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  • Quarterly net income was $23.1 million, or $1.02 per share
  • Quarter-end Book Value per share was $39.38

RYE, N.Y.–(BUSINESS WIRE)–Associated Capital Group, Inc. (“AC” or the “Company”) reported
financial results for the first quarter ended March 31, 2019.

Financial Highlights

($000s except per share data or as noted)

2019   2018
AUM – end of period (in millions) $ 1,591 $ 1,560
Revenues 4,652 4,703
Operating loss before management fee (4,616 ) (4,250 )
Investment and other non-operating income/(expense), net 38,721 (24,856 )
Income/(loss) before income taxes 30,845 (29,106 )
Net income/(loss) 23,147 (22,229 )
Net income/(loss) per share – diluted $ 1.02 $ (0.95 )
Shares outstanding at March 31 (thousands)         22,575       23,133  

First Quarter Overview

First quarter revenues of $4.7 million were in line with the prior year
quarter. Reflecting $0.3 million higher operating expenses, the
operating loss was $4.6 million for the quarter compared to an operating
loss of $4.3 million in last year’s first quarter.

Net investment and other non-operating income rose to $38.7 million, a
$63.6 million swing from the $24.9 million loss in the first quarter of
2018, reflecting the mark-to-market increase in our investment portfolio.

AC recorded an income tax expense in the current quarter of $6.2 million
versus a tax benefit of $6.7 million in the comparable quarter of 2018.

Net income for the first quarter of 2019 was $23.1 million, or $1.02 per
share, compared to a net loss of $22.2 million, or $0.95 per share, in
the prior year’s quarter.

Commitment to Community

Continuing with the tradition in place prior to our spin-off from GAMCO,
(y)our Company gives back to the community.

Over our first three years as a public company, AC shareholders
recommended approximately $15 million to charities of their choice that
address a broad range of local, national and international concerns.
Over 95 organizations received support through 2019.

Financial Condition

At March 31, 2019, AC’s book value was $889 million, or $39.38 per
share, compared to $866 million, or $38.36 per share, at December 31,

First Quarter Results of Operations

Assets Under Management (AUM)

Assets under management at March 31, 2019 were $1.6 billion, an increase
of $31.0 million from March 31, 2018. This increase reflects $31.8
million of net appreciation offset by $0.8 million of net capital

March 31, December 31, March 31,
2019   2018 2018
(in millions)
Event Merger Arbitrage $ 1,401 $ 1,342 $ 1,407
Event-Driven Value 127 118 88
Other   63   60   65
Total AUM $ 1,591 $ 1,520 $ 1,560


Total operating revenues for the three months ended March 31, 2019 of
$4.7 million were unchanged from the comparable prior year period:

  • Investment advisory fees increased to $2.7 million, up $0.2 million
    from the prior year period.
  • Institutional research services revenue was $1.9 million, down $0.2
    million from the prior year period.

Incentive fees are not recognized until the measurement period ends and
the fee is crystalized, typically annually on December 31. If the
measurement period had ended on March 31, we would have recognized $3.7
million of incentive fees versus a negligible incentive fee in the prior
year quarter.

Investment and other non-operating income/(expense), net

During the quarter, investment and other non-operating income/(expense),
net resulted in a gain of $38.7 million compared to a loss of $24.9
million in the first quarter of 2018. Portfolio mark-to-market changes
were a gain of $35.0 million and a loss of $27.5 million in the 2019 and
2018 quarters, respectively. This was largely driven by investment gains
due to the higher market values in the 2019 quarter, with $10.9 million
attributable to the 3 million GAMCO shares held with the remainder from
our diverse portfolio.

Business and Investment Highlights

Event-Driven Asset Management

Our merger arbitrage fund returned +2.04% net of fees (+2.81% gross) for
the first quarter of 2019. Global M&A activity totaled $959 billion in
the first quarter, making it the fourth highest total for a first
quarter on record. Healthcare, financials and technology were the most
active sectors for consolidation in the first quarter. Our arb team
expects dealmaking to remain vibrant as the drivers for M&A remain,
including higher interest rates that are expected to contribute to wider
deal spreads, and market volatility that creates opportunities to
purchase shares of target companies at more favorable prices.

Institutional Research

In the first quarter, G.research, our institutional research services
business, in cooperation with Gabelli Funds, concluded its 29th
annual Pump, Valve, & Water Systems conference on February 28, 10th
annual Specialty Chemicals on March 13 and 5th annual Waste &
Environmental Services on March 26. During the second quarter of 2019,
we hosted the 13th annual Buffett/Berkshire-related Omaha
Research Trip on May 3-4 and will host the 11th annual
Entertainment & Broadcasting Conference on June 6, 2019. If you’re
interested in joining please contact C.V. McGinity at [email protected]
or call him directly at (914) 921 7732.

In addition, G.research continues to sponsor non-deal roadshows
providing corporate management access to our institutional clients.

For frequent, real-time updates from our research team on social media
platforms, we invite you to visit GabelliTV, our online portal, at
YouTube (
or Facebook (

Shareholder Compensation

During the first quarter, AC repurchased approximately 10,000 shares at
an average investment of $40.03 per share, for a total outlay of $0.4

At March 31, 2019, there were 3.6 million Class A shares and 19.0
million Class B shares outstanding, of which a private company
controlled by our Executive Chairman owns approximately 18.4 million
Class B shares.

Since the spin-off of the Company from GAMCO, we have returned
approximately $103 million to shareholders through share repurchases and
exchange offers representing approximately three million shares.

About Associated Capital Group, Inc.

The Company has been publicly traded since November 30, 2015 following
its spin-off from GAMCO Investors, Inc. Our focus is on merger arbitrage
and the creation of private equity. In concert with this we have created
a special purpose acquisition vehicle (“SPAC”) in Italy.

The Company operates its investment management business via
Gabelli & Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli
Securities, Inc.), its 100% owned subsidiary. GCIA and its wholly-owned
subsidiary, Gabelli & Partners, collectively serve as general partners
or investment managers to investment funds including limited
partnerships, offshore companies and separate accounts. The Company
primarily manages assets in equity event-driven strategies, across a
range of risk and event arbitrage portfolios and earns management and
incentive fees from its advisory activities. GCIA is registered with the
Securities and Exchange Commission as an investment advisor under the
Investment Advisers Act of 1940, as amended.

The Company operates its institutional research services business
through G.research, LLC, an indirect wholly-owned subsidiary of the
Company. G.research is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, that provides institutional research
services and acts as an underwriter.

The Company also derives investment income/(loss) from proprietary
trading of assets awaiting deployment in its operating businesses.


Operating Loss Before Management Fee

Operating loss before management fee expense is 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. The
reconciliation of operating loss before management fee expense to
operating loss is provided below.

(In thousands) 2019   2018
Operating loss before management fee $(4,616) $(4,250)
Deduct: management fee expense 3,260
Operating loss $(7,876) $(4,250)
Table I
(Dollars in thousands)
March 31, December 31, March 31,
2019 2018 2018
Cash and cash equivalents $ 396,020 $ 409,564 $ 283,972
Investments 495,806 439,876 549,255
Investment in GAMCO stock (3,016,501, 3,016,501
and 3,726,250 shares, respectively) 61,838 50,949 92,523
Receivable from brokers 26,980 24,629 18,535
Deferred tax assets, net 6,871 9,422 1,241
Other receivables 2,671 15,425 4,280
Other assets   4,510   4,568   5,537  
Total assets $ 994,696 $ 954,433 $ 955,343  
Payable to brokers $ 17,423 $ 5,511 $ 5,621
Income taxes payable and deferred tax liabilities, net 7,222 3,577
Compensation payable 7,511 11,388 2,982
Securities sold short, not yet purchased 17,118 9,574 5,211
Accrued expenses and other liabilities   5,637   8,335   3,131  
Sub-total 54,911 38,385 16,945
Redeemable noncontrolling interests (a)   50,781   49,800   50,604  
Equity 889,004 866,248 927,794
4% PIK Note due from GAMCO       (40,000 )
Total equity   889,004   866,248   887,794  
Total liabilities and equity $ 994,696 $ 954,433 $ 955,343  
(a)   Represents third-party capital balances in consolidated investment
Table II
(Amounts in thousands, except per share data)
For the quarter ended March 31,
2019 2018
Investment advisory and incentive fees $ 2,733 $ 2,529
Institutional research services 1,913 2,152
Other revenues   6     22  
Total revenues   4,652     4,703  
Compensation costs 5,896 6,324
Stock-based compensation 415 72
Other operating expenses   2,957     2,557  
Total expenses   9,268     8,953  
Operating loss before management fee   (4,616 )   (4,250 )
Investment gain/(loss) 34,979 (27,530 )
Interest and dividend income from GAMCO 590
Interest and dividend income, net   3,742     2,084  
Investment and other non-operating income/(expense), net   38,721     (24,856 )
Gain/(loss) before management fee and income taxes 34,105 (29,106 )
Management fee   3,260      
Income/(loss) before income taxes 30,845 (29,106 )
Income tax expense/(benefit)   6,191     (6,734 )
Net income/(loss) 24,654 (22,372 )
Net income/(loss) attributable to noncontrolling interests   1,507     (143 )
Net income/(loss) attributable to Associated Capital Group, Inc. $ 23,147   $ (22,229 )
Net income/(loss) per share attributable to Associated Capital
Group, Inc.:
Basic $ 1.02 $ (0.95 )
Diluted 1.02 (0.95 )
Weighted average shares outstanding:
Basic 22,584 23,508
Diluted 22,584 23,508
Actual shares outstanding – end of period 22,575 23,133


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 U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements convey our current expectations or forecasts
of future events. You can identify these statements because they do not
relate strictly to historical or current facts. They use words such as
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” and other words and terms of similar meaning. They also
appear in any discussion of future operating or financial performance.
In particular, these include statements relating to future actions,
future performance of our products, expenses, the outcome of any legal
proceedings, and financial results. Although we believe that we are
basing our expectations and beliefs on reasonable assumptions within the
bounds of what we currently know about our business and operations, the
economy and other conditions, there can be no assurance that our actual
results will not differ materially from what we expect or believe.
Therefore, you should proceed with caution in relying on any of these
forward-looking statements. They are neither statements of historical
fact nor guarantees or assurances of future performance.

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.


Kenneth D. Masiello
Chief Accounting Officer
(203) 629-2726