Total " " | 21,420 | 21,938 | ||||||
Book value per share | $ | 42.80 | $ | 41.30 | ||||
First Quarter Financial Data
- Assets under management ended the quarter at
$1 .55 billion versus$1 .80 billion atMarch 31, 2023 . - Book value was
$42 .80 per share compared to$41 .30 per share atMarch 31, 2023 .
First Quarter Results
Total revenues in the first quarter were
Starting in
Total operating expenses, excluding management fee, were
Net investment and other non-operating income was
For the quarter ending
The effective tax rate applied to our pre-tax income for the quarter ended
Assets Under Management (AUM)
Assets under management at March 31, 2024 were
($ in millions) | 2024 | 2023 | 2023 | ||||||||
Merger Arbitrage(a) | $ | 1,262 | $ | 1,312 | $ | 1,537 | |||||
Long/Short Value(b) | 251 | 244 | 229 | ||||||||
Other | 36 | 35 | 33 | ||||||||
Total AUM | $ | 1,549 | $ | 1,591 | $ | 1,799 | |||||
(a) Includes
(b) Includes
The alternative investment strategy offerings center around our merger arbitrage strategy which has an absolute return focus of generating returns independent of the broad equity and fixed income markets. We also offer strategies utilizing fundamental, active, event-driven and special situations investments.
Merger Arbitrage
For the first quarter of 2024, the longest continuously offered fund in the merger arbitrage strategy generated gross returns of 1.33% (0.87% net of fees). A summary of the performance is as follows:
Full Year | |||||||||||||||||||||||||||||||
Performance%(a) | 1Q '24 | 1Q '23 | 2023 | 2022 | 2021 | 2020 | 5 Year(b) | Since 1985(b)(c) | |||||||||||||||||||||||
Merger Arbitrage | |||||||||||||||||||||||||||||||
Gross | 1.33 | -0.23 | 5.49 | 4.47 | 10.81 | 9.45 | 7.42 | 10.05 | |||||||||||||||||||||||
Net | 0.87 | -0.63 | 3.56 | 2.75 | 7.78 | 6.70 | 5.09 | 7.11 | |||||||||||||||||||||||
(a) Net performance is net of fees and expenses, unless otherwise noted. Performance shown for an actual fund in this strategy. The performance of other funds in this strategy may vary. Past performance is no guarantee of future results.
(b) Represents annualized returns through
(c) Inception Date: February 1985
Global M&A activity totaled
The Merger Arbitrage strategy is offered by mandate and client type through partnerships and offshore corporations serving accredited as well as institutional investors. The strategy is also offered in separately managed accounts, a Luxembourg UCITS (an entity organized as an Undertaking for
Acquisitions
Shareholder Compensation
On
During the first quarter, AC repurchased 117,354 Class A shares, for
Since our spin-off from GAMCO on
At
About
Operating Loss Before Management Fee
Operating loss before management fee expense represents a non-GAAP financial measure used by management to evaluate its business operations. We believe this measure is useful in illustrating the operating results of the Company as management fee expense is based on pre-tax income before management fee expense, which includes non-operating items including investment gains and losses from the Company’s proprietary investment portfolio and interest expense.
Three months ended | ||||||||
($ in 000's) | 2024 | 2023 | ||||||
Operating loss - GAAP | $ | (4,970 | ) | $ | (5,133 | ) | ||
Add: management fee expense (1) | 1,982 | 2,543 | ||||||
Operating loss before management fee - Non-GAAP | $ | (2,988 | ) | $ | (2,590 | ) | ||
(1) Management fee expense is incentive-based and is equal to 10% of Income before management fee and income taxes and excludes the impact of consolidating entities. For the three months ended March 31, 2024 and 2023, Income before management fee, income taxes and excluding consolidated entities was
Table I
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Amounts in thousands) | |||||||||
2024 | 2023 | 2023 | |||||||
ASSETS | |||||||||
Cash, cash equivalents and US Treasury Bills | $ | 395,386 | $ | 406,642 | $ | 401,776 | |||
Investments in securities and partnerships | 442,458 | 420,706 | 450,238 | ||||||
Investment in GAMCO stock | 51,026 | 45,602 | 45,613 | ||||||
Receivable from brokers | 32,966 | 30,268 | 11,023 | ||||||
Income taxes receivable, including deferred tax assets, net | 6,444 | 8,474 | 8,825 | ||||||
Other receivables | 2,126 | 5,587 | 1,460 | ||||||
Other assets | 23,776 | 26,518 | 23,951 | ||||||
Total assets | $ | 954,182 | $ | 943,797 | $ | 942,886 | |||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |||||||||
Payable to brokers | $ | 6,332 | $ | 4,459 | $ | 15,208 | |||
Income taxes payable | 1,723 | - | - | ||||||
Compensation payable | 11,545 | 15,169 | 8,894 | ||||||
Securities sold short, not yet purchased | 9,439 | 5,918 | 3,569 | ||||||
Accrued expenses and other liabilities | 2,514 | 5,173 | 1,981 | ||||||
Total liabilities | 31,553 | 30,719 | 29,652 | ||||||
Redeemable noncontrolling interests | 5,779 | 6,103 | 7,233 | ||||||
Total equity | 916,850 | 906,975 | 906,001 | ||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 954,182 | $ | 943,797 | $ | 942,886 | |||
(1) Certain captions include amounts related to a consolidated variable interest entity ("VIE") and voting interest entity ("VOE"); refer to footnote 4 of the Condensed Consolidated Financial Statements included in the 10-Q report to be filed for the quarter ended March 31, 2024 for more details on the impact of consolidating these entities.
(2) Investment in GAMCO stock: 2,382,170, 2,386,295 and 2,407,000 shares, respectively.
Table II
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Investment advisory and incentive fees | $ | 2,907 | $ | 2,411 | ||||
Other revenues | 104 | 54 | ||||||
Total revenues | 3,011 | 2,465 | ||||||
Compensation | 3,820 | 3,570 | ||||||
Other operating expenses | 2,179 | 1,485 | ||||||
Total expenses | 5,999 | 5,055 | ||||||
Operating loss before management fee | (2,988 | ) | (2,590 | ) | ||||
Investment gain/(loss) | 16,794 | 20,511 | ||||||
Interest and dividend income from GAMCO | 95 | 96 | ||||||
Interest and dividend income, net | 5,805 | 4,999 | ||||||
Shareholder-designated contribution | (69 | ) | (871 | ) | ||||
Investment and other non-operating income/(loss), net | 22,625 | 24,735 | ||||||
Income/(loss) before management fee and income taxes | 19,637 | 22,145 | ||||||
Management fee | 1,982 | 2,543 | ||||||
Income/(loss) before income taxes | 17,655 | 19,602 | ||||||
Income tax expense/(benefit) | 3,798 | 1,580 | ||||||
Income/(loss) before noncontrolling interests | 13,857 | 18,022 | ||||||
Income/(loss) attributable to noncontrolling interests | 36 | 268 | ||||||
Net income/(loss) attributable to | $ | 13,821 | $ | 17,754 | ||||
Net income/(loss) per share attributable to | ||||||||
Basic | $ | 0.64 | $ | 0.81 | ||||
Diluted | $ | 0.64 | $ | 0.81 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 21,500 | 21,970 | ||||||
Diluted | 21,500 | 21,970 | ||||||
Actual shares outstanding - end of period | 21,420 | 21,938 | ||||||
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
The financial results set forth in this press release are preliminary. Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the
Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Some of the factors that could cause our actual results to differ from our expectations or beliefs include a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, and a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors contained in our Form 10 and other public filings. Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.
Chief Financial Officer
(914) 921 5078
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