- Book Value was
$42.11 per share at year-end 2023 vs.$40.48 a year ago - Year-end AUM:
$1.59 billion atDecember 31, 2023 vs.$1.84 billion atDecember 31, 2022 $4.0 million of donations completed inJanuary 2024 to shareholder designated 501(c)(3) charitable organizations brought the total giving to$38 million since our spin-off in 2015- The Board of Directors authorized the repurchase of up to an additional 350,000 shares
Financial Highlights – GAAP basis | ||||||||||||||||
($’s in 000’s except AUM and per share data) | ||||||||||||||||
Fourth Quarter | Full Year | |||||||||||||||
(Unaudited) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
AUM – end of period (in millions) | $ | 1,591 | $ | 1,842 | $ | 1,591 | $ | 1,842 | ||||||||
AUM – average (in millions) | 1,581 | 1,811 | 1,659 | 1,817 | ||||||||||||
Revenues | 5,636 | 7,538 | 12,683 | 15,228 | ||||||||||||
Operating loss before management fee (Non-GAAP) | (2,451 | ) | (2,616 | ) | (11,501 | ) | (11,262 | ) | ||||||||
Investment and other non-operating income/(loss), net | 26,672 | 19,550 | 63,812 | (49,203 | ) | |||||||||||
Income/(loss) before income taxes | 21,850 | 16,934 | 46,865 | (60,465 | ) | |||||||||||
Net income/(loss) | 16,342 | 13,664 | 37,451 | (48,907 | ) | |||||||||||
Net income/(loss) per share-diluted | $ | 0.76 | $ | 0.62 | $ | 1.72 | $ | (2.22 | ) | |||||||
Class A shares outstanding (000’s) | 2,587 | 3,027 | 2,587 | 3,027 | ||||||||||||
Class B “ “ | 18,951 | 18,963 | 18,951 | 18,963 | ||||||||||||
Total “ “ | 21,538 | 21,990 | 21,538 | 21,990 | ||||||||||||
Book Value per share | $ | 42.11 | $ | 40.48 | $ | 42.11 | $ | 40.48 | ||||||||
Giving Back to Society – (Y)our “S” in ESG
AC seeks to be a good corporate citizen by supporting our community through sponsoring local organizations. On
Fourth Quarter Financial Data
- Assets under management ended the quarter at
$1.59 billion , in line withSeptember 30, 2023 and compared to$1.84 billion atDecember 31, 2022 . - At
December 31, 2023 , book value per share was$42.11 per share versus$41.43 per share atSeptember 30, 2023 and$40.48 per share atDecember 31, 2022 .
Fourth Quarter Results
Fourth quarter revenues were
Total operating expenses, excluding management fee, were
Net investment and other non-operating income was
The fourth quarter of 2023 includes a Management fee of
Full Year Results
Revenues for the year-ended 2023 were
For 2023, the operating loss before Management fee was
The full year 2023 net investment and other non-operating income swung from a loss of
In 2023, Management fee was
Our income tax rate for the year was 19.5% compared to 24.7% for the prior year primarily driven by deferred tax benefits from a foreign investment that reduced the current period’s effective tax rate.
Assets Under Management (AUM)
Assets under management ended the year at
AUM since spin-off:
($ in millions) | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||||||
Merger Arbitrage | $ | 1,312 | $ | 1,588 | $ | 1,542 | $ | 1,126 | $ | 1,525 | $ | 1,342 | $ | 1,384 | $ | 1,076 | $ | 869 | ||||||||||||||||
Long/Short Value(a) | 244 | 222 | 195 | 180 | 132 | 118 | 91 | 133 | 145 | |||||||||||||||||||||||||
Other | 35 | 32 | 44 | 45 | 59 | 60 | 66 | 63 | 66 | |||||||||||||||||||||||||
Total AUM | $ | 1,591 | $ | 1,842 | $ | 1,781 | $ | 1,351 | $ | 1,716 | $ | 1,520 | $ | 1,541 | $ | 1,272 | $ | 1,080 |
(a) Assets under management represent the assets invested in this strategy that are attributable to AC.
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 fourth quarter 2023, our longest continuously offered fund in the merger arbitrage strategy generated gross returns of 3.19% (2.35% net of fees). For the full year, gross returns were 5.49% (3.56% net of fees), adding to its historical record of positive net returns in 37 of the last 39 years. A summary of the performance is as follows:
Full Year | ||||||||||||||||||||||||||||||||||||
Performance%(a) | 4Q '23 | 4Q '22 | 2023 | 2022 | 2021 | 2020 | 2019 | 5 Year(b) | Since 1985(b)(c) | |||||||||||||||||||||||||||
Merger Arb | ||||||||||||||||||||||||||||||||||||
Gross | 3.19 | 4.40 | 5.49 | 4.47 | 10.81 | 9.45 | 8.55 | 7.73 | 10.08 | |||||||||||||||||||||||||||
Net | 2.35 | 3.45 | 3.56 | 2.75 | 7.78 | 6.70 | 5.98 | 5.33 | 7.14 |
(a) Net performance is net of fees and expenses, unless otherwise noted. Performance shown is 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
Merger Arbitrage returns are driven in part by deal activity. In 2023, worldwide M&A totaled
Since inception in 1985, our longest continuously offered fund in the merger arbitrage strategy has consistently outperformed the return on 90-day T-Bills. The summary historical performance is as follows:
Merger Arbitrage(1) | |||||
Percent Return (%) | |||||
Year | Gross Return | Net Return | 90 Day T-Bills | ||
2023 | 5.49 | 3.56 | 5.26 | ||
2022 | 4.47 | 2.75 | 1.50 | ||
2021 | 10.81 | 7.78 | 0.05 | ||
2020 | 9.45 | 6.70 | 0.58 | ||
2019 | 8.55 | 5.98 | 2.25 | ||
2018 | 4.35 | 2.65 | 1.86 | ||
2017 | 4.69 | 2.92 | 0.84 | ||
2016 | 9.13 | 6.44 | 0.27 | ||
2015 | 5.33 | 3.43 | 0.03 | ||
2014 | 3.89 | 2.29 | 0.03 | ||
2013 | 5.33 | 3.43 | 0.05 | ||
2012 | 4.32 | 2.63 | 0.07 | ||
2011 | 4.89 | 3.07 | 0.08 | ||
2010 | 9.07 | 6.35 | 0.13 | ||
2009 | 12.40 | 9.15 | 0.16 | ||
2008 | 0.06 | -0.94 | 1.80 | ||
2007 | 6.39 | 4.26 | 4.74 | ||
2006 | 12.39 | 8.96 | 4.76 | ||
2005 | 9.40 | 6.63 | 3.00 | ||
2004 | 5.49 | 3.69 | 1.24 | ||
2003 | 8.90 | 6.26 | 1.07 | ||
2002 | 4.56 | 2.45 | 1.70 | ||
2001 | 7.11 | 4.56 | 4.09 | ||
2000 | 18.10 | 13.57 | 5.96 | ||
1999 | 16.61 | 12.31 | 4.74 | ||
1998 | 10.10 | 7.21 | 5.06 | ||
1997 | 12.69 | 9.21 | 5.25 | ||
1996 | 12.14 | 8.84 | 5.25 | ||
1995 | 14.06 | 10.27 | 5.75 | ||
1994 | 7.90 | 5.53 | 4.24 | ||
1993 | 12.29 | 8.91 | 3.09 | ||
1992 | 7.05 | 4.78 | 3.62 | ||
1991 | 12.00 | 8.76 | 5.75 | ||
1990 | 9.43 | 6.67 | 7.92 | ||
1989 | 23.00 | 17.55 | 8.63 | ||
1988 | 45.84 | 35.66 | 6.76 | ||
1987 | -13.67 | -14.54 | 5.90 | ||
1986 | 33.40 | 26.14 | 6.24 | ||
1985 | 30.47 | 22.64 | 7.82 | ||
Average | 10.46 | 7.40 | 3.27 | ||
(1) The performance above refers to our longest continuously offered fund in the merger arbitrage strategy (net and gross returns). Net returns are net of management and incentive fees. Individual investment returns may differ due to timing of investment and other factors. Past performance is not indicative of future results.
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 and a
Acquisitions
Shareholder Dividends and Buybacks
At its meeting on
During the fourth quarter, AC repurchased 85,342 Class A shares, for
On
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.
Year-to-date | ||||||||
($ in 000’s) | 2023 | 2022 | ||||||
Operating loss – GAAP | $ | (16,947 | ) | $ | (11,262 | ) | ||
Add: management fee expense(1) | 5,446 | - | ||||||
Operating loss before management fee – Non-GAAP | $ | (11,501 | ) | $ | (11,262 | ) |
(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 year ended
Table I
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
(Amounts in thousands) | ||||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
Cash, cash equivalents and US Treasury Bills | $ | 406,642 | $ | 404,463 | ||||
Investments in securities and partnerships | 420,706 | 435,610 | ||||||
Investment in GAMCO stock | 45,602 | 36,683 | ||||||
Receivable from brokers | 16,005 | 12,072 | ||||||
Receivable from brokers (cash held for real estate purchase) | 14,263 | - | ||||||
Income taxes receivable, including deferred tax assets, net | 8,474 | 10,320 | ||||||
Other receivables | 5,587 | 6,324 | ||||||
Other assets | 26,518 | 22,218 | ||||||
Total assets | $ | 943,797 | $ | 927,690 | ||||
LIABILITIES AND EQUITY | ||||||||
Payable to brokers | $ | 4,459 | $ | 7,784 | ||||
Compensation payable | 15,196 | 13,936 | ||||||
Securities sold short, not yet purchased | 5,918 | 2,874 | ||||||
Accrued expenses and other liabilities | 5,173 | 2,707 | ||||||
Sub-total | $ | 30,719 | $ | 27,301 | ||||
Redeemable noncontrolling interests | 6,103 | 10,193 | ||||||
906,975 | 890,196 | |||||||
Total liabilities and equity | $ | 943,797 | $ | 927,690 | ||||
Notes:
(1) Certain captions include amounts related to a consolidated variable interest entity ("VIE") and voting interest entity ("VOE"). Refer to the Consolidated Financial Statements included in the 10-K report to be filed for the year ended
(2) Investment in GAMCO stock: 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 | Year Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Investment advisory and incentive fees | $ | 5,535 | $ | 7,392 | $ | 12,324 | $ | 14,801 | ||||||||
Other | 101 | 146 | 359 | 427 | ||||||||||||
Total revenues | 5,636 | 7,538 | 12,683 | 15,228 | ||||||||||||
Compensation | 5,809 | 8,352 | 17,246 | 18,883 | ||||||||||||
Other operating expenses | 2,278 | 1,802 | 6,938 | 7,607 | ||||||||||||
Total expenses | 8,087 | 10,154 | 24,184 | 26,490 | ||||||||||||
Operating loss before management fee | (2,451 | ) | (2,616 | ) | (11,501 | ) | (11,262 | ) | ||||||||
Investment gain/(loss) | 21,398 | 16,214 | 43,033 | (56,513 | ) | |||||||||||
Interest and dividend income from GAMCO | 96 | 97 | 384 | 446 | ||||||||||||
Interest and dividend income, net | 7,591 | 4,952 | 24,412 | 9,971 | ||||||||||||
Shareholder-designated contribution | (2,413 | ) | (1,713 | ) | (4,017 | ) | (3,127 | ) | ||||||||
Investment and other non-operating income/(expense), net | 26,672 | 19,550 | 63,812 | (49,203 | ) | |||||||||||
Income/(loss) before management fee and income taxes | 24,221 | 16,934 | 52,311 | (60,465 | ) | |||||||||||
Management fee | 2,371 | - | 5,446 | - | ||||||||||||
Income/(loss) before income taxes | 21,850 | 16,934 | 46,865 | (60,465 | ) | |||||||||||
Income tax expense/(benefit) | 5,551 | 2,855 | 9,137 | (14,943 | ) | |||||||||||
Income/(loss) before noncontrolling interests | 16,299 | 14,079 | 37,728 | (45,522 | ) | |||||||||||
Income/(loss) attributable to noncontrolling interests | (43 | ) | 415 | 277 | 3,385 | |||||||||||
Net income/(loss) attributable to | $ | 16,342 | $ | 13,664 | $ | 37,451 | $ | (48,907 | ) | |||||||
Net income/(loss) per share attributable to | ||||||||||||||||
Basic | $ | 0.76 | $ | 0.62 | $ | 1.72 | $ | (2.22 | ) | |||||||
Diluted | $ | 0.76 | $ | 0.62 | $ | 1.72 | $ | (2.22 | ) | |||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 21,576 | 21,998 | 21,771 | 22,024 | ||||||||||||
Diluted | 21,576 | 21,998 | 21,771 | 22,024 | ||||||||||||
Actual shares outstanding – end of period | 21,538 | 21,990 | 21,538 | 21,990 |
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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