Accor
Annual Report 2019

Plain-text annual report

A N N U A L R E P O R T 2019 WISDOM. PERFORMANCE. BRIGHT FUTURE. TRUST. G.research, LLC One Corporate Center Rye, NY 10580 Tel. (914) 921-5150 www.gabellisecurities.com August 23, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com June 19, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com April 8, 2019 g. research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com June 27, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com August 14, 2019 g.research Collegium Pharmaceutical (COLL - $11.80 – NASDAQ) Allergan plc (AGN - $120.64 – NYSE) In Pursuit of the Next Big Thing Biotech M&A Update Bank M&A 2019 Back Together …at Last Source: Collegiumpharma.com, addictions.com A Contrarian Opioid Play Buy Recommendation Kevin Kedra (914) 921-7721 ©G.research, LLC 2019 Source: stpaulsmarietta.org, Allergan corporate website Splitting Up Allergan: What’s it Worth? Source: Company website, g. research. Companies BioMarin bluebird bio Clovis Oncology Incyte Ticker BMRN - - BLUE - CLVS - INCY Price $ 93.90 161.71 25.67 84.76 Exchange - NASDAQ " - " - " - + + + + + + + + + + 1H Recap and 2H Preview -Please Refer To Important Disclosures On The Last Page Of This Report- -Please Refer To Important Disclosures On The Last Page Of This Report- Kevin Kedra (914) 921-7721 G.research, LLC 2019 Jing He (914) 921-7798  G.research, LLC 2019 Steve Comery, CFA (914) 921-5596  G.research, LLC 2019 Brett Harriss (914) 921-8335 G.research, LLC 2019 -Please Refer To Important Disclosures On The Last Page Of This Report- -Please Refer To Important Disclosures On The Last Page Of This Report- -Please Refer To Important Disclosures On The Last Page Of This Report- G.research, LLC One Corporate Center Rye, NY 10580 Tel. (914) 921-5150 www.gabellisecurities.com February 5, 2019 g.research Covetrus (CVET - $38.00 – NASDAQ) * Based on price of ‘when-issued’ CVETV Source: Lady and the Tramp Let the Pets Run Free Initiating Coverage with Buy Kevin Kedra (914) 921-7721 ©G.research, LLC 2019 -Please Refer To Important Disclosures On The Last Page Of This Report- G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com January 16, 2019 g.research Take-Two Interactive Software, Inc. (TTWO – $106.49 – NASDAQ) Source: Everyeye.it – Red Dead Redemption 2 A Royal Flush Initiate with a BUY, 2019 PMV $136 per share Alec M. Boccanfuso G.research, LLC 2019 (914) 921-8327 -Please Refer To Important Disclosures On The Last Page Of This Report- G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com June 27, 2019 g.research Schlumberger Limited (SLB - $39.02 - NYSE) Source: Company website Favor the Leader Simon Wong, CFA (914) 921-5125 G.research, LLC 2019 -Please Refer To Important Disclosures On The Last Page Of This Report- October 24, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580 Tel. (914) 921-5150 www.gabellisecurities.com Sony Corporation (SNE - $58.58 - NYSE) SONY PICTURES SONY MUSIC SONY Electronics SONY Semiconductors Creative Entertainment, Technology and Value Initiate SNE with a Buy, 2020 PMV $92 per share - 2019 - Alec M. Boccanfuso Hendi Susanto Video Games (914) 921-8327 (914) 921-7735 Semiconductor & Electronics John Tinker Music & Pictures (914) 921-8348 G.research, LLC 2019 -Please Refer To Important Disclosures On The Last Page Of This Report- G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com May 7, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-8335 www.gabellisecurities.com May 15, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com May 29, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580 Tel. (914) 921-5150 www.gabellisecurities.com July 1, 2019 g.research G.research, LLC One Corporate Center Rye, NY 10580-1422 Tel (914) 921-5150 www.gabellisecurities.com April 15, 2019 g.research Full Stream Ahead To Infinity and Beyond Fox Corporation Live from New York its…Fox Corporation? Reflections From EPG 2019 -Late Cycle EPG- Ubisoft Entertainment SA (UBI.PA - €68.84 – EN Paris) (UBSFY - $15.56 - NASDAQ) Oil Patch Update Return of Offshore Gets Closer Brett Harriss (914) 921-8335 G.research, LLC 2019 Brett Harriss (914) 921-8335 ©G.research, LLC 2019 -Please Refer To Important Disclosures On The Last Page Of This Report- -Please Refer To Important Disclosures On The Last Page Of This Report- Justin Bergner, CFA (914) 921-8326 G.research, LLC 2019 Source: Hedgeye.com  “Guidance Still Valid”  Tentative Towards M&A  Innovate, Digitize, Speed Up Source: Forbes – Assassin’s Creed Odyssey Bright Horizons Initiate with a Buy, 2019 PMV €93 per share Alec M. Boccanfuso (914) 921-8327 G.research, LLC 2019 Companies Forum Energy Technologies Ticker (FET Oceaneering International TechnipFMC (OII (FTI Price Exchange $5.49 - NYSE) 16.82 - NYSE) 24.67 - NYSE) - - - Simon T. Wong, CFA (914) 921-5125 ©G.research, LLC 2019 -Please Refer To Important Disclosures On The Last Page Of This Report- -Please Refer To Important Disclosures On The Last Page Of This Report- -Please Refer To Important Disclosures On The Last Page Of This Report- Dear Partners/Shareholders: World leaders are focused on the unprecedented human and economic challenges of COVID-19. Global equity markets plunged as spreading pandemic virus events unfolded during March to end the worst month for stocks since 2008 and the worst first quarter since 1937. (Y)our team is observing social distancing guidelines and remains fully operational and focused, with teammates on a rotating schedule in the office. Over the years we have invested in technology and infrastructure that allow teammates to work remotely in anticipation of the need to invest seamlessly from remote locations. Looking back at 2019 - We are privileged to share Associated Capital’s (“AC”) financial results for 2019. As always, we value your trust and support. • COMMITMENT TO COMMUNITY - in November, our Board approved the continuation of the shareholder designated charitable contribution program with a $0.20 per share designation for registered shareholders. This translates into approximately $4.5 million in donations, which brings our total projected contributions to $20 million since our spin-off from GAMCO in November 2015. • MERGER ARBITRAGE strategy was up 8.6% gross (6.0% net) for the year. Since inception in February 1985, we have compounded net annual returns of 7.4%. As a result, a $10 million investment by a tax free vehicle in this fund at its inception would be worth approximately $120 million as of December 31, 2019. • On March 16, 2020, the board of AC voted to distribute all of AC’s Morgan Group shares to AC shareholders. • The successful public offering of Gabelli Value for Italy S.p.a. (VALU), an Italian company listed on the LSE’s Borsa Italian AIM segment in April 2018 is nearing its two-year anniversary. This general sector SPAC, which raised €110 million, was created to acquire an Italian small to mid-sized franchised business at a target capitalization of €400 million with the potential for international development, especially into the United States. Given the Coronavirus situation in Italy which exists today, the Board of Gabelli Value for Italy S.p.a. now must explore the various options. • We added a third leg to our direct private equity and merchant banking with the launch of Gabelli Principal Strategies Group, LLC – formed to pursue strategic operating initiatives. • We continue to evaluate options for our investment in GAMCO Investors, Inc. At year end, we hold 2.9 million shares of GAMCO with a cost basis significantly higher than market value. • We took additional steps to physically separate (y)our company from GAMCO Investors. On May 31, Associated Capital purchased a building in Greenwich and relocated our entire team to the new location by year end. Subsequently in March, we acquired a building in London that will eventually house our expanding marketing and investment offerings. • On October 31, 2019, we completed the merger of G.research with Morgan Group Holdings Corp. (MGHL:OTC). Leading up to the merger and through year end, G.research rationalized staffing and its cost structure resulting in a business that is operating at near break-even. • We paid semi-annual dividends of $0.10 per share, paying out $4.6 million to shareholders. • Book value ended the year at $39.93 per share versus $38.36 at December 31, 2018. As previously discussed, we created a new subsidiary, Gabelli Private Equity Partners to explore the launch of a private equity business, something our predecessor firm had success with in the 1980s. We will continue our outreach initiatives with business owners, corporate management, and various financial sponsors. In 2020, we will continue to explore new avenues, including L.P.’s in our investment line-up, to put our capital to work by pursuing deals, new distribution channels and new products. Along these lines, we echo again the Acquisition Criteria list from Warren Buffett’s Berkshire Hathaway 2018 Annual Report. We cannot improve upon it: Sincerely, Mario J. Gabelli Executive Chairman BERKSHIRE HATHAWAY INC. ACQUISITION CRITERIA We are eager to hear from principals or their representatives about businesses that meet all of the following criteria: — Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations), — Businesses earning good returns on equity while employing little or no debt, — Management in place (we can’t supply it), — Simple businesses (if there’s lots of technology, we won’t understand it), — An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown). Douglas R. Jamieson Chief Executive Officer and President In 2019, AC made significant progress towards arriving at a solution for G.research, the institutional research services business. First, by appointing a new management team; second, by significantly reducing head count and rationalizing its cost structure; third, by merging the operation with Morgan Group Holdings on October 31; and, most recently, in March 2020, your Board of Directors authorized the distribution of Morgan Group (MGHL) to our shareholders. We ended 2019 with cash and investments of $346 million and $605 million, respectively, including 2.9 million shares of GAMCO stock valued at $57 million. Our net equity was $897 million or $39.93 per share versus $866 million or $38.36 per share at year end 2018. Our financial resources underpin our flexibility to pursue strategic objectives that may include acquisitions, seeding new investment strategies, and co-investing. We consider our primary goal as using our liquid resources to opportunistically and strategically grow book value and net income. If opportunities are not present with what we consider a margin of safety, however, we will consider alternatives to return capital to our shareholders, including stock repurchases and dividends. Investment Partnerships The Gabelli & Partners’ team is extending our marketing reach with trips to Asia and Europe, resulting in searches, proposals and new business for the UCITs, offshore funds and SMA’s. Gabelli & Partners currently has a relationship with more than 20 third party marketing firms, principally private banks in continental Europe. Gabelli Value for Italy (VALU) is currently evaluating offers for potential investments, as it approaches its two-year anniversary. Valuations of target companies in Italy remain at least 20% lower than comparable assets in the US. Marc Gabelli and his team are active in reviewing a number of potential investments. But it remains somewhat challenged given the country-wide shut-down in Italy. Institutional Research Services On October 31, 2019, we consummated the merger between G.research, LLC (“G.research”) and Morgan Group Holding Co. (“Morgan Group”). As a result of the transaction, G.research became a wholly owned subsidiary of Morgan Group (MGHL:OTC). Associated Capital holds 83.3% of the outstanding shares of Morgan Group. G.research provides institutional research services and underwriting activities. G.research’s revenues are derived primarily from revenue generating institutional research services, sales manager fees, underwriting fees and selling concessions. During the fourth quarter, G.research marketed the 43rd Annual Auto Aftermarket Symposium on November 4th - 5th in Las Vegas which was hosted by Gabelli Funds. In May, we purchased a building in central Greenwich which houses Gabelli & Partners marketing and client service, finance and accounting and our merger arbitrage team. We invite you to stop in. A S S E TS U N D E R MANAG E M E NT Assets under management (dollars in millions) increased 12.9% in 2019. We continue to see interest in products from new investor groups, especially outside of the United States. CO N D E N S E D CO N SO LI DATE D BAL AN CE S H E E T (in thousands) ASSETS Cash and cash equivalents (a) Investments Receivables Other assets Total assets LIABILITIES AND EQUITY Compensation payable Securities sold, not yet purchased Income taxes payable Accrued expenses and other liabilities Total liabilities Redeemable noncontrolling interests (b) Stockholders' equity Total equity Total liabilities and equity Shares outstanding Average Year-end December 31, 2019 2018 $345,588 605,040 38,101 22,177 $1,010,906 $20,246 16,419 3,676 22,745 63,086 50,385 897,435 897,435 $409,564 490,824 30,332 23,713 $954,433 $11,388 9,574 3,577 13,846 38,385 49,800 866,248 866,248 $1,010,906 $954,433 22,534 22,475 23,070 22,585 (a) Includes $13 million held by consolidated investment funds in 2019 and in 2018 (b) Represents third-party capital balances in consolidated investment funds Q UARTE R LY FI NAN CIAL I N FO R MATI O N Quarterly financial information for 2019 and 2018 is presented below. (In thousands, except per share data) 2019 Revenues Operating loss Net income/(loss) attributable to Associated Capital Group, Inc 's shareholders Net income/(loss) attributable to Associated Capital Group, Inc 's shareholders per share: Basic Diluted Revenues Operating loss Net income/(loss) attributable to Associated Capital Group, Inc 's shareholders Net income/(loss) attributable to Associated Capital Group, Inc 's shareholders per share: Basic Diluted 1st 2nd 3rd 4th Total $4,652 (7,876) $4,821 (3,151) $5,118 (3,009) $16,674 (1,722) $31,265 (15,758) $23,147 $(932) $5,951 $11,022 $39,188 $1.02 $1.02 $(0.04) $(0.04) $0.26 $0.26 $0.50 $0.50 $1.74 $1.74 1st 2nd 3rd 4th Total 2018 $4,703 (4,250) $4,796 (3,446) $4,666 (3,499) $8,614 (2,285) $22,779 (13,480) $(22,229) $11,824 $(7,379) $(40,315) $(58,099) $(0.95) $(0.95) $0.51 $0.51 $(0.32) $(0.32) $(1.76) $(1.76) $(2.52) $(2.52) “There are many advantages to investing in risk arbitrage. Let’s focus on three: risk arbitrage returns are not closely correlated with those of the stock market; they are less volatile than returns on the S&P 500; and longer term they are higher than those returns afforded by traditional investing. While these three factors provide for excellent results in the world of arbitrage, the real beauty of risk arb investing is that there is rarely a down year. Because risk arb returns are consistently positive year in and year out, they fulfill the concept of a compound return. We proclaim this source of compounded earnings as the eighth wonder of the world. Compounding is the secret to wealth creation over a period of decades.” - Regina M. Pitaro (Deals...Deals...and More Deals, 1999) Regina M. Pitaro Columbia University, Graduate School of Business M.B.A., Finance Loyola University of Chicago M.A., Anthropology Fordham University B.S., Anthropology In 1999, we published one of the few books on merger arbitrage, Deals…Deals…and More Deals. Our new publication, Merger Masters: Tales of Arbitrage, profiles leading investors who share our enthusiasm for merger arbitrage and have utilized the investment discipline in various forms over the last half-century. It also includes the perspective of iconic CEOs who have used M&A to build value and, in the process, tangled with the arbitrage community. Merger Masters is now available on Amazon.com. “Give a man a fish and you feed him for a day. Teach a man to arbitrage, and you feed him forever.” - Warren Buffett ENGLISH ITALIAN CHINESE JAPANESE SPANISH Coming soon Deals...Deals...and More Deals - Now in four languages. Originally published in 1999 by Gabelli University Press. M E RG E R AR B ITR AG E The alternative investment strategies focus on fundamental, active, event-driven special situations and merger arbitrage. It is led by the merger arbitrage portfolios which returned an unleveraged +8.6%, (+6.0 % return net of fees and expenses) for all of 2019. This strategy benefits from corporate merger and acquisitions activity that reached $3.9 trillion globally in 2019. The U.S. remained a bright spot for deal making with volume totaling $1.8 trillion in 2019, an increase of 6% compared to 2018 and the strongest year since 2015. . Forty-three announced deals greater than $10 billion (“mega deals”) accounted for 31% of deal activity, totaling $1.2 trillion. Deal making in Europe totaled $751 billion, a decline of 25% from 2018, while Asia Pacific M&A totaled $770 billion, a 14% decline. The most active sectors for M&A activity were Healthcare ($533 billion, an all-time record), Technology and Energy & Power. The strategy is offered domestically through partnerships and separately managed accounts. Internationally, the strategy is offered through corporations and EU regulated UCITS structures and the London Stock Exchange listed investment company, Gabelli Merger Plus Trust (GMP-LN). The merger arbitrage investment process begins with the announcement of an acquisition, when an acquirer makes an offer for all of the target company’s stock. The target’s shares usually trade at a discount, or spread, to the final deal price because of the time value of money, regulatory approval risks or any other risks that might prevent a transaction from closing. Our typical investment process involves buying shares of the target at a discount, earning the spread to the deal price when the deal closes, and reinvesting the profits in new deals in a similar manner. By owning a diversified portfolio of deals, we mitigate the adverse impact of deal specific risks. Our investment process in M&A has a long track record of attractive, non-market correlated returns. In early 2020 we have seen increased volatility on the back of market uncertainty. While the global pandemic may slow new deal announcements in the near term, it will also lead to opportunity and an improved spread environment. We have managed through such markets in the past and are confident in our process and ability to generate returns through M&A arbitrage investing. Paolo Vicinelli Portfolio Manager Anthony Lombardi Research Willis Brucker Portfolio Manager ENGLISH ITALIAN CHINESE JAPANESE SPANISH 1 01 O F S PAC S — S PECIAL PU R P OS E ACQ U I S ITI O N CO M PAN I E S SPACs are essentially blind pools raised by a Sponsor to acquire a single unspecified target company within a limited timeframe (typically two years). SPACs have a certain prominence as a means for companies to go public. There are three stages in the SPAC lifecycle: 1. Fundraising/IPO: Investors purchase $10.00 units, normally, 1 common share plus one half warrant with a $11.50/ share strike price. The $10.00 per share in cash is placed in a trust account; the common and warrant are separated. The sponsor of the SPAC receives a promote equaling 20% of the equity which vests only on consummation of the acquisition deal. The Sponsor funds the offering and the operating expenses (~3%) through purchasing Sponsor warrants. 2. Search Sponsor has 18-24 months to secure an acquisition. 3. Merger / “Second IPO = NEWCO” Sponsor negotiates terms of deal (typically short form merger) and conducts a roadshow for “NEWCO”. Investors have the option to redeem the initial IPO common shares for the amount stated by the trust, or, to continue as shareholders of “Newco.” Generally, merger agreements contain a maximum threshold of trust share redemptions. Underwriters attempt to match the redeeming investors with new investors seeking to invest in Newco, often by sweetening the consideration with a portion of the Sponsor promote. Investors are enticed to purchase SPACs at IPO by the asymmetric risk/reward. If a SPAC fails to consummate a transaction or an investor chooses to redeem, they simply receive their $10.00 back, bearing only the opportunity cost of investing that $10.00 per share. In the meantime, the investor can separate and sell the warrant embedded in the unit which has option value even before a transaction is announced. More broadly, the plusses and minuses of SPACs can be summed up as follows: Investors Sponsor Target Plus Minus Plus Minus Plus Minus Free look at deal with upside via warrants Opportunity cost on capital Reward via promote Potential loss of initial capital Ability to go public quickly, monetize and retain interests Second IPO could be poorly received, leav- ing orphaned equity Competition for SPAC targets generally comes from the “regular way” IPO market and sales to strategic or financial sponsors. For a SPAC to successfully appeal to a target, they must solve some issue such as the lack of clean historical financials to go public (e.g. formerly bankrupt entities), the need for market sponsorship (e.g. for foreign entities), or a desire to immediately monetize some equity while retaining a stake in the upside (e.g. family companies with divergent interests). The most appealing second IPOs tend to be those that create a public entity in an industry with a scarcity of publicly-traded assets and/or the ability to create a public traded entity at a demonstrable discount to public comps. In this way SPACs are relative trading vehicles usually requiring not only a robust equity market but a wide private-to-public multiple arbitrage that usually only exists late in the equity market cycle. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 Or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 001-37387 Associated Capital Group, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 191 Mason, Greenwich, CT (Address of principal executive offices) 47-3965991 (I.R.S. Employer Identification No.) 06830 (Zip Code) Registrant’s telephone number, including area code (203) 629-9595 Securities registered pursuant to Section 12(b) of the Act: Title of each class Class A Common Stock, par value $0.001 per share Trading Symbol AC Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes  No . Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes  No . Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes  No . Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer  Non-accelerated filer  Accelerated filer  Smaller reporting company  Emerging growth company  If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes  No . The aggregate market value of the class A common stock held by non-affiliates of the registrant as of June 28, 2019 (the last business day of the registrant’s most recently completed second fiscal quarter) was $120,948,122. As of February 28, 2020, 3,421,000 shares of class A common stock and 19, 002,918 shares of class B common stock were outstanding. GGCP, Inc., a private company controlled by the Company’s Executive Chairman, held 66,000 shares of class A common stock and indirectly held 18,423,741 shares of class B common stock. Other executive officers and directors of GGCP, Inc. held 46,946 and 462,580 shares of class A and class B common stock, respectively. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s definitive proxy statement relating to the 2020 Annual Meeting of Shareholders are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this report. 2 Associated Capital Group, Inc. Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2019 Part I Item 1 Item 1A Item 1B Item 2 Item 3 Item 4 Item 5 Item 6 Item 7 Item 7A Item 8 Item 9 Item 9A Item 9B Item 10 Item 11 Item 12 Item 13 Item 14 Item 15 Item 16 Part II Part III Part IV Business Business Strategy Competition Intellectual Property Regulation Employees Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Market For The Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities Selected Financial Data Management's Discussion And Analysis Of Financial Condition And Results Of Operations Quantitative And Qualitative Disclosures About Market Risk Financial Statements And Supplementary Data Changes In And Disagreements With Accountants On Accounting And Financial Disclosure Controls And Procedures Other Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters Certain Relationships And Related Transactions, and Director Independence Principal Accountant Fees And Services Exhibits, Financial Statement Schedules Form 10-K Summary Signatures Power of Attorney Exhibit 21.1 - Subsidiaries of Associated Capital Group, Inc. 4 7 8 8 9 12 13 13 13 13 13 13 14 14 22 22 56 56 57 57 57 57 58 58 58 60 61 62 Certifications Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 32.2 3 This page was intentionally left blank PART I Forward-Looking Statements Our disclosure and analysis in this report and in documents that are incorporated by reference contain some forward- looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. You should not place undue reliance on these statements. 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, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation: the adverse effect from a decline in the securities markets; a decline in the performance of our products; a general downturn in the economy; changes in government policy or regulation; changes in our ability to attract or retain key employees; and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. We also direct your attention to any more specific discussions of risk contained in our other public filings or in documents incorporated by reference here or in prior filings or reports. We are providing these statements as permitted by the Private Litigation Reform Act of 1995. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking statements. ITEM 1: BUSINESS Unless we have indicated otherwise, or the context otherwise requires, references in this report to “Associated Capital Group, Inc.,” “AC Group,” “the Company,” “AC,” “we,” “us” and “our” or similar terms are to Associated Capital Group, Inc., its predecessors and its subsidiaries. Our offices are located at 191 Mason Street, Greenwich, CT 06830. Our website address is www.associated-capital- group.com. Information on our website is not incorporated by reference herein and is not part of this report. We provide a link on our website to the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“Commission” or “SEC”): our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All such filings on our website are available free of charge. In addition, these reports and the other documents we file with the SEC are available at www.sec.gov. We are a Delaware corporation, incorporated in 2015, that provides alternative investment management services and we derive investment income/(loss) from proprietary investment of cash and other assets awaiting deployment in our operating business. In addition, our controlled subsidiary, G.research, LLC (“G.research”) provides institutional research and underwriting services. 4 Proprietary Capital The proprietary capital is earmarked for our direct investment business that invests in new and existing businesses, using a variety of techniques and structures. The direct investment business is developing along three core pillars; Gabelli Private Equity Partners, LLC (“GPEP”), formed in August 2017 with $150 million of authorized capital as a “fund-less” sponsor; the SPAC business (Gabelli special purpose acquisition vehicles), launched in April 2018 when the Company sponsored a €110 million initial public offering of its first special purpose acquisition corporation, the Gabelli Value for Italy S.p.a., an Italian company listed on the London Stock Exchange’s Borsa Italiana AIM segment under the symbol “VALU”. VALU was created to acquire a small- to medium-sized Italian franchise business with the potential for international expansion, particularly in the United States. Finally, Gabelli Principal Strategies Group, LLC (“GPS”) was created to pursue strategic operating initiatives. A portion of our proprietary capital is in the form of GAMCO Class A common stock. On November 30, 2015, AC received 4,393,055 shares of GAMCO Class A common stock for $150 million as part of the spin-off transaction from GAMCO. As of December 31, 2019, the Company held 2,935,401shares of GAMCO Class A common stock. Alternative Investment Management We conduct our investment management activities through our wholly-owned subsidiary Gabelli & Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli Securities, Inc.). GCIA and its wholly-owned subsidiary, Gabelli & Partners, LLC (“Gabelli & Partners”). GCIA is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). GCIA and Gabelli & Partners together serve as general partners or investment managers to investment funds including limited partnerships and offshore companies (collectively, “Investment Partnerships”), and separate accounts. We primarily manage assets in equity event-driven value strategies and across a range of risk and event arbitrage portfolios. The business earns management and incentive fees from its advisory activities. Management fees are largely based on a percentage of assets under management (“AUM”). Incentive fees are based on the percentage of the investment returns of certain client portfolios. We manage assets on a discretionary basis and invest in a variety of U.S. and foreign securities. We primarily employ absolute return strategies with the objective of generating positive returns. We serve a wide variety of investors including private wealth management accounts, corporations, corporate pension and profit-sharing plans, foundations and endowments, as well as serving as sub-advisor to certain third-party investment funds. In event merger arbitrage, the goal is to earn absolute positive. We introduced our first alternative fund, Gabelli Arbitrage (renamed Gabelli Associates), in February 1985. Our typical investment process involves buying shares of the target at a discount, earning the spread to the deal price when the deal closes, and reinvesting the profits in new deals in a similar manner. By owning a diversified portfolio of deals, we mitigate the adverse impact of deal-specific risks.Since inception in February 1985, we have compounded net annual returns of 7.37%. As a result, a $10 million investment by a tax free vehicle in this fund at its inception would be worth more than $120 million, as of December 31, 2019. In addition, the value of such an investment would have exhibited significantly less volatility than that of broad equity indices. An offshore version of the event merger arbitrage strategy was added in 1989. Building on our strengths in global event-driven value investing, several new investment funds have been added to balance investors’ geographic, strategy and sector needs. Today, we manage Investment Partnerships in multiple categories, including event merger arbitrage, event-driven value and other strategies. 5 Assets Under Management As of December 31, 2019, we managed approximately $1.7 billion in assets The following table sets forth AC’s total AUM, including investment funds and separately managed accounts, for the dates shown (in millions): December 31, 2019 2018 $ Event Merger Arbitrage Event-Driven Value (a) Other (b) Total (c) (a) Excluding event merger arbitrage. (b) Includes investment vehicles focused on private equity, merchant banking, non-investment-grade credit and 1,525 132 59 1,716 1,342 118 60 1,520 $ $ $ capital structure arbitrage. (c) Includes $259 and $214 of proprietary capital, respectively. G.research Merger with Morgan Group Holding Co. On October 31, 2019, the Company closed a transaction whereby Morgan Group Holding Co. (“Morgan Group”), a company under common control with us that trades in the over the counter market under the symbol “MGHL”, acquired all of the Company’s interest in G.research for 50,000,000 shares of Morgan Group common stock. In addition, immediately prior to the closing, 5.15 million Morgan Group shares were issued under a private placement for $515,000. After giving effect to these transactions, the Company has an 83.3% ownership interest in Morgan Group and consolidates the entity, which includes G.research. The Company continues to explore strategic options for its ownership of Morgan Group, including the potential spin-off of its ownership to AC shareholders. The Company can provide no assurances that any further transactions will result. Institutional Research Services G.research is a broker-dealer registered under the Exchange Act and is regulated by the Financial Industry Regulatory Authority (“FINRA”). G.research’s revenues are derived primarily from institutional research services, underwriting fees (primarily for affiliates of the Company) and selling concessions. Our research analysts are industry-focused, following sectors based on our core competencies. Analysts publish their insights in the form of research reports and daily notes. In addition, G.research markets conferences which bring together industry leaders and institutional investors. The objective of institutional research services is to provide superior investment ideas to investment decision makers. Analysts are generally assigned to industry sectors. Our research focus includes Basic Materials – Specialty Chemicals; Business Services; Financials – Community Banks; Healthcare – Animal Health, Biotech & Pharma; Biotech; Industrials – Diversified Industrials, Transports & Metals; Industrials & Internet; Media – Entertainment; and, Media. G.research generates revenues via direct fees and commissions on securities transactions executed on an agency basis on behalf of clients. Clients include institutional investors (e.g., hedge funds and asset managers) as well as affiliated mutual funds and managed accounts. Institutional research services revenues totaled $8.9 million and $8.3 million for the years ended December 31, 2019 and 2018, respectively. A significant portion of G.research institutional research services are provided to GAMCO and its affiliates. For the years ending December 31, 2019 and December 31, 2018, GAMCO Asset Management Inc. (“GAMCO Asset”) paid $0.8 million and $1.0 million and Gabelli Funds, LLC paid $0.7 million and $1.0 million to G.research pursuant to a research service agreements. These agreements were terminated on January 1, 2020 and compensation from Gabelli Funds and GAMCO Asset and costs related to servicing these arrangements are expected to decrease. 6 For the years ended December 31, 2019 and 2018, respectively, G.research earned $4.9 million and $3.8 million, or approximately 76% and 62%, of its commission revenue from transactions executed on behalf of funds advised by Gabelli Funds and clients advised by GAMCO Asset. Gabelli Funds and GAMCO Asset are wholly-owned subsidiaries of GAMCO. We can provide no assurance that GAMCO and its affiliates will continue to use G.research’s institutional research and brokerage services to the same extent in the future. G.research continues to pursue expansion of third party and affiliated activities. Use of Proprietary Resources We have a substantial portfolio of cash and investments. We expect to use this proprietary investment portfolio to provide seed capital for new products, expand our geographic presence, develop new markets and pursue strategic acquisitions and alliances, as well as for shareholder compensation in the form of share repurchases and dividends. Our proprietary portfolios are largely invested in products our affiliates or that are managed by GAMCO affiliates. In addition, we expect to make private equity acquisitions including through the use of special purpose acquisition vehicles (“SPACs”). Business Strategy Our business strategy targets global growth of the business through continued leveraging of our proven asset management strengths including the long-term performance record of our alternative investment funds, diverse product offerings and experienced investment, research and client relationship professionals. In order to achieve performance and growth in AUM and profitability, we are pursuing a strategy which includes the following key elements: Continuing an Active Fundamental Investment Approach Since 1985, our results demonstrate our core competence in event driven investing through market cycles. Our “Private Market Value (PMV) with a Catalyst™” investing approach remains the principal management philosophy guiding our investment operations. This method is based on investing principles articulated by Graham & Dodd, and further refined by our Executive Chairman, Mario J. Gabelli. Growing our Investment Partnerships Advisory Business We intend to grow our Investment Partnerships advisory operations by gaining share with existing products and introducing new products within our core competencies, such as event and merger arbitrage. In addition, we intend to grow internationally. Capitalizing on Acquisitions and Alliances - Direct Investments We intend to leverage our research and investment capabilities by pursuing acquisitions and alliances that will broaden our product offerings and add new sources of distribution. In addition, we may make direct investments in operating businesses using a variety of techniques and structures. For example, in April 2018, the Company completed a €110 million initial public offering of its first special purpose acquisition corporation, the Gabelli Value for Italy S.p.a., an Italian company listed on the London Stock Exchange’s Borsa Italiana AIM segment under the symbol “VALU”. VALU was created to acquire a small- to medium- sized Italian franchise business with the potential for international expansion, particularly in the United States. Pursuing Partnerships and Joint Ventures We plan to pursue partnerships and joint ventures with firms that fit with AC’s product quality and that can provide Asian/European distribution capabilities that would complement our U.S. equity product expertise. We expect to target opportunities for investors interested in non-market correlated returns. 7 Competition The alternative asset management industry is intensely competitive. We face competition in all aspects of our business from other managers in the United States and around the globe. We compete with alternative investment management firms, insurance companies, banks, brokerage firms and financial institutions that offer products that have similar features and investment objectives. Many of these investment management firms are subsidiaries of large diversified financial companies and may have access to greater resources than us. Many are larger in terms of AUM and revenues and, accordingly, have larger investment and sales organizations and related budgets. Historically, we have competed primarily on the basis of the long-term investment performance of our investment products. We have recently taken steps to increase our distribution channels, brand awareness and marketing efforts. The market for providing investment management services to institutional and private wealth management clients is also highly competitive. Selection of investment advisors by U.S. institutional investors is often subject to a screening process and to favorable recommendations by investment industry consultants. Many of these investors require their investment advisors to have a successful and sustained performance record, often five years or longer, and focus on one-year and three-year performance records. Currently, we believe that our investment performance record would be attractive to potential new institutional and private wealth management clients. While we have significantly increased our AUM from institutional investors since our entry into the institutional asset management business, no assurance can be given that our efforts to obtain new business will be successful. Intellectual Property Service marks and brand name recognition are important to our business. We have rights to the service marks under which our products are offered. We have rights to use the “Gabelli” name, and the “GAMCO” brand, pursuant to a non-exclusive, royalty-free license agreement we have entered into with GAMCO (the “Service Mark and Name License Agreement”). We can use these names with respect to our funds, collective investment vehicles, Investment Partnerships and other investment products pursuant to the Service Mark and Name License Agreement. The Service Mark and Name License Agreement has a perpetual term, subject to termination only in the event we are not in compliance with its quality control provisions. Pursuant to an assignment agreement signed in 1999, Mario J. Gabelli had assigned to GAMCO all of his rights, title and interests in and to the “Gabelli” name for use in connection with investment management services and institutional research services. In addition, the funds managed by Mario J. Gabelli outside GAMCO and AC have entered into a license agreement with GAMCO permitting them to continue limited use of the “Gabelli” name under specified circumstances. Commitment to Community AC seeks to be a good corporate citizen in our community through the way we conduct our business activities as well as by other measures such as serving our community, sponsoring local organizations and developing our teammates. Since our spin-off in 2015, AC has supported over 160 qualified charities that address a broad range of local, national and international concerns. The recipients were identified by our shareholders through AC’s Shareholder-Designated Contribution Program. The 2019 program, approved by our Board in November 2019, allows each shareholder of record at November 30, 2019 to designate a qualified charity to receive a $0.20 per share donation from AC. We expect that the Company’s total contributions for the 2019 program will be approximately $4.5 million bringing cumulative donations to approximately $20.0 million. Regulation Virtually all aspects of our businesses are subject to federal, state and foreign laws and regulations. These laws and regulations are primarily intended to protect investment advisory clients and investors, the financial markets and the customers of broker-dealers. Under such laws and regulations, agencies that regulate investment advisors and broker- dealers have broad powers, including the power to limit, restrict or prohibit such an advisor or broker-dealer from carrying on its business in the event that it fails to comply with such laws and regulations. In such an event, the possible sanctions that may be imposed include civil and criminal liability, the suspension of individual employees, injunctions, 8 limitations on engaging in certain lines of business for specified periods of time, revocation of the investment advisor and other registrations, censures and fines. Existing U.S. Regulation Overview AC and certain of its U.S. subsidiaries are currently subject to extensive regulation, primarily at the federal level, by the SEC, the Department of Labor, FINRA and other regulatory bodies. Certain of our U.S. subsidiaries are also subject to anti-terrorist financing, privacy, and anti-money laundering regulations as well as economic sanctions laws and regulations established by these agencies. The Advisers Act GCIA is registered with the SEC under the Advisers Act and is regulated by and subject to examination by the SEC. The Advisers Act imposes numerous obligations on registered investment advisors including fiduciary duties, disclosure obligations and record keeping, operational and marketing requirements. The SEC is authorized to institute proceedings and impose sanctions for violations of the Advisers Act, ranging from censure to termination of an investment advisor’s registration. The failure of GCIA to comply with the requirements of the SEC could have a material adverse effect on us. We derive a majority of our revenues from investment advisory services from investment management agreements. Under the Advisers Act, our investment management agreements may not be assigned without the client’s consent. Broker-Dealer and Trading and Investment Regulation G.research is a registered as broker-dealer with the SEC and is subject to regulation by FINRA and various states’ regulatory authorities. In its capacity as a broker-dealer, G.research is required to maintain certain minimum net capital amounts. These requirements also provide that equity capital may not be withdrawn, advances to affiliates may not be made or cash dividends paid if certain minimum net capital requirements are not met. G.research’s net capital, as defined, met or exceeded all minimum requirements as of December 31, 2019. As a registered broker-dealer, G.research is also subject to periodic examination by FINRA, the SEC and the state regulatory authorities. Our trading and investment activities for client accounts are regulated under the Exchange Act, as well as the rules of various U.S. and non-U.S. securities exchanges and self-regulatory organizations. These laws and regulations govern such items as trading on inside information, market manipulation, technical requirements (e.g., short sale limits, volume limitations and reporting obligations), and market regulation policies in the United States and globally. Violation of any of these laws and regulations could result in restrictions on our activities and damage our reputation. Employee Retirement Income Security Act of 1974 (“ERISA”) Subsidiaries of AC are subject to ERISA and to regulations promulgated thereunder, insofar as they are “fiduciaries” under ERISA with respect to certain of their clients. ERISA and applicable provisions of the Internal Revenue Code of 1986, as amended, impose certain duties on persons who are fiduciaries under ERISA and prohibit certain transactions involving ERISA plan clients. Our failure to comply with these requirements could have a material adverse effect on us. Anti-Tax Evasion Legislation Our global business may be impacted by the Foreign Account Tax Compliance Act (“FATCA”) which was enacted in 2010 and introduced expansive new investor onboarding, withholding and reporting rules aimed at ensuring U.S. persons with financial assets outside of the United States pay appropriate taxes. In many instances, however, the precise nature of what needs to be implemented will be governed by bilateral Intergovernmental Agreements (“IGAs”) between the United States and the countries in which we do business or have accounts. While many of these IGAs have been put into place, others have yet to be concluded. 9 The Organization for Economic Cooperation and Development (“OECD”) has developed the Common Reporting Standard (“CRS”) to address the issue of offshore tax evasion on a global basis. Aimed at maximizing efficiency and reducing cost for financial institutions, the CRS provides a common standard for due diligence, reporting and exchange of information regarding financial accounts. Pursuant to the CRS, participating jurisdictions will obtain from reporting financial institutions, and automatically exchange with partner jurisdictions on an annual basis, financial information with respect to all reportable accounts identified by financial institutions on the basis of common due diligence and reporting procedures. As a result, the Investment Partnerships will be required to report information on the investors of the Partnerships to comply with the CRS due diligence and reporting requirements, as adopted by the countries in which the Investment Partnerships are organized. The FATCA and CRS rules will impact both U.S. and non-U.S. Investment Partnerships and separately managed accounts and subject us to extensive additional administrative burdens. Our business could also be impacted to the extent there are other changes to tax laws such as the recent tax reform legislation. Such changes could adversely affect our financial results. The Patriot Act The USA Patriot Act of 2001 contains anti-money laundering and financial transparency laws and mandates the implementation of various new regulations applicable to broker-dealers and other financial services companies, including standards for verifying client identification at account opening, and obligations to monitor client transactions and report suspicious activities. Anti-money laundering laws outside of the United States contain some similar provisions. Our failure to comply with these requirements could have a material adverse effect on us. Laws and Other Issues Relating to Taking Significant Equity Stakes in Companies Investments by AC, its affiliates, and those made on behalf of their respective advisory clients and Investment Partnerships often represent a significant equity ownership position in an issuer’s equity. This may be due to the fact that AC is deemed to be a member of a “group” that includes GAMCO and, therefore, may be deemed to beneficially own the securities owned by other members of the group under applicable securities regulations. As of December 31, 2019, by virtue of being a member of the group, AC was deemed to hold five percent or more beneficial ownership with respect to 98 equity securities. This activity raises frequent regulatory, legal and disclosure issues regarding our aggregate beneficial ownership level with respect to portfolio securities, including issues relating to issuers’ stockholder rights plans or “poison pills;” various federal and state regulatory limitations, including (i) state gaming laws and regulations, (ii) federal communications laws and regulations; (iii) federal and state public utility laws and regulations, as well as federal proxy rules governing stockholder communications; and (iv) federal laws and regulations regarding the reporting of beneficial ownership positions. Our failure to comply with these requirements could have a material adverse effect on us. Potential Legislation Relating to Private Pools of Capital We manage a variety of private pools of capital, including hedge funds. Congress, regulators, tax authorities and others continue to explore increased regulation related to private pools of capital, including changes with respect to: investor eligibility; trading activities, record-keeping and reporting; the scope of anti-fraud protections; safekeeping of client assets; tax treatment; and a variety of other matters. AC may be materially and adversely affected by new legislation, rule-making or changes in the interpretation or enforcement of existing rules and regulations imposed by various regulators. Existing European Regulation Overview Alternative Investment Fund Managers Directive Our European activities are impacted by the European Union’s (“EU”) Alternative Investment Fund Managers Directive (“AIFMD”). AIFMD regulates managers of, and service providers to, a broad range of alternative investment funds (“AIFs”) domiciled within and, potentially, outside the EU. AIFMD also regulates the marketing of all AIFs inside the European Economic Area. AIFMD’s requirements restrict AIF marketing and impose additional compliance 10 and disclosure obligations on AC regarding items such as remuneration, capital requirements, leverage, valuation, stakes in EU companies, depositaries, domicile of custodians and liquidity management. These compliance and disclosure obligations and the associated risk management and reporting requirements will subject us to additional expenses. Undertakings for Collective Investment in Transferable Securities The EU has also adopted directives on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (“UCITS”) impacting depositary functions, remuneration policies and sanctions. The latest initiative in this area, UCITS V, seeks to align the depositary regime, remuneration rules and sanctioning powers of regulators under the UCITS Directive with the requirements of AIFMD. Similarly, the European Securities and Markets Authority recently revised its guidelines for exchange-traded and other UCITS funds. These guidelines introduced new collateral management requirements for UCITS funds concerning collateral received in the context of derivatives using Efficient Portfolio Management (“EPM”) techniques (including securities lending) and over-the-counter derivative transactions. These rules required us to make changes to our collateral management arrangements applicable to the EPM of the UCITS funds for which GCIA acts as a sub-advisor. Compliance with the UCITS directives will cause us to incur additional expenses associated with new risk management and reporting requirements. Markets in Financial Instruments Directive The EU’s revised Markets in Financial Instruments Directive (“MiFID II”), which was fully implemented in 2018, created specific new rules regarding the use of “soft dollars” to pay for research. A MiFID licensed investment firm that provides portfolio management services or independent investment advisory services to clients may not pay for third-party research with soft dollars generated through client trading activity. Research must be paid for either (i) by the investment firm out of its own resources or (ii) through a separate research payment account for each client to pay for the research. While currently neither GCIA nor G.research is directly subject to MiFID II: (a) GCIA may be invoiced separately by any EU brokers from whom it purchases research in the future; (b) clients may begin to require that GCIA “unbundle” research payments from commission trading; and (c) EU-based clients of G.research may also demand that G. research separately invoice them for trading and research. The Financial Conduct Authority (“FCA”) currently regulates Gabelli Securities International (UK) Limited (“GSIL UK”), our MiFID licensed entity in the United Kingdom. Authorization by the FCA is required to conduct certain financial services-related business in the United Kingdom under the Financial Services and Markets Act 2000. The FCA’s rules adopted under that Act provide requirements dealing with a firm’s capital resources, senior management arrangements, conduct of business, interaction with clients and systems and controls. The FCA supervises GSIL UK through a combination of proactive engagement, event-driven and reactive supervision and thematic-based reviews in order to monitor our compliance with regulatory requirements. Breaches of the FCA’s rules may result in a wide range of disciplinary actions against GSIL and/or its employees. Our EU-regulated entities are additionally subject to EU regulations on OTC derivatives which require (i) the central clearing of standardized OTC derivatives, (ii) the application of risk-mitigation techniques to non-centrally cleared OTC derivatives and (iii) the reporting of all derivative contracts. Brexit Impact Until January 31, 2020, the date the United Kingdom terminated its membership in the European Union, GSIL UK was required to comply with MiFID II, which sets out detailed requirements governing the organization and conduct of business of investment firms and regulated markets. MiFID II also includes pre- and post-trade transparency requirements for equity markets and extensive transaction reporting requirements. In addition, relevant entities must comply with revised obligations on capital resources for banks and certain investment firms set out in the Capital Requirements Directive. This directive includes requirements not only on capital, but also governance and remuneration as well. The obligations introduced through these directives have a direct effect on some of our European operations. 11 For the time being, under the transition agreement negotiated between the EU and the UK, GSIL UK will continue to comply with MiFID II to the same extent that all FCA regulated firms are required to comply. The transition period under the transition agreement expires on December 31, 2020. The Company cannot assure you the extent to which the substance of MiFID II or other EU regulations will continue to apply to GSIL UK after the end of the transition period. Regulatory Matters Generally The investment management industry is likely to continue to face a high level of regulatory scrutiny and to become subject to additional rules designed to increase disclosure, tighten controls and reduce potential conflicts of interest. In addition, the SEC has substantially increased its use of focused inquiries which request information from investment advisors regarding particular practices or provisions of the securities laws. We participate in some of these inquiries in the normal course of our business. Changes in laws, regulations and administrative practices by regulatory authorities, and the associated compliance costs, have increased our cost structure and could in the future have a material adverse impact. Although we have installed procedures and utilize the services of experienced administrators, accountants and lawyers to assist us in adhering to regulatory guidelines and satisfying these requirements, and maintain insurance to protect ourselves in the case of client losses, there can be no assurance that the precautions and procedures that we have instituted and installed, or the insurance that we maintain to protect ourselves in case of client losses, will protect us from all potential liabilities. Employees On March 1, 2020, we had a full-time staff of 39 teammates, of whom 18 served in the portfolio management, research and trading areas, 14 served in the marketing and shareholder servicing areas and 7 served in the finance, legal, operations and administrative areas. We also avail ourselves of services provided by GAMCO in accordance with a transitional services agreement that was entered into with GAMCO as part of the Spin-off. Status as a Smaller Reporting Company and an Emerging Growth Company We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K. As a result, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies.” We will, in general, remain a smaller reporting company unless the market value of AC common stock that is held by non-affiliates exceeds $250 million as of the last business day of our most recently completed second fiscal quarter. In addition, we are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). As a result, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will, in general, remain as an emerging growth company for up to five full fiscal years following the Spin-off. We would cease to be an emerging growth company and, therefore, become ineligible to rely on the above exemptions, if (1) we have more than $1 billion in annual revenue in a fiscal year; (2) we issue more than $1 billion of non-convertible debt during the preceding three-year period; or (3) the market value of AC common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. We may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as a smaller reporting company or an emerging growth company, except that we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 107(b) of the JOBS Act. 12 ITEM 1A: RISK FACTORS Smaller reporting companies are not required to provide the information required by this item. ITEM 1B: UNRESOLVED STAFF COMMENTS None. ITEM 2: PROPERTIES On May 31, 2019, AC acquired a building at 191 Mason Street, Greenwich, CT which serves as our headquarters. AC paid rent to GAMCO pursuant to a sublease based on the percentage of square footage occupied by its employees (including pro rata allocation of common space) at GAMCO’s offices at One Corporate Center, in Rye, NY prior to the relocation to the new headquarters. ITEM 3: LEGAL PROCEEDINGS Currently, we are not subject to any legal proceedings that individually or in the aggregate involved a claim for damages in excess of 10% of our consolidated assets. From time to time, we may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. Examinations or investigations can result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the consolidated financial statements include the necessary provisions for losses that we believe are probable and estimable. Furthermore, we evaluate whether there exist losses which may be reasonably possible and, if material, make the necessary disclosures. ITEM 4: MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5: MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for our Stock, Dividends and Stock Repurchase Program Our shares of Class A Stock are traded on the New York Stock Exchange under the symbol AC. As of February 1, 2020, there were 121 and 21 holders of record of the Company’s Class A and Class B common stock, respectively. These figures do not include approximately 2,184 beneficial holders of Class A shares held in “street” name at various brokerage firms. In December 2015, the Board of Directors established a stock repurchase program authorizing the Company to repurchase up to 500,000 shares. On February 7, 2017, the Board of Directors reset the available number of shares to be purchased under the stock repurchase program to 500,000 shares. On August 3, 2017 and May 8, 2018, the Board of Directors authorized the repurchase of an additional 1 million and 500,000 shares, respectively. Our stock repurchase program is not subject to an expiration date. 13 The following table provides information with respect to the shares of our Class A Stock we repurchased during the quarter ended December 31, 2019: Period 10/01/19 - 10/31/19 11/01/19 - 11/30/19 12/01/19 - 12/31/19 Totals Total Number of Shares Repurchased 7,110 4,365 9,499 20,974 Average Price Paid Per Share, net of Commissions $ 36.39 36.01 37.50 36.80 $ Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs 7,110 4,365 9,499 20,974 Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs 1,108,220 1,103,855 1,094,356 In addition to our on-going stock repurchase program, in March and October 2018, the Company completed exchange offers with respect to its Class A shares which resulted in the repurchase of 493,954 and 373,581 Class A shares in exchange for 666,805 and 709,749 shares of GBL valued at approximately $17.7 million and $14.6 million, respectively. We have adopted the 2015 Stock Award and Incentive Plan (the “Equity Compensation Plan”). A maximum of 2.0 million shares of Class A Stock have been reserved for issuance as approved by the Company's stockholders at the annual meeting of stockholders held on May 3, 2016. The Company withdrew the registration statement covering the issuance of those shares as of December 29, 2017. During 2018, the Company awarded 172,800 Phantom Restricted Stock Awards (“Phantom RSAs”) under the Equity Compensation Plan. As of December 31, 2019, 119,650 awarded but unvested Phantom RSAs are outstanding. On February 4, 2020, an additional 23,000 Phantom RSA’s were forfeited by teammates who transferred to Morgan Group Holdings Co., resulting in 96,650 Phantom RSA’s remaining outstanding. The number of shares remaining available for future issuance under equity compensation plans is 1,289,100. ITEM 6: SELECTED FINANCIAL DATA Smaller reporting companies are not required to provide the information required by this item. ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS (“MD&A”) OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction This MD&A is provided as a supplement to, and should be read in conjunction with, the Consolidated Financial Statements and the notes thereto included in Item 8 to this report. Unless the context otherwise requires, all references to “we,” “us,” “our,” “AC Group” or the “Company” refer collectively to Associated Capital Group, Inc. and its subsidiaries through which our operations are actually conducted. Factors Affecting Financial Condition and Results of Operations The Company, through its subsidiaries, provides alternative investment management services and institutional research services, as well as management of the Company’s proprietary investment portfolio. In its alternative asset management operations, subsidiaries of the Company serve as general partner or investment manager to investment funds including limited partnerships, offshore companies and separate accounts. The Company primarily manages assets in equity event-driven value strategies, across a range of risk and event arbitrage portfolios, earning management and incentive fees from its advisory activities. The institutional research operations offer domain knowledge-driven research and a sales and execution platform for institutional investors, earning fees from its institutional clients via trading commissions or direct payment. 14 Overview Consolidated Statements of Income Investment advisory and incentive fees, which are based on the amount and composition of AUM in our funds and accounts, represent our largest source of revenues. Growth in revenues depends on good investment performance, which influences the value of existing AUM as well as contributes to higher investment and lower redemption rates and facilitates the ability to attract additional investors while maintaining current fee levels. Growth in AUM is also dependent on being able to access various distribution channels, which is usually based on several factors, including performance and service. In light of the dynamics created by COVID-19 and its impact on the global supply chain and banks, oil, travel and leisure, we could experience higher volatility in short term returns of our funds. Incentive fees generally consist of an incentive allocation on the absolute gain in a portfolio or a fee of 20% of the economic profit, as defined in the agreements governing the investment vehicle or account. We recognize such revenue only when the measurement period has been completed or at the time of an investor redemption. Institutional research services revenues consist of brokerage commissions derived from securities transactions executed on an agency basis or direct payments from institutional clients. Commission revenues vary directly with the perceived value of the research provided, as well as account execution activity and new account generation. Compensation includes variable and fixed compensation and related expenses paid to officers, portfolio managers, sales, trading, research and all other professional staff. Variable compensation paid to sales personnel and portfolio management and may represent up to 55% of revenues. Management fee expense is incentive-based and entirely variable compensation in the amount of 10% of adjusted aggregate pre-tax profits which is paid to the Executive Chairman or his designees for his services as Executive Chairman pursuant to an employment agreement. Other operating expenses include general and administrative operating costs and clearing charges and fees incurred by our brokerage operations. Other income and expense includes net gains and losses from investments (which include both realized and unrealized gains and losses from securities and equity in earnings of investments in partnerships), interest and dividend income, and interest expense. Net gains and losses from investments are derived from our proprietary investment portfolio consisting of various public and private investments and from consolidated investment funds. Net income/(loss) attributable to noncontrolling interests represents the share of net income attributable to third-party limited partners of certain partnerships and offshore funds we consolidate. Please refer to Notes A and E in our consolidated financial statements included elsewhere in this report. Consolidated Statements of Financial Condition We ended 2019 with approximately $938 million in cash and investments, net of securities sold, not yet purchased of $16 million. This includes $349 million of cash and cash equivalents; $29 million of short-term U.S. Treasury obligations; $255 million of securities, net of securities sold, not yet purchased, including shares of GAMCO and VALU with market values of $57 million and $9 million, respectively; and $305 million invested in affiliated and third-party funds and partnerships, including investments in affiliated closed end funds which have a value of $100 million and more limited liquidity. Our financial resources provide flexibility to pursue strategic objectives that may include acquisitions, lift-outs, seeding new investment strategies, and co-investing, as well as shareholder compensation in the form of share repurchases and dividends. Total shareholders’ equity was $897 million or $39.93 per share as of December 31, 2019, compared to $866 million or $38.36 per share as of the prior year-end. These shareholders’ equity per share calculations are a non-GAAP measurement calculated by dividing the total equity by the number of common shares outstanding. The increase in equity from the end of 2018 was largely attributable to investment income for the year. 15 Our primary goal is to use our liquid resources to opportunistically and strategically grow book value and net income. While this goal is a priority, if opportunities are not present with what we consider a margin of safety, we will consider alternatives to return capital to our shareholders, including stock repurchases and dividends. Assets Under Management Highlights We reported assets under management as follows (dollars in millions): Year Ended December 31, 2019 2018 % Change Event Merger Arbitrage Event-Driven Value Other Total (a) (a) Includes $259 million and $214 million of proprietary capital, respectively. 1,525 132 59 1,716 $ $ $ $ 1,342 118 60 1,520 13.6 11.6 (1.7) 12.9 Changes in our AUM during 2019 were as follows (dollars in millions): Year Ended December 31, 2019 Beginning Inflows Outflows Investment Return Ending Event Merger Arbitrage Event-Driven Value Other Total AUM $ $ 1,342 118 60 1,520 $ 368 8 - 376 $ (262) (4) (8) (274) 77 10 7 94 1,525 132 59 1,716 $ $ $ $ $ $ The majority of our AUM has calendar year-end measurement periods, and our incentive fees are primarily recognized in the fourth quarter. Operating Results for the Year Ended December 31, 2019 as Compared to the Year Ended December 31, 2018 Revenues Total revenues were $31.3 million for the year ended December 31, 2019, $8.5 million higher than total revenues of $22.8 million for the year ended December 31, 2018. Total revenues by type were as follows (dollars in thousands): Investment advisory and incentive fees Institutional research services Other revenues Total revenues 22,148 8,947 170 31,265 Year Ended December 31, 2018 2019 $ $ Change $ % 14,409 8,284 86 22,779 $ 7,739 663 84 8,486 53.7 8.0 97.7 37.3 $ $ $ Investment advisory and incentive fees: We earn advisory fees based on our AUM. Investment advisory fees are directly influenced by the amount of average AUM and the fee rates applicable to various accounts. Advisory fees were $10.9 million for 2019 compared to $10.2 million for 2018, an increase of $0.7 million. This increase is a result of the increase in average AUM over the period. 16 Incentive fees are directly related to the gains generated for our clients’ accounts. We earn a percentage, usually 20%, of such gains. Incentive fees were $11.2 million in 2019, up $7.0 million from $4.2 million in 2018, due to higher investment performance. Institutional research services: Institutional research services revenues in 2019 were $8.9 million, a $0.6 million increase from $8.3 million in 2018 primarily resulting from higher brokerage commissions derived from securities transactions executed on an agency basis of $0.6 million and higher selling concessions and sales manager fees of $1.0 million offset by decreased revenue from research services agreements with affiliates of $0.9 million. Other revenues: Other revenues were $0.2 million for 2019 compared to $0.1 million for 2018, an increase of $0.1 million. Expenses Compensation: Compensation, which includes variable compensation, salaries, bonuses and benefits, was $32.2 million for the year ended December 31, 2019, an increase of $5.6 million from $26.6 million for the year ended December 31, 2018. Fixed compensation expense, which includes salaries, bonuses and benefits, decreased to $15.6 million in 2019 from $16.8 million in 2018. The remainder of compensation expense represents variable compensation that fluctuates with management and incentive fee revenues as well as the investment results of certain proprietary accounts. Variable payouts are also impacted by the mix of products upon which performance fees are earned and the extent to which they may exceed their allocated costs. For 2019, these variable payouts (based on the investment performance of the products with incentive fees) were $16.6 million, an increase of $7.5 million from $9.1 million in 2018. Stock-based compensation was $1.4 million in 2019, an increase of $0.7 million from $0.7 million recorded in 2018. The increase was primarily due to the expense attributable to Phantom RSAs awarded in 2018. Management fees: Management fee expense is incentive-based and entirely variable compensation equal to 10% of the aggregate adjusted pre-tax profits, which is paid to the Executive Chairman or his designees pursuant to his employment agreement with AC. In 2019, AC recorded management fee expense of $5.7 million. No management fee expense was recorded in 2018 due to pre-tax losses incurred. Other operating expenses: Our other operating expenses were $9.1 million in 2019 compared to $9.7 million in 2018, a decrease of $0.6 million due to lower overall costs. Investment and other non-operating income/(expense), net Net gain/(loss) from investments: Net gain/(loss) from investments is directly related to the performance of our proprietary capital. For the year ended December 31, 2019, net gains from investments were $60.8 million compared to a net loss of $65.2 million in the prior year primarily due to mark-to-market changes in the value of the GAMCO stock and other investments. Interest and dividend income: Interest and dividend income remained unchanged at $13.4 million for 2019 and 2018. Interest expense: Interest expense decreased to $0.2 million in 2019 from $0.3 million in 2018. Income Taxes In 2019, we recorded an income tax expense of $12.1 million resulting in an effective tax rate (“ETR”) of 21.7%. In 2018, we recorded an income tax benefit of $11.5 million resulting in a negative ETR of -16.7% (i.e., a tax benefit on positive income). The 2019 ETR is above the standard corporate tax rate of 21% primarily due state income taxes and a valuation allowance on carryforward of charitable contributions. The 2018 ETR is below the standard rate of 21% due to inability of the Company to deduct certain capital losses incurred during the year offset in part by tax benefits from the dividends received deduction. In addition, the Company recorded a valuation allowance of $1.4 million and 17 $0.7 million against deferred tax assets attributable to charitable contribution carryovers as of December 31, 2019 and 2018, respectively. Noncontrolling Interests Net income attributable to noncontrolling interests was $3.6 million in 2019 compared to income of $0.7 million in 2018. The increase of $2.9 million was driven primarily by increased earnings at Gabelli Merge Plus+ Trust. Net Income/(Loss) Net income for the year ended December 31, 2019 was $39.2 million compared to net loss of $58.1 million for the prior year. The change was driven primarily by mark-to-market increases on our investment portfolio. Liquidity and Capital Resources Our principal assets consist of cash and cash equivalents; short-term treasury securities; marketable securities, primarily equities, including 2.9 million shares of GAMCO stock; and interests in affiliated and third-party funds and partnerships. Although Investment Partnerships may be subject to restrictions as to the timing of distributions, the underlying investments of such Investment Partnerships are generally liquid, and the valuations of these products reflect that underlying liquidity. Summary cash flow data is as follows (in thousands): Year Ended December 31, 2019 2018 Cash flows provided by (used in): Operating activities Investing activities Financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Increase in cash from consolidation Cash and cash equivalents at end of year $ $ (44,334) (5,058) (11,584) (60,976) 409,564 - 348,588 76,980 4,736 34,689 116,405 293,112 47 409,564 $ $ We require relatively low levels of capital expenditures and have a highly variable cost structure where costs increase and decrease based on the level of revenues we receive. Our revenues, in turn, are highly correlated to the level of AUM and to its investment performance. We anticipate that our available liquid assets should be sufficient to meet our cash requirements as we build out our operating business. At December 31, 2019, we had cash and cash equivalents of $348.6 million and $588.6 million of investments net of securities sold, not yet purchased of $16.4 million. Of these amounts, $13.1 million and $31.8 million, respectively, were held by consolidated investment funds and may not be readily available for the Company to access. Net cash used by operating activities was $44.3 million in 2019. The net income adjusted for noncash items, primarily unrealized gains on securities, deferred income taxes and exchange offers, was $21.2 million along with a decrease in net receivables/payables of $12.9 million. This was more than offset, however, by increases in investments in securities and net contributions to investment partnerships of $78.4 million. Net cash provided by operations was $77.0 million in 2018. The net loss adjusted for noncash items, primarily unrealized losses on securities, deferred income taxes and exchange offers, was $9.0 million. This was more than offset, however, by an increase in net receivables/payables of $8.7 million and reductions in investments in securities and net withdrawals from investment partnerships of $77.3 million. Net cash used in investing activities was $5.1 million in 2019 due to the purchase of a building for $6.5 million and purchases of securities of $5.0 million partially offset by proceeds from sales of securities of $4.9 million, return of 18 capital on securities of $0.9 million and cash received in acquisition of Morgan Group $0.6 million. Net cash generated from investing activities was $4.7 million in 2018. A short-term note due from GBL (“GBL Short-term Note”) with a principal amount of $15 million was repaid during the year. Offsetting this principal repayment was net purchases of securities in the amount of $10.4 million and $0.1 million from return of capital on securities. Net cash used in financing activities was $11.6 million largely resulting from dividends paid of $4.5 million, share repurchases of $4.1 million and redemptions to consolidated funds of $2.9 million. Net cash provided by financing activities was $34.7 million for 2018, largely resulting from $50.0 million principal payments on the GAMCO Note partially offset by $7.0 million of treasury stock purchases, dividend payments of $4.7 million, and net redemptions of redeemable noncontrolling interests of $3.6 million G.research is registered with the SEC as a broker-dealer and is regulated by FINRA. As such, G.research is subject to minimum net capital requirements promulgated by the SEC. G.research computes its net capital under the alternative method permitted by the SEC, which requires minimum net capital of $250,000. As of December 31, 2019 and 2018, G.research had net capital, as defined, of approximately $4.6 million and $9.1 million, respectively, exceeding the regulatory requirement by approximately $4.3 million and $8.8 million, respectively. Net capital requirements for G.research may increase in accordance with SEC rules and regulations to the extent it engages in other business activities. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Critical Accounting Policies In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We base our estimates on historical experience, when available, and on other various assumptions that are believed to be reasonable under the circumstances. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following critical accounting policies require management to exercise significant judgment: Major Revenue-Generating Services and Revenue Recognition The Company’s revenues are derived primarily from investment advisory and incentive fees and institutional research services. Investment advisory and incentive fees are directly influenced by the level and mix of AUM as fees are derived from a contractually-determined percentage of the balance of each account as well as a percentage of the investment performance of certain accounts. Management fees from investment partnerships and offshore funds are computed either monthly or quarterly, and amounts receivable are included in investment advisory fees receivable on the consolidated statements of financial condition. These revenues vary depending upon the level of capital flows, financial market conditions, investment performance and the fee rates applicable to each account. Incentive allocations or fees are generally recognized at the end of an annual measurement period and amounts receivable are included in investment advisory fees receivable on the consolidated statements of financial condition. G.research, LLC provides institutional research services and earns brokerage commissions and sales manager fees from securities transactions executed on an agency basis on behalf of institutional clients and mutual funds, private wealth management clients and retail customers of affiliated companies. Commission revenue and related clearing charges are recorded on a trade-date basis and are included in institutional research services and other operating expenses, respectively, on the consolidated statements of income. 19 G.research has also been involved in syndicated underwriting activities that included public equity and debt offerings managed by major investment banks. Underwriting fees include gains, losses, selling concessions and fees, net of syndicate expenses, arising from securities offerings in which G.research acts as underwriter or agent and are accrued as earned. See Note C, Revenue, in the consolidated financial statements for additional information. Investments in Securities Investments in securities are a recorded at fair value in the statements of financial condition in accordance with U.S. GAAP. Securities transactions and any related gains and losses are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the specific identified cost basis and are included in gain/(loss) from investments, net on the consolidated statements of income. Management determines the appropriate classification of securities at the time of purchase. Government debt with maturities of greater than three months at the time of purchase are considered investments in debt securities. Investments in debt securities are accounted for as trading, available for sale ("AFS"), or held-to-maturity securities. The Company does not hold any investments in debt securities accounted for as AFS or held to maturity. Securities sold, but not yet purchased are recorded on the trade date, and are stated at fair value and represent obligations of AC to purchase the securities at prevailing market prices. Therefore, the future satisfaction of such obligations may be for an amount greater or less than the amounts recorded on the consolidated statements of financial condition. The ultimate gains or losses recognized are dependent upon the prices at which these securities are purchased to settle the obligations under the sales commitments. Unrealized gains and losses and realized gains and losses from covers of securities sold, not yet purchased transactions are included in net gain/(loss) from investments on the consolidated statements of income. Consolidation The Company assesses all entities with which it is involved for consolidation on a case by case basis depending on the specific facts and circumstances surrounding each entity. Pursuant to accounting guidance, the Company first evaluates whether it holds a variable interest in an entity. The Company considers all economic interests, including proportionate interests through related parties, to determine if such interests are to be considered a variable interest. Fees paid to the Company that are customary and commensurate with the level of services provided from entities in which the Company does not hold other economic interests in the entity are not considered as a variable interest. For any entity where the Company has determined that it does hold a variable interest, the Company performs an assessment to determine whether it qualifies as a variable interest entity (“VIE”). The granting of substantive kick-out rights is a key consideration in determining whether a limited partnership or similar entity is a VIE and whether or not that entity should be consolidated. The Company evaluates consolidation on a case by case basis those VIEs in which substantive kick-out rights have been granted to the unaffiliated investors to either dissolve the fund or remove the general partner. Under the variable interest entity model, the Company consolidates those entities where it is determined that the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it has a controlling financial interest in the VIE, which is defined as possessing both (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. If the Company alone is not considered to have a controlling financial interest in the VIE but the Company and its related parties under common control in the aggregate have a controlling financial interest in the VIE, the Company will be deemed to be the primary beneficiary if it is the party that is most closely associated with the VIE. When the Company and its related parties not under common control in the aggregate have a controlling financial interest in a VIE, the Company would be deemed to be the primary beneficiary if substantially all the activities of the entity are performed on behalf of the Company. 20 The Company determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion as required. Investments and redemptions (either by the Company, related parties of the Company or third parties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primary beneficiary. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities (“VOEs”) under the voting interest model. The Company evaluates whether the entity should be evaluated under the guidance for partnerships and similar entities, or corporations, and consolidates those entities it controls through a majority voting interest or other means. If the Company is the general partner or managing member it generally will not be required to consolidate a VOE. The Company records noncontrolling interests in consolidated Investment Partnerships for which the Company’s ownership is less than 100%. See Note E, Investment Partnerships and Variable Interest Entities in the consolidated financial statements for additional information. Investments in Partnerships and Affiliates The Company is general partner or co-general partner of various affiliated entities. We also have investments in unaffiliated partnerships, offshore funds and other entities (collectively, “investments in partnerships and affiliates”). The Company accounts for its investments in partnerships and affiliates under the equity method. Substantially all of the Company's equity method investees are entities that record their underlying investments at fair value and included in investments in partnerships. Therefore, under the equity method of accounting, the Company's share of the investee's underlying net income predominantly represents fair value adjustments in the investments held by the equity method investees. The Company's share of the investee's underlying net income or loss is based upon the most currently available information and is recorded as net gain/(loss) from investments on the consolidated statements of income. Capital contributions are recorded as an increase in investments when paid, and withdrawals and distributions are recorded as reductions of the investments when received. Depending on the terms of the investment, the Company may be restricted as to the timing and amounts of withdrawals. Income Taxes For purposes of the preparation of the consolidated financial statements, the provision for income taxes is computed using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts on the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, the Company determines whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company recognizes the accrual of interest on uncertain tax positions and penalties in the income tax provision on the consolidated statements of income. Recent Accounting Developments See Footnote B, Significant Accounting Policies – Recent Accounting Developments, in the consolidated financial statements. 21 Seasonality and Inflation We do not believe that our operations are subject to significant seasonal fluctuations. We do not believe inflation will significantly affect our compensation costs, as they are substantially variable in nature. The rate of inflation may affect certain other expenses, however, such as information technology and occupancy costs. To the extent inflation results in rising interest rates and has other effects upon the securities markets, it may adversely affect our financial position and results of operations by reducing our AUM, revenues or otherwise. ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Smaller reporting companies are not required to provide the information required by this item. ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm Consolidated Financial Statements: Consolidated Statements of Income for the years ended December 31, 2019 and 2018 Consolidated Statements of Comprehensive Income for the years ended December 31, 2019 and 2018 Consolidated Statements of Financial Condition at December 31, 2019 and 2018 Consolidated Statements of Equity for the years ended December 31, 2019 and 2018 Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018 Notes to Consolidated Financial Statements Page 24 25 26 27 28 30 32 All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission that are not required under the related instructions or are inapplicable have been omitted. 22 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Associated Capital Group, Inc. Greenwich, CT Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of Associated Capital Group, Inc. and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, equity and cash flows, for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /S/ Deloitte & Touche, LLP Stamford, Connecticut March 16, 2020 We have served as the Company's auditor since 2015. 23 This page was intentionally left blank ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Revenues Investment advisory and incentive fees Institutional research services Other revenues Total revenues Expenses Compensation Management fee Other operating expenses Total expenses Operating loss Other income/(expense) Net gain/(loss) from investments Interest and dividend income Interest expense Shareholder-designated contribution Total other income/(expense), net Income/(loss) before income taxes Income tax provision/(benefit) Net income/(loss) Net income/(loss) attributable to noncontrolling interests Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders Year Ended December 31, 2019 2018 $ 22,148 8,947 170 31,265 $ 14,409 8,284 86 22,779 32,184 5,713 9,126 47,023 (15,758) 26,607 - 9,652 36,259 (13,480) 60,757 13,407 (217) (3,281) 70,666 54,908 12,126 42,782 3,594 39,188 $ (65,203) 13,384 (262) (3,300) (55,381) (68,861) (11,478) (57,383) 716 (58,099) $ Net income/(loss) per share attributable to Associated Capital Group, Inc.'s shareholders: Basic Diluted $ $ 1.74 1.74 $ $ (2.52) (2.52) Weighted average shares outstanding: Basic Diluted Actual shares outstanding See accompanying notes. 22,534 22,534 22,475 23,070 23,070 22,585 24 ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) Year Ended December 31, 2019 2018 Net income/(loss) Less: Comprehensive income/(loss) attributable to noncontrolling interests $ 42,782 3,594 $ (57,383) 716 Comprehensive income/(loss) attributable to Associated Capital Group, Inc. $ 39,188 $ (58,099) See accompanying notes. 25 ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except per share data) December 31, December 31, 2019 2018 $ $ 348,588 300,357 159,311 145,372 24,150 9,582 4,369 2,004 3,519 13,654 1,010,906 409,564 229,960 142,135 118,729 24,629 4,394 1,309 9,422 3,519 10,772 954,433 $ $ $ 14,889 3,676 20,246 16,419 483 7,373 63,086 $ 5,511 3,577 11,388 9,574 515 7,820 38,385 50,385 49,800 6 6 19 1,003,450 (701) (106,342) 896,432 1,003 897,435 1,010,906 $ 19 1,008,319 (39,889) (102,207) 866,248 - 866,248 954,433 $ ASSETS Cash and cash equivalents (a) Investments in securities (Including GBL stock with a value of $57.2 million and $50.9 million, respectively) (a) Investments in affiliated registered investment companies Investments in partnerships (a) Receivable from brokers (a) Investment advisory fees receivable Receivable from affiliates Deferred tax assets, net Goodwill Other assets (a) Total assets LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Payable to brokers Income taxes payable, net Compensation payable Securities sold, not yet purchased Payable to affiliates Accrued expenses and other liabilities (a) Total liabilities Redeemable noncontrolling interests (a) Commitments and contingencies (Note L) Equity: Preferred stock, $.001 par value; 10,000,000 shares authorized; none issued and outstanding Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 6,569,254 and 6,537,768 shares issued, respectively; 3,452,381 and 3,530,752 shares outstanding, respectively Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued; 19,022,918 and 19,054,404 shares outstanding, respectively Additional paid-in capital Retained earnings/(Accumulated Deficit) Treasury stock, at cost (3,116,873 and 3,007,016 shares, respectively) Total Associated Capital Group, Inc. equity Noncontrolling interests Total equity Total liabilities and equity (a) As of December 31, 2019, cash and cash equivalents, investments in securities, investment in partnerships, receivable from broker, other assets, accrued expenses and other liabilities, and redeemable noncontrolling interests include amounts related to consolidated variable interest entities (“ VIEs”). See Footnote E. See accompanying notes. 26 e l b a m e e d e R g n i l l o r t n o c n o N y r u s a e r T e v i s n e h e r p m o C d e t a l u m u c c A s t s e r e t n I l a t o T k c o t S e m o c n I % 4 L B G e t o N K I P l a n o i t i d d A n i - d i a P l a t i p a C d e n i a t e R s g n i n r a E n o m m o C k c o t S 0 3 2 , 6 4 $ 7 4 1 , 8 1 9 $ ) 5 9 8 , 2 6 ( $ 2 1 7 , 6 $ ) 0 0 0 , 0 5 ( $ 5 0 5 , 0 1 0 , 1 $ 0 0 8 , 3 1 $ 5 2 $ s r e d l o h e r a h s . c n I , p u o r G l a t i p a C d e t a i c o s s A S E I R A I D I S B U S D N A . C N I , P U O R G L A T I P A C D E T A I C O S S A Y T I U Q E F O S T N E M E T A T S D E T A D I L O S N O C D E S N E D N O C D E T I D U A N U ) a t a d e r a h s r e p t p e c x e , s d n a s u o h t n i s r a l l o D ( 8 1 0 2 , 1 3 r e b m e c e D d n a 8 1 0 2 , 0 3 r e b m e t p e S , 8 1 0 2 , 0 3 e n u J , 8 1 0 2 , 1 3 h c r a M d e d n e s h t n o m e e r h t e h t r o F - ) 1 7 9 , 1 ( ) 3 4 1 ( 8 8 4 , 6 - - - - - - - 2 7 ) 9 2 2 , 2 2 ( ) 9 5 4 ( 0 0 0 , 0 1 ) 7 3 7 , 7 1 ( - - - - - - ) 9 5 4 ( ) 7 3 7 , 7 1 ( 4 0 6 , 0 5 $ 4 9 7 , 7 8 8 $ ) 1 9 0 , 1 8 ( $ ) 6 3 3 ( 9 3 0 , 1 - - - - 4 2 8 , 1 1 ) 2 0 3 , 2 ( ) 0 8 3 , 5 ( 0 0 0 , 0 2 - - - ) 0 8 3 , 5 ( 7 0 3 , 1 5 $ 6 3 9 , 1 1 9 $ ) 1 7 4 , 6 8 ( $ ) 5 4 3 ( 7 5 1 - - - ) 9 7 3 , 7 ( ) 2 3 7 ( 0 0 0 , 0 2 - - - ) 2 3 7 ( 9 1 1 , 1 5 $ 5 2 8 , 3 2 9 $ ) 3 0 2 , 7 8 ( $ ) 2 8 9 ( ) 7 3 3 ( - - - - ) 0 4 4 ( ) 5 1 3 , 0 4 ( ) 8 5 2 , 2 ( ) 4 6 5 , 4 1 ( - - ) 0 4 4 ( ) 4 6 5 , 4 1 ( 0 0 8 , 9 4 $ 8 4 2 , 6 6 8 $ ) 7 0 2 , 2 0 1 ( $ ) 2 1 7 , 6 ( - - - - - - - - - - - - - - - - - - - - - - - $ $ - - 0 0 0 , 0 2 - - - - - - - - - - - - 0 0 0 , 0 1 - - - - - - 2 7 - - - 2 1 7 , 6 - - ) 9 2 2 , 2 2 ( - - - - - - - - - - - - $ ) 0 0 0 , 0 4 ( $ 7 7 5 , 0 1 0 , 1 $ ) 7 1 7 , 1 ( $ 5 2 $ - - 0 0 0 , 0 2 - - - - - - 4 2 8 , 1 1 - ) 2 0 3 , 2 ( - - - - - $ ) 0 0 0 , 0 2 ( $ 7 7 5 , 0 1 0 , 1 $ 5 0 8 , 7 $ 5 2 $ - - - - - ) 9 7 3 , 7 ( - - - - - - e c n a d i u g g n i t n u o c c a w e n f o n o i t p o d a 7 1 0 2 , 1 3 r e b m e c e D t a e c n a l a B o t t n a u s r u p s n o i t a c i f i s s a l c e R e s n e p x e n o i t a s n e p m o c d e s a b - k c o t S f o t n e m y a p m o r f s d e e c o r P e t o N K I P % 4 L B G k c o t s C A r o f k c o t s L B G f o e g n a h c x E s t s e r e t n i g n i l l o r t n o c n o n n i a t r e c f o n o i t a d i l o s n o C f o s n o i t p m e d e R s d n u f t n e m t s e v n i ) s s o l ( / e m o c n i t e N ) e r a h s r e p 0 1 . 0 $ ( d e r a l c e d s d n e d i v i D k c o t s y r u s a e r t f o e s a h c r u P 8 1 0 2 , 1 3 h c r a M t a e c n a l a B s t s e r e t n i g n i l l o r t n o c n o n ) s s o l ( / e m o c n i t e N f o t n e m y a p m o r f s d e e c o r P e t o N K I P % 4 L B G f o s n o i t p m e d e R k c o t s y r u s a e r t f o e s a h c r u P 8 1 0 2 , 0 3 e n u J t a e c n a l a B s t s e r e t n i g n i l l o r t n o c n o n ) s s o l ( / e m o c n i t e N f o t n e m y a p m o r f s d e e c o r P e t o N K I P % 4 L B G k c o t s y r u s a e r t f o e s a h c r u P f o s n o i t p m e d e R 7 2 $ 7 7 5 , 0 1 0 , 1 $ 6 2 4 $ 5 2 $ 8 1 0 2 , 0 3 r e b m e t p e S t a e c n a l a B - - ) 8 5 2 , 2 ( - - - ) 5 1 3 , 0 4 ( - - - - - - ) e r a h s r e p 0 1 . 0 $ ( d e r a l c e d s d n e d i v i D k c o t s C A r o f k c o t s L B G f o e g n a h c x E k c o t s y r u s a e r t f o e s a h c r u P s t s e r e t n i g n i l l o r t n o c n o n ) s s o l ( / e m o c n i t e N f o s n o i t p m e d e R $ 9 1 3 , 8 0 0 , 1 $ ) 9 8 8 , 9 3 ( $ 5 2 $ 8 1 0 2 , 1 3 r e b m e c e D t a e c n a l a B . s e t o n g n i y n a p m o c c a e e S S E I R A I D I S B U S D N A . C N I , P U O R G L A T I P A C D E T A I C O S S A Y T I U Q E F O S T N E M E T A T S D E T A D I L O S N O C D E S N E D N O C D E T I D U A N U ) a t a d e r a h s r e p t p e c x e , s d n a s u o h t n i s r a l l o D ( 9 1 0 2 , 1 3 r e b m e c e D d n a 9 1 0 2 , 0 3 r e b m e t p e S , 9 1 0 2 , 0 3 e n u J , 9 1 0 2 , 1 3 h c r a M d e d n e s h t n o m e e r h t e h t r o F e l b a m e e d e R g n i l l o r t n o c n o N s t s e r e t n I l a t o T g n i l l o r t n o c n o N t s e r e t n I y r u s a e r T k c o t S l a n o i t i d d A n i - d i a P l a t i p a C d e t a l u m u c c A n o m m o C t i c i f e D k c o t S s r e d l o h e r a h s . c n I , p u o r G l a t i p a C d e t a i c o s s A 0 0 8 9 4 , $ 8 4 2 6 6 8 , $ ) 6 2 5 ( 7 0 5 1 , - - ) 1 9 3 ( 7 4 1 3 2 , 1 8 7 0 5 , $ 4 0 0 9 8 8 , $ ) 7 9 1 2 ( , 4 8 0 1 , - - - ) 2 3 9 ( ) 4 5 2 2 ( , ) 0 3 6 1 ( , 8 6 6 9 4 , $ 8 8 1 4 8 8 , $ 0 9 3 ) 9 5 3 ( - - 1 5 9 5 , ) 2 4 3 1 ( , 9 9 6 9 4 , $ 7 9 7 8 8 8 , $ ) 6 7 6 ( 2 6 3 1 , - - - 6 3 6 2 2 0 1 1 , ) 2 7 7 ( ) 8 4 2 2 ( , - - - - - - - - - - - - - - - - 3 0 0 , 1 - - $ ) 7 0 2 , 2 0 1 ( $ 9 1 3 , 8 0 0 , 1 $ ) 9 8 8 , 9 3 ( $ 5 2 $ 8 1 0 2 , 1 3 r e b m e c e D t a e c n a l a B - - ) 1 9 3 ( - - - - 7 4 1 , 3 2 - - - - $ ) 8 9 5 , 2 0 1 ( $ 9 1 3 , 8 0 0 , 1 $ ) 2 4 7 , 6 1 ( $ 5 2 $ - - - ) 0 3 6 , 1 ( - - ) 4 5 2 , 2 ( - ) 2 3 9 ( - - - - - - - $ ) 8 2 2 , 4 0 1 ( $ 5 6 0 , 6 0 0 , 1 $ ) 4 7 6 , 7 1 ( $ 5 2 $ - - ) 2 4 3 , 1 ( - - - - 1 5 9 , 5 - - - - ) e r a h s r e p 0 1 . 0 $ ( d e r a l c e d s d n e d i v i D k c o t s y r u s a e r t f o e s a h c r u P 9 1 0 2 , 0 3 e n u J t a e c n a l a B s t s e r e t n i g n i l l o r t n o c n o n ) s s o l ( / e m o c n i t e N k c o t s y r u s a e r t f o e s a h c r u P o t s n o i t u b i r t n o C s t s e r e t n i g n i l l o r t n o c n o n ) s s o l ( / e m o c n i t e N k c o t s y r u s a e r t f o e s a h c r u P 9 1 0 2 , 1 3 h c r a M t a e c n a l a B s t s e r e t n i g n i l l o r t n o c n o n ) s s o l ( / e m o c n i t e N f o s n o i t p m e d e R f o s n o i t p m e d e R $ ) 0 7 5 , 5 0 1 ( $ 5 6 0 , 6 0 0 , 1 $ ) 3 2 7 , 1 1 ( $ 5 2 $ 9 1 0 2 , 0 3 r e b m e t p e S t a e c n a l a B - - - - ) 2 7 7 ( - - ) 7 6 3 ( ) 8 4 2 , 2 ( - - 2 2 0 , 1 1 - - - - - - - - ) e r a h s r e p 0 1 . 0 $ ( d e r a l c e d s d n e d i v i D k c o t s y r u s a e r t f o e s a h c r u P s t s e r e t n i g n i l l o r t n o c n o n f o s n o i t p m e d e R ) s s o l ( / e m o c n i t e N r e g r e m n a g r o M 5 8 3 0 5 , $ 5 3 4 7 9 8 , $ 3 0 0 , 1 $ ) 2 4 3 , 6 0 1 ( $ 0 5 4 , 3 0 0 , 1 $ ) 1 0 7 ( $ 5 2 $ 9 1 0 2 , 1 3 r e b m e c e D t a e c n a l a B 8 2 . s e t o n g n i y n a p m o c c a e e S ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2019 2018 $ 42,782 $ (57,383) (10,173) 30 - 7,360 2,152 - (21,883) 56 (2,078) 21 72 (12,825) - 8,706 54,397 37 (61,923) 53,924 (28,071) 11,603 (3,060) 479 (5,188) - 3,611 (32) 9,378 156 8,859 (470) (87,116) (44,334) (8,577) 31,948 (443) 13,430 1,345 (97) (757) 73 (7,770) 1,496 (1,397) 2,858 134,363 76,980 (4,989) 4,928 932 (6,518) 589 - (5,058) $ (12,350) 1,958 128 - - 15,000 4,736 $ Operating activities Net income/(loss) Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: Equity in net gains from partnerships Depreciation and amortization Stock based compensation expense Deferred income taxes Donated securities Losses on exchange offers Unrealized (gains)/losses on securities Realized losses on sales of securities (Increase)/decrease in assets: Investments in securities Investments in partnerships: Contributions to partnerships Distributions from partnerships Receivable from affiliates Receivable from brokers Investment advisory fees receivable Goodwill and intangible assets Other assets Increase/(decrease) in liabilities: Payable to affiliates Payable to brokers Income taxes payable and deferred tax liabilities, net Compensation payable Accrued expenses and other liabilities Total adjustments Net cash provided by/(used in) operating activities Investing activities Purchases of securities Proceeds from sales of securities Return of capital on securities Purchase of building Cash received in acquisition of Morgan Group Proceeds from note receivable Net cash provided by/(used in) investing activities 29 ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Dollars in thousands) Year Ended December 31, 2019 2018 $ $ Financing activities Redemptions of redeemable noncontrolling interests Dividends paid Purchase of treasury stock Proceeds from payment of GAMCO Note Proceeds from promissory note from Executive Chairman Repayment of promissory note to Executive Chairman Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash, cash equivalents and restricted cash at beginning of period Increase in cash from consolidation Cash, cash equivalents and restricted cash at end of period Supplemental disclosures of cash flow information: Cash paid for interest Cash paid/(received) for taxes Reconciliation to cash, cash equivalents and restricted cash Cash and cash equivalents Restricted cash included in receivable from brokers Cash, cash equivalents and restricted cash (2,934) (4,513) (4,135) - 2,124 (2,126) (11,584) (60,976) 409,764 - 348,788 (3,634) (4,666) (7,011) 50,000 - - 34,689 116,405 293,312 47 409,764 $ $ $ $ 197 4,700 $ $ 261 (140) 348,588 200 348,788 $ 409,564 200 409,764 $ Non-cash activity: - On January 1, 2018, AC determined it had control over certain investment funds which resulted in their consolidation and an increase of approximately $47 of cash and cash equivalents, $6,441 of net assets and an increase of approximately $6,488 of redeemable noncontrolling interests. - During 2018, AC completed two exchange offers with respect to its Class A shares. The Company exchanged 1,376,554 GBL Class A shares valued at $32,301 for 867,535 Class A shares. - On October 31, 2019, the Company closed on a transaction whereby Morgan Group Holding Co., (Morgan Group) under common control of AC's majority shareholder, acquired all of the Company's interest in G.research for 50,000,000 shares of Morgan Group common stock. In connection with the transaction the Company received $589,000 in cash held by Morgan Group which has been classified in cash provided by investing activities. See accompanying notes. 30 A. Organization Unless we have indicated otherwise, or the context otherwise requires, references in this report to “Associated Capital Group, Inc.,” “AC Group,” “the Company,” “AC,” “we,” “us” and “our” or similar terms are to Associated Capital Group, Inc., its predecessors and its subsidiaries. We are a Delaware corporation that provides alternative investment management, institutional research and we derive investment income/(loss) from proprietary investment of cash and other assets awaiting deployment in our operating business. Our institutional research and underwriting services are provided through G.research, LLC ("G.research"). G.research is a broker-dealer registered under the Exchange Act of 1934, as amended (the “Exchange Act”). G.research acts as an underwriter primarily for affiliates of the Company. G.research is regulated by the Financial Industry Regulatory Authority (“FINRA”). GCIA and its wholly-owned subsidiary, Gabelli & Partners, LLC (“Gabelli & Partners”), collectively serve as general partners or investment managers to investment funds including limited partnerships and offshore companies (collectively, “Investment Partnerships”), and separate accounts. We primarily manage assets in equity event-driven value strategies, across a range of risk and event arbitrage portfolios. The business earns management and incentive fees from its advisory activities. Management fees are largely based on a percentage of assets under management. Incentive fees are based on the percentage of the investment returns of certain clients’ portfolios. GCIA is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). We may make direct investments in operating business using a variety of techniques and structures. For example, in April 2018, the Company sponsored a €110 million initial public offering of its first special purpose acquisition corporation, the Gabelli Value of Italy S.p.a., an Italian company listed on the London Stock Exchange’s Borsa Italiana AIM segment under the symbol “VALU”. VALU was created to acquire a small-to medium-sized Italian franchise business with the potential for international expansion, particularly in the United States. The Spin-off On November 30, 2015, GAMCO Investors, Inc. (“GAMCO” or “GBL”) distributed all the outstanding shares of each class of AC common stock on a pro rata one-for-one basis to the holders of each class of GAMCO’s common stock (the “Spin-off”). As part of the Spin-off, AC received 4,393,055 shares of GAMCO Class A common stock for $150 million. The Company currently holds 2,935,401shares as of December 31, 2019. In connection with the Spin-off, GAMCO issued a promissory note (the “GAMCO Note”) to AC Group in the original principal amount of $250 million used to partially capitalize the Company. During the year ended December 31, 2018, AC received principal repayments totaling $50 million on the GAMCO Note which fully satisfied the outstanding principal balance. The GAMCO Note bore interest at 4% per annum and had an original maturity date of November 30, 2020.We conduct our investment management activities through Gabelli & Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli Securities, Inc.). On October 31, 2019, the Company closed on a transaction whereby Morgan Group Holding Co., (“Morgan Group”) a company that trades in the over the counter market under the symbol “MGHL” and under common control of AC’s majority shareholder, acquired all of the Company’s interest in G.research for 50,000,000 shares of Morgan Group common stock. In addition, immediately prior to the closing,5.15 million Morgan Group shares were issued under a private placement for $515,000. Subsequent to the transaction and private placement, the Company has an 83.3% ownership interest in Morgan Group and consolidates the entity, which includes G.research. The transaction has been accounted for pursuant to ASC 805-50, Transactions Between Entities Under Common Control. A common-control transaction is similar to a business combination because there is no change in control over the entity by the parent. Therefore, the accounting and reporting for a transaction between entities under common control is outside the scope of the business combinations guidance in ASC 805-10, ASC 805-20, and ASC 805-30 and is addressed in ASC 805- 31 50. For transactions between entities under common control, there is no change in basis in the net assets received and therefore they are recorded at their historical cost. Morgan is a shell company with minimal assets and income and is consolidated after the transaction. The Company’s consolidated statement of financial condition and statement of operations is not materially different with the consolidation. B. Significant Accounting Policies Consolidated Financial Statements All material intercompany transactions and balances have been eliminated. Subsidiaries are fully consolidated from the date the Company obtains control and continue to be consolidated until the date that such control ceases. The Company’s principal market is in the United States. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported on the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents Cash equivalents primarily consist of an affiliated money market mutual fund which is highly liquid. U.S. Treasury Bills and Notes with maturities of three months or less at the time of purchase are also considered cash equivalents. Investments in Securities Securities owned are recorded at fair value in the statements of financial condition in accordance with U.S. GAAP. Securities transactions and any related gains and losses are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the specific identified cost basis and are included in gain/(loss) from investments, net on the consolidated statements of income. Equity securities, effective January 1, 2018 with the adoption of Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, are stated at fair value with any unrealized gains or losses reported in current period earnings in gain/(loss) from investments, net on the consolidated statements of income. Management determines the appropriate classification of securities at the time of purchase. Government debt with maturities of greater than three months at the time of purchase are considered investments in debt securities. Investments in debt securities are accounted for as trading, available for sale (“AFS”), or held-to-maturity securities. The Company does not hold any investments in debt securities accounted for AFS or held to maturity. Securities sold, but not yet purchased are recorded on the trade date, and are stated at fair value and represent obligations of AC to purchase the securities at prevailing market prices. Therefore, the future satisfaction of such obligations may be for an amount greater or less than the amounts recorded on the consolidated statements of financial condition. The ultimate gains or losses recognized are dependent upon the prices at which these securities are purchased to settle the obligations under the sales commitments. Unrealized gains and losses and realized gains and losses from covers of securities sold, not yet purchased transactions are included in net gain/(loss) from investments on the consolidated statements of income. 32 Fair Value of Financial Instruments The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with the Financial Accounting Standards Board’s (“FASB”) guidance on fair value measurement. The levels of the fair value hierarchy and their applicability to the Company are described below: • Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the reporting date. Level 1 assets include cash equivalents, government obligations, open-end mutual funds, closed-end funds and equities. • Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities that are not active and inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves that are observable at commonly-quoted intervals. Assets included in this category are over-the-counter derivatives that have valuation inputs that can generally be corroborated by observable market data. • Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Assets in this category generally include equities that trade infrequently and direct private equity investments. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy in which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument is new and not yet established in the marketplace, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. In the absence of a closing price, an average of the bid and ask price is used. Bid prices reflect the highest price that market participants are willing to pay for an asset. Ask prices represent the lowest price that market participants are willing to accept for an asset. Cash equivalents—Cash equivalents primarily consist of an affiliated money market mutual fund which is invested solely in U.S. Treasury securities and valued based on the net asset value of the fund. Other cash equivalents are valued using unadjusted quoted market prices. Accordingly, cash equivalents are categorized in Level 1 of the fair value hierarchy. Investments in securities—Investments in securities and securities sold not yet purchased are generally valued based on quoted prices from an exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in Level 1 of the fair value hierarchy. Securities categorized as Level 2 investments are valued using other observable inputs. Nonpublic and infrequently traded investments are included in Level 3 of the fair value hierarchy because significant inputs to measure fair value are unobservable. Receivables from Affiliates and Payables to Affiliates Receivables from affiliates consist primarily of sub-advisory fees due from Gabelli Funds, LLC. Payables to affiliates primarily consist of expenses paid by affiliates on behalf of the Company pursuant to a transitional services agreement with GAMCO entered into in connection with the Spin-off. 33 Receivables from and Payables to Brokers Receivables from and payables to brokers consist of amounts related to purchases and sales of securities as well as cash amounts held in anticipation of investment. Consolidation The Company assesses all entities with which it is involved for consolidation on a case by case basis depending on the specific facts and circumstances surrounding each entity. Pursuant to applicable guidance, the Company first evaluates whether it holds a variable interest in an entity. The Company considers all economic interests including proportionate interests through related parties, to determine if such interests are considered a variable interest. Fees paid to the Company that are customary and commensurate with the level of services provided from entities in which the Company does not hold other more than insignificant economic interests in the entity are not considered as a variable interest. For any entity where the Company has determined that it holds a variable interest, the Company performs an assessment to determine whether it qualifies as a variable interest entity (“VIE”). The granting of substantive kick-out or participating rights is a key consideration in determining whether a limited partnership or similar entity is a VIE and whether or not that entity should be consolidated. The Company evaluates for consolidation on a case by case basis those VIEs in which substantive kick-out or participating rights have been granted to the unaffiliated investors to either dissolve the fund or remove the general partner. Under the variable interest entity model, the Company consolidates those entities where it is determined that the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it has a controlling financial interest in the VIE, which is defined as possessing both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. When the Company alone is not considered to have a controlling financial interest in the VIE but the Company and its related parties under common control in the aggregate have a controlling financial interest in the VIE, the Company will be deemed the primary beneficiary if it is the party that is most closely associated with the VIE. When the Company and its related parties not under common control in the aggregate have a controlling financial interest in the VIE, the Company would be deemed to be the primary beneficiary if substantially all the activities of the entity are performed on behalf of the Company. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion as required. Investments and redemptions (either by the Company, related parties or third parties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primary beneficiary. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities ("VOEs") under the voting interest model. The Company evaluates whether the entity should be evaluated under the guidance for partnerships and similar entities, or corporations, and consolidates those entities it controls through a majority voting interest or other means. If the Company is the general partner or managing member it generally will not be required to consolidate a VOE. The Company records noncontrolling interests in consolidated entities for which the Company’s ownership is less than 100%. Refer to Noncontrolling Interests below for additional information. Investments in Partnerships and Affiliates The Company is general partner or co-general partner of various affiliated entities. We also have investments in unaffiliated partnerships, offshore funds and other entities (collectively, “unaffiliated entities”). Given that we are not a general partner or investment manager in any unaffiliated entity, we neither earn any management or incentive fees nor have a controlling financial interest in such entity. We do not consolidate any unaffiliated entity. 34 The balance sheet caption investments in partnerships includes investments in both affiliated and unaffiliated entities. The Company accounts for its investments in partnerships and affiliates under the equity method. Substantially all of the Company’s equity method investees are entities that record their underlying investments at fair value and included in investments in partnerships. Therefore, under the equity method of accounting, the Company’s share of the investee’s underlying net income predominantly represents fair value adjustments in the investments held by the equity method investees. The Company’s share of the investee’s underlying net income or loss is based upon the most currently available information and is recorded as net gain/(loss) from investments on the consolidated statements of income. Capital contributions are recorded as an increase in investments when paid, and withdrawals and distributions are recorded as reductions of the investments when received. Depending on the terms of the investment, the Company may be restricted as to the timing and amounts of withdrawals. Derivative Financial Instruments The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes such derivatives in either investment in securities or securities sold, not yet purchased on the consolidated statements of financial condition. From time to time, the Company will enter into hedging transactions to manage its exposure to foreign currencies or equity prices related to its proprietary investments. Except for a foreign exchange contract entered into by the Company, these transactions are not designated as hedges for accounting purposes, and changes in fair values of these derivatives are included in net gain/(loss) from investments on the consolidated statements of income. See Note D, Investments in Securities, for additional information. Major Revenue-Generating Services and Revenue Recognition The Company’s revenues are derived primarily from investment advisory and incentive fees and institutional research services. Investment advisory and incentive fees are directly influenced by the level and mix of AUM as fees are derived from a contractually-determined percentage of the balance of each account as well as a percentage of the investment performance of certain accounts. Management fees from investment partnerships and offshore funds are computed either monthly or quarterly, and amounts receivable are included in investment advisory fees receivable on the consolidated statements of financial condition. These revenues vary depending upon the level of capital flows, financial market conditions, investment performance and the fee rates applicable to each account. Incentive allocations or fees are generally recognized at the end of an annual measurement period and amounts receivable are included in investment advisory fees receivable on the consolidated statements of financial condition. G.research, LLC provides institutional research services and earns brokerage commissions and sales manager fees from securities transactions executed on an agency basis on behalf of institutional clients and mutual funds, private wealth management clients and retail customers of affiliated companies. Commission revenue and related clearing charges are recorded on a trade-date basis and are included in institutional research services and other operating expenses, respectively, on the consolidated statements of income. It has also been involved in syndicated underwriting activities that included public equity and debt offerings managed by major investment banks. Underwriting fees include gains, losses, selling concessions and fees, net of syndicate expenses, arising from securities offerings in which G.research acts as underwriter or agent and are accrued as earned. See Note C, Revenue, for additional information. Depreciation Fixed assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives of four to thirty-nine years. As of December 31, 2019 and 2018, fixed assets with a net book value of $6.6 million and $84,000, respectively, are included in other assets on the consolidated statements of financial condition. 35 Allocated Expenses The Company is charged or incurs certain overhead expenses that are paid by, or paid on our behalf by, other affiliates and are included in other operating expenses on the consolidated statements of income. These overhead expenses primarily relate to centralized functions including finance and accounting, legal, compliance, treasury, tax, internal audit, information technology, human resources and risk management. These overhead expenses are allocated to the Company by other affiliates or allocated by the Company to other affiliates as the expenses are incurred, based upon direct usage when identifiable, or by revenue, headcount, space or other allocation methodologies periodically reviewed by the management of the Company and the affiliates. In addition, GCIA and GAMCO serve as paymasters under compensation payment sharing agreements. The compensation expense and related payroll taxes and benefits of certain dual employees that provide services to both AC and affiliates that are paid for by GCIA or GAMCO are allocated between the companies based upon the relative time each employee devotes to each affiliate. These allocated compensation expenses are included in compensation on the consolidated statements of income. All of the allocations and estimates in the financial statements are based on assumptions that management of AC believes are reasonable. However, these allocations may not be indicative of the actual expenses we would have incurred or may incur in the future. Management Fee Management fee expense in the amount of 10% of the aggregate pre-tax profits, before consideration of this fee and before consideration of the income attributable to consolidated funds and partnerships, is paid to the Executive Chairman or his designees in accordance with his employment agreement. Stock-Based Compensation During 2018, the Company’s Board of Directors approved the grant of Phantom Restricted Stock awards (“Phantom RSAs”). The Phantom RSAs will be settled by a cash payment, net of applicable withholding tax, on the vesting dates. In addition, an amount equivalent to the cumulative dividends declared on shares of the Company’s Class A common stock during the vesting period will be paid to participants on vesting. The Phantom RSAs are accounted for as a liability because cash settlement is required and compensation will be recognized over the vesting period. In determining the compensation expense to be recognized each period, the Company will remeasure the fair value of the liability at each reporting date taking into account the remaining vesting period attributable to each award and the current market value of the Company’s Class A stock. In making these determinations, the Company will consider the impact of Phantom RSAs that have been forfeited prior to vesting (e.g., due to an employee termination). The Company has elected to consider forfeitures as they occur. The expense attributable to the Phantom RSAs is allocated solely to AC. Goodwill Goodwill is initially measured as the excess of the cost of an acquired business over the sum of the fair value assigned to assets acquired less the liabilities assumed. Goodwill is tested for impairment at least annually on November 30th and whenever certain triggering events are met. In assessing the recoverability of goodwill as of November 30, 2019 and 2018, we performed a qualitative assessment of whether it was more likely than not that an impairment had occurred and concluded that a quantitative analysis was not required. As such, no impairment was recorded during 2019 or 2018. Income Taxes For purposes of the preparation of the consolidated financial statements, the provision for income taxes is computed using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected 36 future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income tax expense/benefit in the period that includes the enactment date of the change in tax rate. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. A valuation allowance would be recorded to reduce the carrying value of deferred tax assets to the amount that is more likely than not to be realized. In making such a determination of whether a valuation allowance is necessary, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the event the Company were to determine that the Company would be able to realize the Company’s deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. For uncertain tax positions the Company first determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position. For those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes the accrual of interest on uncertain tax positions and penalties in income tax provision on the consolidated statements of income. Accrued interest and penalties on uncertain tax positions are included within accrued expenses and other liabilities on the consolidated statements of financial condition. Noncontrolling Interests Noncontrolling interests in investment partnerships that are redeemable at the option of the holder are classified as redeemable noncontrolling interests in the mezzanine section of the consolidated statements of financial condition between liabilities and equity. Noncontrolling interests in other entities that are not redeemable at the option of the holder are classified as such as a separate component of shareholder’s equity. For the years ended December 31, 2019 and 2018, net income/(loss) attributable to noncontrolling interests on the consolidated statements of income represents the share of net income/(loss) attributable to third-party investors in consolidated funds. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and receivable from brokers. The Company maintains cash and cash equivalents primarily in the Gabelli U.S. Treasury Money Market Fund, which invests fully in instruments issued by the U.S. government. Receivables from brokers and financial institutions can exceed the federally insured limit. The concentration of credit risk with respect to advisory fees and incentive fees/allocation, which are included in investment advisory fees receivable and receivables from affiliates on the consolidated statements of financial condition, is generally limited due to the short payment terms extended to clients by the Company. All investments in securities are held at third party brokers or custodians. Business Segment The Company operates in one business segment. The Company’s chief operating decision maker reviews the Company’s financial performance at an aggregate level. Recent Accounting Developments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which amends the guidance in GAAP for the accounting for leases. ASU 2016-02 requires a lessee to recognize assets and liabilities arising from most operating 37 leases in the consolidated statement of financial position. The Company adopted this ASU effective January 1, 2019 with no material impact on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Currently, U.S. GAAP requires an “incurred loss” methodology that delays recognition until it is probable a loss has been incurred. Under ASU 2016-13, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The Statement of Income will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. In November 2019, the FASB issued ASU 2019-10, which deferred the effective date of this guidance for smaller reporting companies for three years. This guidance is effective for the Company on January 1, 2023 and requires a modified retrospective transition method, which will result in a cumulative-effect adjustment in retained earnings upon adoption. Early adoption is permitted. The Company is currently assessing the potential impact of this new guidance on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other, to simplify the process used to test for impairment of goodwill. Under the new standard, an impairment loss must be recognized in an amount equal to the excess of the carrying amount of a reporting unit over its fair value, limited to the total amount of goodwill allocated to that reporting unit. As a smaller reporting company pursuant to ASU 2019-10, the ASU is effective for the Company on January 1, 2023. This guidance will be effective for the Company on January 1, 2023 using a prospective transition method and early adoption is permitted. The Company is currently evaluating the potential effect of this new guidance on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU adds certain disclosure requirements and modifies or eliminates requirements under current GAAP. This ASU is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company has early adopted the eliminated and modified disclosure requirements effective January 1, 2019. C. Revenue The Company’s revenue is accounted for as contracts with customers, and the timing of revenue recognition is based on the Company’s analysis of the provisions of each respective contract. Depending upon the specific terms, revenue may be recognized over time or at a point in time. Modifications to contracts may affect the timing of the satisfaction of performance obligations, the determination of the transaction price, and the allocation of the price to performance obligations, any of which may impact the timing of the recognition of the related revenue. The Company’s major revenue sources are as follows: Investment advisory and incentive fees. The Company and its subsidiaries act as general partner, investment manager or sub-advisor to investment funds and/or separately managed accounts of institutional investors (e.g., corporate pension plans). The fees that are paid to the Company are set forth in the offering documents for the investment fund or the separately managed account agreement. Investment advisory and incentive fee revenue consists of: a) Asset-based advisory fees – The Company receives a management fee, payable monthly in advance based on value of the net assets of the client. It is generally set at a rate of 1%-1.5% per annum. Asset-based management fee revenue is recognized only as the services are performed over the period. b) Performance-based advisory fees – Certain client contracts call for additional fees and or allocations of income tied to a certain percentage, generally 20%, of the investment performance of the account over a measurement period, typically the calendar year. In addition, the contracts provide that performance-based fees or allocations become fixed in the event of an investor redemption prior to the end of the measurement period. In the event that an account suffers a loss in one period, it must be recovered before incentive fees are earned by the Company; this is commonly referred to as a “high water mark” provision. While the Company’s performance obligation is satisfied over time, the Company does not recognize performance- 38 based fees until the end of the measurement period or the time of the investor redemption when the uncertainty surrounding the amount of the variable consideration is resolved. c) Sub-advisory fees – Pursuant to agreements with other investment advisors, the Company receives a percentage of advisory fees received by such advisors from certain of their investment fund clients. These fees may be either asset- or performance-based. In addition, they may be subject to reduction by certain expenses as set forth in the respective agreements. Sub-advisory fee revenue which is asset-based is recognized ratably as the services are performed over the relevant contractual performance period. Sub- advisory fee revenue which is performance-based is recognized only when it becomes fixed and not subject to adjustment. The Company reserves the right to waive or reduce asset-based and performance-based fees with respect to certain investors in the investment funds which may include investments by employees and other related parties. Advisory and incentive fees payable by investment funds are typically approved by third-party administrators and paid directly from the accounts’ assets. Such fees attributable to separate accounts may be subject to review and approval by the client and may be paid either from the accounts’ assets or directly by the client. Our advisory fee revenues are influenced by both the amount of AUM and the investment performance of our products. An overall decline in the prices of securities may cause our advisory fees to decline by either causing the value of our AUM to decrease or causing our clients to withdraw funds in favor of investments they perceive to offer greater opportunity or lower risk. Similarly, success in the investment management business is dependent on investment performance as well as distribution and client servicing. Good performance can stimulate sales of our investment products and tends to keep withdrawals and redemptions low, which generates higher asset-based management fees. Conversely, poor performance, both in absolute terms and/or relative to peers and industry benchmarks, tends to result in decreased sales, increased withdrawals and redemptions and in the loss of clients, with corresponding decreases in revenues to us. Institutional Research Services. The Company, through G.research, generates institutional research services revenues via hard dollar payments or through commissions on securities transactions executed on an agency basis on behalf of clients. Clients include institutional investors (e.g., hedge funds and asset managers) as well as affiliated mutual funds and managed accounts. These revenues consist of: a) Brokerage Commissions – Acting as agent, G.research buys and sells securities on behalf of its customers. Commissions are charged on the execution of securities transactions made on behalf of client accounts on an agency basis and are based on a rate schedule. G.research recognizes commission revenue when the related securities transactions are executed on trade date. G.research believes that the performance obligation is satisfied on trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to or from the customer. Commissions earned are typically collected from the clearing brokers utilized by G.research on a daily or weekly basis. b) Hard dollar payments – G.research provides research services to unrelated parties, for which direct payment is received. G.research may, or may not have contracts for such services. Where a contract for such services is in place, the contractual fee for the period is recognized ratably over the contract period, which is considered the period over which G.research satisfies its performance obligation. For payments where no research contract exists, revenue is not recognized until agreement is reached with the client at which time the performance obligation is considered to have been met and revenue is recognized. c) Selling concessions – The Company participates as a member of the selling group of underwritten equity offerings and receives compensation based on the difference between what its clients pay for the securities sold to its institutional clients and what the issuer receives. The terms of the selling concessions are set forth in contracts between the Company and the underwriter. Revenue is recognized on the trade date (the date on which the Company purchases the securities from the issuer) for the portion the Company is contracted to buy. The Company believes that the trade date is the appropriate point in time to recognize revenue for securities underwriting transactions as there 39 are no significant actions the Company needs to take subsequent to this date, and the issuer obtains the control and benefit of the capital markets offering at this point. Selling concessions earned are typically collected from the clearing brokers utilized by the Company on a daily or weekly basis. d) Sales manager fees – The Company participates as sales manager of at-the-market offerings of certain affiliated closed-end funds and receives a tiered percentage of proceeds as stipulated in agreements between the Company, the funds and the funds’ investment adviser. The Company recognizes sales manager fees upon sale of the related closed-end funds. Sales manager fees earned are fixed and typically collected from the clearing brokers utilized by G.research on a daily or weekly basis. Institutional research revenues are impacted by the perceived value of the research product provided to clients, the volume of securities transactions and the acquisition or loss of new client relationships. Other. Other revenues include (a) underwriting fees representing gains, losses, and fees, net of syndicate expenses, arising from public equity and debt offerings in which G.research acts as underwriter or agent and are accrued as earned, and (b) other miscellaneous revenues. Total revenues by type were as follows for the years ended December 31, 2019 and 2018 (in thousands): Revenues Investment advisory and incentive fees Asset-based advisory fees Performance-based advisory fees Sub-advisory fees Year Ended December 31, 2019 2018 $ 7,022 7,501 7,625 22,148 $ 7,384 3,115 3,910 14,409 Institutional research services Hard dollar payments Commissions Selling concessions Sales manager fees Other Underwriting fees Miscellaneous 1,975 5,904 335 733 8,947 96 74 170 2,835 5,349 84 16 8,284 19 67 86 Total $ 31,265 $ 22,779 D. Investments in Securities 40 Investments in securities at December 31, 2019 and 2018 consisted of the following (in thousands): Debt - Trading Securities: Government obligations Equity Securities: Common stocks Mutual funds Other investments Total investments in securities 2019 2018 Cost Fair Value Cost Fair Value $ 28,428 $ 29,037 $ 11,694 $ 11,707 271,627 1,207 7,847 309,109 262,053 2,196 7,071 300,357 244,557 761 5,285 262,297 213,151 1,161 3,941 229,960 Securities sold, not yet purchased at December 31, 2019 and 2018 consisted of the following (in thousands): 2019 2018 Proceeds Fair Value Proceeds Fair Value Equity securities: Common stocks Other investments Total securities sold, not yet purchased $ $ 13,863 13 13,876 $ $ 16,300 119 16,419 $ $ 10,150 - 10,150 $ $ 9,485 89 9,574 Investments in affiliated registered investment companies at December 31, 2019 and 2018 consisted of the following (in thousands): Equity securities: Closed-end funds Mutual funds Total investments in affiliated registered investment companies 2019 2018 Cost Fair Value Cost Fair Value $ 75,646 48,348 $ 99,834 59,477 $ 73,950 49,714 $ 85,090 57,045 $ 123,994 $ 159,311 $ 123,664 $ 142,135 The Company recognizes all equity derivatives as either assets or liabilities measured at fair value and includes them in either investment in securities or securities sold, not yet purchased on the consolidated statements of financial condition. From time to time, the Company and/or consolidated funds will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments. At December 31, 2019 and December 31, 2018 we held derivative contracts on 3.4 million and 1.0 million equity shares, respectively, that are included in investments in securities or securities sold, not yet purchased on the consolidated statements of financial condition as shown in the table below. We had two foreign exchange contracts outstanding at December 31, 2019 and one at December 31, 2018. Except for the foreign exchange contracts entered into by the Company, these transactions are not designated as hedges for accounting purposes, and changes in fair values of these derivatives are included in net gain/(loss) from investments on the consolidated statements of income and included in investments in securities, securities sold, not yet purchased, or receivable from or payable to brokers on the consolidated statements of financial condition. 41 The following table identifies the fair values of all derivatives and foreign currency positions held by the Company (in thousands): Asset Derivatives Liability Derivatives Statement of Financial Condition Location Fair Value December 31, 2019 December 31, 2018 Statement of Financial Condition Location Fair Value December 31, 2019 December 31, 2018 Derivatives designated as hedging instruments under FASB ASC 815-20 Foreign exchange contracts Receivable from brokers $ 23 $ 204 Payable to brokers $ - $ - Derivatives not designated as hedging instruments under FASB ASC 815-20 Equity contracts Total Investments in securities $ 291 $ 464 Securities sold, not yet purchased $ 119 $ 89 $ 314 $ 668 $ 119 $ 89 The following table identifies gains and losses of all derivatives and foreign currency positions held by the Company (in thousands): Type of Derivative Income Statement Location 2019 2018 Year ended December 31, Foreign exchange contracts Equity contracts Net gain/(loss) from investments Net gain/(loss) from investments $ 128 (1,951) $ 204 4,774 Total $ (1,823) $ 4,978 The Company is a party to enforceable master netting arrangements for swaps entered into with major U.S. financial institutions as part of its investment strategy. They are typically not used as hedging instruments. These swaps, while settled on a net basis with the counterparties, are shown gross in assets and liabilities on the consolidated statements of financial condition. The swaps have a firm contract end date and are closed out and settled when each contract expires. Gross Amounts Not Offset in the Statements of Financial Condition Gross Amounts of Recognized Assets Gross Amounts Offset in the Statements of Financial Condition Net Amounts of Assets Presented in the Statements of Financial Condition Financial Instruments Cash Collateral Received Net Amount Swaps: December 31, 2019 December 31, 2018 $ $ 291 416 $ - $ - (In thousands) 291 416 $ $ $ $ (119) (89) $ - $ - $ $ 172 327 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statements of Financial Condition Net Amounts of Liabilities Presented in the Statements of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount Gross Amounts Not Offset in the Statements of Financial Condition Swaps: December 31, 2019 December 31, 2018 $ $ 119 89 $ - $ - (In thousands) 119 89 $ $ $ $ (119) (89) $ - $ - $ - $ - 42 E. Investment Partnerships and Variable Interest Entities The Company is general partner or co-general partner of various affiliated entities in which the Company had investments totaling $124.8 million and $100.1 million at December 31, 2019 and 2018, respectively, and whose underlying assets consist primarily of marketable securities (“Affiliated Entities”). We also had investments in unaffiliated partnerships, offshore funds and other entities of $20.5 million and $18.6 million at December 31, 2019 and 2018, respectively (“Unaffiliated Entities”). We evaluate each entity to determine its appropriate accounting treatment and disclosure. Certain of the Affiliated Entities, and none of the Unaffiliated Entities, are consolidated. The value of entities where consolidation is not deemed appropriate consist of equity method investments which are included in investments in partnerships on consolidated statements of financial condition. This caption includes investments in Affiliated Entities and Unaffiliated Entities which the Company accounts for under the equity method of accounting. The Company reflects the equity in earnings of these Affiliated Entities and Unaffiliated Entities as net gain/(loss) from investments on the consolidated statements of income. The following table reflects the net impact of the consolidated entities on the consolidated statements of financial condition in thousands): 43 Assets Cash and cash equivalents Investments in securities (including GBL stock) Investments in affiliated investment companies Investments in partnerships Receivable from brokers Investment advisory fees receivable Other assets Total assets Liabilities and equity Securities sold, not yet purchased Accrued expenses and other liabilities Redeemable noncontrolling interests Total equity Total liabilities and equity Assets Cash and cash equivalents Investments in securities (including GBL stock) Investments in affiliated investment companies Investments in partnerships Receivable from brokers Investment advisory fees receivable Other assets Total assets Liabilities and equity Securities sold, not yet purchased Accrued expenses and other liabilities Redeemable noncontrolling interests Total equity Total liabilities and equity Prior to Consolidation December 31, 2019 Consolidated Entities As Reported $ $ $ $ $ $ $ $ $ $ $ $ Prior to Consolidation December 31, 2018 Consolidated Entities As Reported $ $ $ 13,167 117,684 (51,713) (22,409) 16,391 (22) 29 73,127 11,794 10,949 50,384 - 73,127 13,490 98,196 (50,871) (19,390) 16,631 (33) 471 58,494 4,943 3,751 49,800 - 58,494 348,588 300,357 159,311 145,372 24,150 9,582 23,546 1,010,906 16,419 46,667 50,385 897,435 1,010,906 409,564 229,960 142,135 118,729 24,629 4,394 25,022 954,433 9,574 28,811 49,800 866,248 954,433 $ $ $ $ $ $ $ $ $ 335,421 182,673 211,024 167,781 7,759 9,604 23,517 937,779 4,625 35,718 1 897,435 937,779 396,074 131,764 193,006 138,119 7,998 4,427 24,551 895,939 4,631 25,060 - 866,248 895,939 44 The following table reflects the net impact of the consolidated entities on the consolidated statements of income (in thousands): Total revenues Total expenses Operating loss Total other income/(expense), net Income/(loss) before income taxes Income tax benefit Net income/(loss) before NCI Net income attributable to noncontrolling interests Net loss Total revenues Total expenses Operating loss Total other income, net Income/(loss) before income taxes Income tax benefit Net income/(loss) before NCI Net loss attributable to noncontrolling interests Net income Variable Interest Entities Year Ended December 31, 2019 Consolidated Entities As Reported $ Prior to Consolidation 32,821 $ 45,698 (12,877) 64,267 51,390 12,126 39,264 76 39,188 $ Prior to Consolidation 22,855 $ 34,413 (11,558) (58,019) (69,577) (11,478) (58,099) - (58,099) $ $ (1,556) 1,325 (2,881) 6,399 3,518 - 3,518 3,518 $ - (76) 1,846 (1,922) 2,638 716 - 716 716 $ - 31,265 47,023 (15,758) 70,666 54,908 12,126 42,782 3,594 39,188 22,779 36,259 (13,480) (55,381) (68,861) (11,478) (57,383) 716 (58,099) $ $ Year Ended December 31, 2018 Consolidated Entities $ As Reported $ With respect to each consolidated VIE, its assets may only be used to satisfy its obligations. The investors and creditors of any consolidated VIE have no recourse to the Company’s general assets. In addition, the Company neither benefits from such VIE’s assets nor bears the related risk beyond its beneficial interest in the VIE. 45 The following table presents the balances related to VIEs that are consolidated and included on the consolidated statements of financial condition as well as the Company’s net interest in these VIEs (in thousands): Cash and cash equivalents Investments in securities Receivable from broker Investments in partnerships and affiliates Accrued expenses and other liabilities Redeemable noncontrolling interests AC's net interests in consolidated VIEs Equity Method Investments December 31, 2019 $ December 31, 2018 $ 2,224 18,454 2,601 8,363 (329) (9,592) 21,721 2,560 7,253 553 - (42) (419) 9,905 $ $ The Company’s equity method investments include investments in partnerships and offshore funds. These equity method investments are not consolidated but on an aggregate basis exceed 10% of the Company’s consolidated total assets or income. The summarized financial information of the Company’s equity method investments as of and for the years ended December 31, 2019 and 2018 are as follows (in millions): Total assets Total liabilities Total equity December 31, 2019 December 31, 2018 $ 1,607 246 1,361 $ 1,549 260 1,289 For the year 2019 2018 Net income/(loss) 43 (12) Capital may generally be redeemed from Affiliated Entities on a monthly basis upon adequate notice as determined in the sole discretion of each entity’s investment manager. Capital invested in Unaffiliated Entities may generally be redeemed at various intervals ranging from monthly to annually upon notice of 30 to 95 days. Certain Unaffiliated Entities may require a minimum investment period before capital can be voluntarily redeemed (a “Lockup Period”). No investment in an Unaffiliated Entity has an unexpired Lockup Period. The Company has no outstanding capital commitments to any Affiliated or Unaffiliated Entity. F. Fair Value The following tables present information about the Company’s assets and liabilities by major category measured at fair value on a recurring basis as of December 31, 2019 and 2018 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. 46 The following tables present assets and liabilities measured at fair value on a recurring basis as of the dates specified (in thousands): Assets Quoted Prices in Active Markets for Identical Assets (Level 1) $ 343,428 Cash equivalents Investments in securities (including GBL stock): Trading - Gov't obligations Common stocks Mutual funds Other Total investments in securities Investments in affiliated registered investment companies: Closed-end funds Mutual funds Total investments in affiliated registered investment companies Total investments held at fair value Total assets at fair value Liabilities $ Common stocks Other Securities sold, not yet purchased $ $ 159,311 450,492 793,920 16,300 - 16,300 December 31, 2019 Significant Other Observable Inputs (Level 2) $ - Significant Unobservable Inputs (Level 3) $ - Total $ 343,428 29,037 257,520 2,196 2,428 291,181 99,834 59,477 - 4,444 - 509 4,953 - - - 89 - 4,134 4,223 - - 29,037 262,053 2,196 7,071 300,357 99,834 59,477 - 4,953 4,953 $ - 4,223 4,223 $ 159,311 459,668 803,096 $ $ - 119 119 $ $ - - $ - $ $ 16,300 119 16,419 December 31, 2018 Significant Other Observable Inputs (Level 2) $ - Significant Unobservable Inputs (Level 3) $ - Total $ 407,239 Assets Quoted Prices in Active Markets for Identical Assets (Level 1) $ 407,239 Cash equivalents Investments in securities (including GBL stock): Gov't obligations Common stocks Mutual funds Other Total investments in securities Investments in affiliated registered investment companies: Closed-end funds Mutual funds Total investments in affiliated registered investment companies Total investments held at fair value Total assets at fair value Liabilities $ Common stocks Other Securities sold, not yet purchased $ $ 11,707 205,978 1,161 19 218,865 85,090 57,045 - 7,161 - 464 7,625 - - - 12 - 3,458 3,470 - - 11,707 213,151 1,161 3,941 229,960 85,090 57,045 142,135 361,000 768,239 9,485 - 9,485 - 7,625 7,625 $ - 3,470 3,470 $ 142,135 372,095 779,334 $ - $ 89 89 $ - $ - $ - $ $ 9,485 89 9,574 47 The following table presents additional information about assets by major category measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value: Year ended December 31, 2019 Year ended December 31, 2018 Common S tocks Other Total Common S tocks Other Total (1) $ $ $ $ $ 618 - 14 - - 12 $ - 3,470 - 687 3 3,458 - 673 3 Beginning balance Consolidated funds Total gains/(losses) Purchases Sales Transfers Ending balance Changes in net unrealized gain/(loss) included in Net gain/(loss) from investments related to Level 3 assets still held as of the reporting date Total realized and unrealized gains and losses for level 3 assets are reported in net gain/(loss) from investments in the consolidated statements of income. 1,787 984 (3,490) 4,773 (32) (552) 3,470 1,169 984 (3,489) 4,773 (32) 53 3,458 - - (605) 12 - - 4,134 63 4,223 $ $ $ $ $ $ (3,504) (3,505) $ $ $ $ 63 89 $ $ 665 673 (1) (8) - During the years ended December 31, 2019 and 2018, the Company transferred investments with a value of approximately $63,000 and $53,000, respectively, from Level 1 to Level 3 due to the unavailability of observable inputs. For the year ended December 31, 2018, the Company transferred an investment with a value of approximately $605,000 from Level 3 to Level 1 due to increased availability of market price quotations. G. Income Taxes The provision for income taxes for the years ended December 31, 2019 and 2018 consisted of the following (in thousands): Federal: Current Deferred State and local: Current Deferred Total 2019 2018 $ 4,294 6,680 $ 1,223 (11,631) 472 680 12,126 $ 124 (1,194) (11,478) $ 48 A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2019 and 2018 is set forth below: Statutory Federal income tax rate State income tax, net of Federal benefit Dividends received deduction Donation of appreciated securities Deferred tax asset valuation allowance Nondeductible capital losses Accelerated vesting of restricted stock awards Noncontrolling interests Other Effective income tax rate 2019 21.0% 1.7 (0.5) - 1.0 - - (1.7) 0.2 21.7% 2018 21.0% 1.3 0.4 - (1.0) (4.5) - - (0.5) 16.7% Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands): Deferred tax assets: Stock-based compensation expense Investments in securities and partnerships Deferred compensation Shareholder-designated contribution carryover (a) Other Deferred tax liabilities: Investments in securities and partnerships Other liabilities Net deferred tax assets/(liabilities) 2019 2018 $ 470 - 499 1,446 - 2,415 $ 139 5,100 2,392 1,898 90 9,619 (27) (384) (411) 2,004 $ - (197) (197) 9,422 $ (a) Net of valuation allowance of $1,385 and $719 for 2019 and 2018, respectively A reconciliation of the beginning and ending amount of gross unrecognized tax benefits related to uncertain tax positions is as follows (in thousands): Balance at January 1, 2018 Reductions for tax positions of prior years Balance at December 31, 2018 Reductions for tax positions of prior years Balance at December 31, 2019 $ 11 (5) 6 $ (6) $ - The Company records penalties and interest related to tax uncertainties in income taxes. As of December 31, 2018 the Company had gross unrecognized tax benefits of $5,688 of which $4,494 if recognized, would impact the Company’s effective tax rate. The Company has accrued liabilities of $3,071 as of December 31, 2018 for interest and penalties. These amounts are included in accrued expenses and other liabilities on the consolidated statements of financial condition. 49 The Company remains subject to income tax examination by the IRS for the years 2017 and 2018 and state examinations for years after 2011. H. Earnings per Share Basic earnings per share is computed by dividing net income/(loss) attributable to our shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income/(loss) attributable to our shareholders by the weighted average number of shares outstanding during the period. The computations of basic and diluted net income/(loss) per share are as follows (in thousands, except per share data): Basic: Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders Weighted average shares outstanding Basic net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders per share For the Years Ending December 31, 2019 2018 $ 39,188 22,534 $ (58,099) 23,070 $ 1.74 $ (2.52) Diluted: Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders $ 39,188 $ (58,099) Weighted average share outstanding Dilutive restricted stock awards Total Diluted net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders per share 22,534 - 22,534 23,070 - 23,070 $ 1.74 $ (2.52) I. Related Party Transactions The following is a summary of certain related party transactions. GGCP, Inc., a private company controlled by the Executive Chairman, indirectly owns a majority of our Class B stock, representing approximately 95% of the combined voting power and 82% of the outstanding shares of our common stock at December 31, 2019. Loans with related parties On April 23, 2019, the Company issued a promissory note for $2.1 million to our Executive Chairman. The promissory note was re-paid with interest at 1% per annum on May 28, 2019. AC received principal repayments on the GAMCO Note totaling $50 million in each of the years ended December 31, 2018 and 2017. The GAMCO Note was fully paid in 2018. Interest income of $0.8 million paid on the GAMCO Note is included in interest and dividend income on the consolidated statements of income for the years ended December 31, 2018. See Note A, Organization. On December 26, 2017, GAMCO issued a promissory note to the Company for $15 million. The note principal and related interest of $40,000 were paid on February 28, 2018. Investments in Securities In August 2006, a son of the Executive Chairman was given responsibility for managing one proprietary investment account. The balance in the proprietary investment account at December 31, 2019 and 2018 was $26.3 million and 50 $18.2 million, respectively, of which $1.0 million and $0.1 million, respectively, is owed to the portfolio manager representing earnings that have been re-invested in the account. At December 31, 2019 and 2018, the value of the Company’s investment in GAMCO common stock was $57.2 million and $50.9 million, respectively. The Company recorded dividend income of $0.3 million and $0.3 million in 2019 and 2018, respectively from GAMCO which is included in interest and dividend income on the consolidated statements of income. For the year, GBL stock price increased 15.4% to $19.49 per share, resulting in a $7.6 million mark-to-market gain for the Company versus a mark-to-market loss of $38 million in 2018. At December 31, 2019 and 2018, the Company invested $336.7 million and $398.3 million, respectively, in the Gabelli U.S. Treasury Money Market Fund, which is recorded in cash and cash equivalents on the consolidated statements of financial condition. For the years ending December 31, 2019 and 2018, the Company earned interest of $7.8 million and $5.5 million from their investments in this fund, respectively. Investments in affiliated equity mutual funds advised by Gabelli Funds and Teton Advisors, Inc., an investment advisor under common control with the Company, totaled $159.3 million and $142.4 million at December 31, 2019 and 2018, respectively and are included in either investments in affiliated registered investment companies on the consolidated statements of financial condition. Included in other income/(expense) are $38.7 million and $21.4 million of gains from investments and dividends with respect to funds advised by Gabelli Funds and Teton Advisors, Inc. for the years ending December 31, 2019 and 2018, respectively. Investments in Partnerships We had an aggregate investment in affiliated Investment Partnerships of approximately $124.8 million and $100.1 million at December 31, 2019 and 2018, respectively. Affiliates of the Company, including its consolidated subsidiaries, receive management fees and incentive fees and allocations of up to 20% with respect to certain of these investments. Investment Advisory Services Pursuant to a sub-advisory agreement with the Company, Gabelli Funds pays GCIA 90% of the net revenues it receives related to investment advisory services provided to GAMCO International SICAV – GAMCO Merger Arbitrage, an investment company incorporated under the laws of Luxembourg (the “SICAV”). For this purpose, net revenues are defined as gross advisory fees less expenses related to payouts and expenses of the SICAV paid by Gabelli Funds. GCIA received $4.1 million and $3.9 million during 2019 and 2018, respectively under this sub-advisory agreement. These payments are included in investment advisory and incentive fees on the consolidated statements of income. Institutional Research Services In 2019 and 2018, G.research earned $4.9 million and $3.8 million, respectively, or 76% and 62%, respectively, of its commission revenue from transactions executed on behalf of Gabelli Funds and GAMCO Asset. These commissions are included in institutional research services on the consolidated statements of income. Pursuant to research services agreements, GAMCO Asset paid $0.8 million and $1.0 million and Gabelli Funds paid $0.7 million and $1.0 million to G.research for the years ended December 31, 2019 and 2018, respectively. On October 11, 2019, the parties agreed to terminate the research services agreement effective January 1, 2020. As required by the Company’s Code of Ethics, staff members are required to maintain their brokerage accounts at G.research unless they receive authorization to maintain an outside account. G.research offers our staff and the staffs of other affiliated entities the opportunity to engage in brokerage transactions at discounted commission rates. Accordingly, many of our staff members, including the executive officers or entities controlled by them, have brokerage accounts at G.research and have engaged in securities transactions at discounted rates. Compensation In accordance with an employment agreement, the Company pays the Executive Chairman, or his designated assignees, a management fee equal to 10% of the Company’s pretax profits before consideration of this fee and before consolidation of Investment Partnerships. In 2019, the Company recorded management fee expense of $5.7 million; 51 there was no management fee expense in 2018. These fees are recorded as management fee on the consolidated statements of income. Affiliated Receivables/Payables At December 31, 2019 and 2018, the receivable from affiliates consists primarily of sub-advisory fees due from Gabelli Funds. At December 31, 2019 and 2018, the payable to affiliates primarily consisted of expenses paid by affiliates on behalf of the Company. GAMCO Sublease In June 2016, AC entered into a sublease agreement with GBL which is subject to annual renewal. Pursuant to the sublease, AC and its subsidiaries pay a monthly fixed lease amount based on the percentage of square footage occupied by its employees (including pro rata allocation of common space) at GBL’s corporate offices. For the years ended December 31, 2019 and 2018, the Company paid $501,327 and $463,286 respectively, under the sublease agreement. These amounts are included in other operating expenses on the consolidated statements of income. J. Equity Voting Rights The holders of Class A Common stock (“Class A Stock”) and Class B Common stock (“Class B Stock”) have identical rights except that holders of Class A Stock are entitled to one vote per share, while holders of Class B Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general. Holders of each share class, however, are not eligible to vote on matters relating exclusively to the other share class. Stock Award and Incentive Plan The Company maintains one stock award and incentive plan (the “Plan”) approved by the shareholders on May 3, 2016, which is designed to provide incentives to attract and retain individuals key to the success of AC through direct or indirect ownership of our common stock. Benefits under the Plan may be granted in any one or a combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents and other stock or cash-based awards. A maximum of 2 million shares of Class A Stock have been reserved for issuance under the Plan by the Compensation Committee of the Board of Directors (the “Compensation Committee”) which is responsible for administering the Plan. Under the Plan, the Compensation Committee may grant RSAs and either incentive or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price that it may determine. Through December 31, 2019, approximately 700,000 shares have been awarded under the Plan leaving approximately 1.3 million shares for future grants. On November 30, 2015, in connection with the Spin-off, the Company issued 554,100 AC RSA shares to GAMCO employees (including GAMCO employees who became AC employees) who held 554,100 GAMCO RSA shares at that date. The purpose of the issuance was to ensure that any employee who had GAMCO RSAs were granted an equal number of AC RSAs so that the total value of the RSAs post-spin-off was equivalent to the total value pre-spin-off. In accordance with GAAP, we have allocated the stock compensation costs of both the AC RSAs and the GAMCO RSAs between GAMCO and AC based upon the allocation of each employee’s responsibilities between the companies. During 2017, the vesting of all of the outstanding AC RSAs and all but 19,400 GAMCO RSAs was accelerated, and they are no longer outstanding. Similarly, the vesting of the GAMCO RSAs outstanding as of December 31, 2017 was accelerated in the first quarter of 2018. There were no RSAs outstanding as of December 31, 2019 or 2018. In August and December 2018, the Company’s Board of Directors approved the grant of 172,800 shares of Phantom Restricted Stock awards (“Phantom RSAs”). Under the terms of the grants, which were effective August 8 and December 31 of 2018, the Phantom RSAs vest 30% and 70% after three and five years, respectively. The Phantom RSAs will be settled by a cash payment, net of applicable withholding tax, on the vesting dates. In addition, an amount 52 equivalent to the cumulative dividends declared on shares of the Company’s Class A common stock during the vesting period will be paid to participants on vesting. Pursuant to ASC 718, the Phantom RSAs are treated as a liability because cash settlement is required and compensation will be recognized over the vesting period. In determining the compensation expense to be recognized each period, the Company will re-measure the fair value of the liability at each reporting date taking into account the remaining vesting period attributable to each award and the current market value of the Company’s Class A stock. In making these determinations, the Company will consider the impact of Phantom RSAs that have been forfeited prior to vesting (e.g., due to an employee termination). The Company has elected to consider forfeitures as they occur. Based on the closing price of the Company’s Class A Common Stock on December 31, 2019 and 2018, the total liability recorded by the Company in compensation payable as of December 31, 2019 and 2018, with respect to the Phantom RSAs was $2.0 million and $0.6 million, respectively. For the years ended December 31, 2019 and 2018, the Company recorded approximately $1.4 million and $0.7 million in stock-based compensation expense, respectively. This expense is included in compensation expense in the consolidated statements of income. As of December 31, 2019, there were 119,650 Phantom RSAs outstanding. The unrecognized compensation expense related to these was $3.9 million which is expected to be recognized over a weighted-average period of 2 years. As of December 31, 2018, there were 170,300 Phantom RSAs outstanding and $5.4 million unrecognized compensation expense. Stock Repurchase Program In 2019, the Company repurchased 0.1 million shares at an average price of $37.62 per share for a total investment of $4.1 million. In 2018, the Company repurchased 0.2 million shares at an average price of $37.52 per share for a total investment of $7.0 million. Exchange Offers In February 2018, AC completed an exchange offer with respect to its Class A shares. Tendering shareholders received 1.35 GAMCO Class A shares for each AC Class A share, together with cash in lieu of any fractional share. Upon completion of the offer, shareholders tendered 493,954 Class A shares in exchange for 666,805 GAMCO Class A shares with a value of $17.7 million. In October 2018, the Company completed an exchange offer with respect to its Class A shares. Tendering shareholders received 1.9 GAMCO Class A shares for each AC Class A share, together with cash in lieu of any fractional share. Upon completion of the offer, shareholders tendered 373,581 shares in exchange for 709,749 GAMCO shares with a value of approximately $14.6 million. Dividends During 2019, the Company declared dividends of $0.20 per share to class A and class B shareholders totaling $4.5 million, of which $2.3 million is payable on January 9, 2020 and is included in accrued expenses and other liabilities on the consolidated statement of financial condition as of December 31, 2019. During 2018, the Company declared dividends of $0.20 per share to class A and class B shareholders totaling $4.6 million, of which $2.3 million was paid on January 9, 2019 and is included in accrued expenses and other liabilities on the consolidated statements of financial condition as of December 31, 2018. K. Retirement Plan The Company participates in an incentive savings plan (the “Savings Plan”) covering substantially all employees. Company contributions to the Savings Plan are determined annually by management of the Company but may not exceed the amount permitted as a deductible expense under the Internal Revenue Code of 1986, as amended. The expense for contributions to the Savings Plan was approximately $29,000 and $11,000 in 2019 and 2018, respectively, and is included in compensation on the consolidated statements of income. 53 L. Guarantees, Contingencies, and Commitments From time to time, the Company may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the condensed consolidated financial statements include the necessary provisions for losses, if any, that the Company believes are probable and estimable. Furthermore, the Company evaluates whether losses exist which may be reasonably possible and will, if material, make the necessary disclosures. Management believes, however, that such amounts, both those that are probable and those that are reasonably possible, are not material to the Company’s financial condition, results of operations or cash flows at December 31, 2019. G.research has agreed to indemnify clearing brokers for losses they may sustain from customer accounts introduced by G.research that trade on margin. At each of December 31, 2019 and 2018, the total amount of customer balances subject to indemnification (i.e., unsecured margin debits) was immaterial. The Company has also entered into arrangements with various other third parties, many of which provide for indemnification of the third parties against losses, costs, claims and liabilities arising from the performance of obligations under the agreements. The Company has had no claims or payments pursuant to these or prior agreements and believes the likelihood of a claim being made is remote, and, therefore, no accrual has been made on the consolidated financial statements. M. Net Capital Requirements G.research is registered with the SEC as a broker-dealer and is regulated by FINRA. As such, G.research is subject to the minimum net capital requirements promulgated by the SEC. G.research computes its net capital under the alternative method permitted by the SEC, which results in required minimum net capital of $250,000. As of December 31, 2019, and 2018, G.research had net capital, as defined, of approximately $4.6 million and $9.1 million, respectively, exceeding the regulatory requirement by approximately $4.3 million and $8.8 million, respectively. Net capital requirements for G.research may increase in accordance with rules and regulations to the extent it engages in other business activities. N. Shareholder-Designated Contribution Plan The Company has established a Shareholder Designated Charitable Contribution program. Under the program, from time to time each shareholder is eligible to designate a charity to which the Company would make a donation at a rate of twenty-five cents per share based upon the actual number of shares registered in the shareholder’s name. The Company recorded an expense of $3.3 million and $3.3 million related to this program for the years ended December 31, 2019 and 2018, respectively, which is included in shareholder-designated contribution in the consolidated statements of income. As of December 31, 2019 and 2018, the Company has reflected a liability in the amount of $2.0 million and $3.3 million in connection with this program which is included in accrued expenses and other liabilities on the consolidated statement of financial condition, respectively. O. Subsequent Events A significant portion of G.research institutional research services have been provided to GAMCO and its affiliates. These agreements were terminated on January 1, 2020 and compensation from Gabelli Funds and GAMCO Asset and costs related to servicing these arrangements are expected to decrease. As of December 31, 2019, 119,650 awarded but unvested Phantom RSAs are outstanding. On February 4, 2020, an additional 23,000 Phantom RSA’s were forfeited by teammates who transferred to Morgan Group Holdings Co., resulting in 96,650 Phantom RSA’s remaining outstanding. On March 14, 2020, the Associated Capital Group Board of Directors approved the spin-off of Morgan Group to Associated Capital shareholders. Associated Capital will distribute to its shareholders on a pro rata basis the 50,000,000 shares of Morgan that Associated Capital owns. 54 ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our current management, including our CEO and CAO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2019. Based on this evaluation of our disclosure controls and procedures management has concluded that our disclosure controls and procedures were not effective as of December 31, 2019 because of a material weakness in our internal control over financial reporting, as further described below. Notwithstanding that our disclosure controls and procedures as of December 31, 2019 were not effective, and the material weakness in our internal control over financial reporting as described below, management believes that the consolidated financial statements and related financial information included in this Annual Report on Form 10-K fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management's Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”)). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with GAAP. An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error or overriding of controls, and therefore can provide only reasonable assurance with respect to reliable financial reporting. Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all misstatements, including the possibility of human error, the circumvention or overriding of controls, or fraud. Effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis. Under the supervision and with the participation of our management we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on the COSO framework. Based on evaluation under these criteria, management determined, based upon the existence of the material weakness described below, that we did not maintain effective internal control over financial reporting as of the Evaluation Date. The material weakness in internal control over financial reporting was caused by the Company not having sufficient personnel with technical accounting and reporting skills, which resulted in the lack of segregation of duties to separate financial statement preparation from senior management review and misstatements related to nonroutine transactions that were corrected before issuance. This material weakness resulted in an increased risk of a material misstatement in the financial statements. Changes in Internal Control Over Financial Reporting Except for the identification of the material weakness described above, there were no changes during the quarter ended December 31, 2019 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 55 Remediation Plan and Status In light of the material weakness in our internal controls over financial reporting, management has taken steps to enhance and improve the design and operating effectiveness of our internal controls over financial reporting, including the following implemented steps: (i) appointed additional qualified personnel to address inadequate segregation of duties; (ii) assigned preparation and review responsibilities to additional personnel for the financial reporting process; (iii) documented the completion and review of assigned responsibilities through checklists (iv) appointed a senior accounting consulting professional to review work performed by current financial reporting personnel and commenced a search to add additional finance staff to augment accounting personnel. We are working to remediate the material weakness as quickly and efficiently as possible. However, the material weakness will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. ITEM 9B: OTHER INFORMATION None. PART III ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding the Directors and Executive Officers of AC and compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by reference from the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders (the “Proxy Statement”). AC has adopted a Code of Business Conduct that applies to all of our officers, directors, full-time and part-time employees and a Code of Conduct that sets forth additional requirements for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (together, the “Codes of Conduct”). The Codes of Conduct are posted on our website (www.associated-capital-group.com) and are available in print free of charge to anyone who requests a copy. Interested parties may address a written request for a printed copy of the Codes of Conduct to: Secretary, Associated Capital Group, Inc., 191 Mason Street, Greenwich, Connecticut 06830. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Codes of Conduct by posting such information on our website. In addition to the certifications attached as Exhibits to this Form 10-K, following its 2020 Annual Meeting, AC will also submit to the New York Stock Exchange (“NYSE”) a certification by our Chief Executive Officer that he is not aware of any violations by AC of the NYSE corporate governance listing standards as of the date of the certification. ITEM 11: EXECUTIVE COMPENSATION Information required by Item 11 is included in our Proxy Statement and is incorporated herein by reference. ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by Item 12 is included in our Proxy Statement and is incorporated herein by reference. ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information required by Item 13 is included in our Proxy Statement and is incorporated herein by reference. ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by Item 14 is included in our Proxy Statement and is incorporated herein by reference. 56 PART IV ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) List of documents filed as part of this Report: (1) Consolidated Financial Statements and Independent Registered Public Accounting Firm’s Reports included herein: See Index on page 23. (2) Financial Statement Schedules Financial statement schedules are omitted as not required or not applicable or because the information is included in the Financial Statements or notes thereto. (3) List of Exhibits: The agreements included or incorporated by reference as exhibits to this Annual Report on Form 10-K contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement. The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading. Exhibit Number 2.1 3.1 3.2 4.1 4.2 10.1 Description of Exhibit Separation and Distribution Agreement, dated November 30, 2015, between GAMCO Investors, Inc., a Delaware corporation (“GAMCO”), and Associated Capital Group, Inc., a Delaware corporation (the “Company”). (Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K dated November 30, 2015 filed with the Securities and Exchange Commission on December 4, 2015). Amended and Restated Certificate of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K dated November 19, 2015 filed with the Securities and Exchange Commission on November 25, 2015). Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to the Company’s Report on Form 8-K dated November 19, 2015 filed with the Securities and Exchange Commission on November 25, 2015). Form of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 21, 2015). Description of The Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. Service Mark and Name License Agreement, dated November 30, 2015, by and between the Company and GAMCO. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015 57 Exhibit Number Description of Exhibit 10.2 10.3 10.4 10.5 10.6 10.7 10.8 21.1 24.1 31.1 31.2 32.1 32.2 100.INS 100.SCH 100.CAL 100.DEF 100.LAB 100.PRE Transitional Administrative and Management Services Agreement, dated November 30, 2015, by and between the Company and GAMCO. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015). Employment Agreement between the Company and Mario J. Gabelli dated November 30, 2015 (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015). Promissory Note in aggregate principal amount of $250,000,000, dated November 30, 2015, issued by GAMCO in favor of the Company (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015). Tax Indemnity and Sharing Agreement, dated November 30, 2015, by and between the Company and GAMCO. (Incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015). 2015 Stock Award Incentive Plan (Incorporated by reference to Exhibit 10.11 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 21, 2015). Form of Indemnification Agreement by and between the Company and the Indemnitee defined therein (Incorporated by reference to Exhibit 10.7 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 21, 2015). Agreement and Plan of Merger, dated as of October 31, 2019, by and among Morgan Group Holding Co., G.R. acquisition, LLC, G.research, LLC, Institutional Services Holdings, LLC and Associated Capital Group, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Morgan Group Holding Co. filed with the Securities and Exchange Commission on November 6, 2019). Subsidiaries of the Company. Powers of Attorney (included on page 63 of this Report). Certification of CEO pursuant to Rule 13a-14(a). Certification of CFO pursuant to Rule 13a-14(a). Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document ITEM 16: FORM 10-K SUMMARY None. 58 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rye, State of New York, on March 8, 2019. ASSOCIATED CAPITAL GROUP, INC. By: /s/ Kenneth D. Masiello Name: Kenneth D. Masiello Title: Chief Accounting Officer Date: March 16, 2020 59 POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Kevin Handwerker and Kenneth D. Masiello and each of them, their true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for them in their name, place and stead, in any and all capacities, to sign any and all amendments to this report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Douglas R. Jamieson Douglas R. Jamieson President and March 16, 2020 Chief Executive Officer (Principal Executive Officer) /s/ Kenneth D. Masiello Kenneth D. Masiello Chief Accounting Officer (Principal Financial Officer) March 16, 2020 /s/ Mario J. Gabelli Mario J. Gabelli /s/ Marc Gabelli Marc Gabelli /s/ Daniel R. Lee Daniel R. Lee /s/ Bruce M. Lisman Bruce M. Lisman /s/ Frederic V. Salerno Frederic V. Salerno /s/ Salvatore F. Sodano Salvatore F. Sodano /s/ Elisa M. Wilson Elisa M. Wilson Executive Chairman of the Board and Director March 16, 2020 Director March 16, 2020 Director March 16, 2020 Director March 16, 2020 Director Director March 16, 2020 March 16, 2020 Director March 16, 2020 60 Exhibit 4.2 DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 Unless otherwise stated or the context otherwise requires, references in this summary to “AC,” “we,” “our,” or “us” refer to Associated Capital Group, Inc. and its direct and indirect subsidiaries, while references to “Associated Capital Group, Inc.” refer only to the holding company on an unconsolidated basis. Associated Capital Group, Inc. has Class A common stock registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The authorized capital stock of Associated Capital Group, Inc. consists of 210,000,000 shares of authorized capital stock, consisting of: (i) 100,000,000 shares of AC Class A Common Stock; (ii) 100,000,000 shares of AC Class B Common Stock; and (iii) 10,000,000 shares of preferred stock. The following Is a summary of the material terms of AC’s Class A Common Stock. This summary is qualified in its entirety by reference to Associated Capital Group, Inc.’s Amended and Restated Certificate of Incorporation (the “certificate of incorporation”) and Amended and Restated By-laws (the “bylaws”), which are incorporated herein by reference as Exhibit 3.1 and Exhibit 3.2, respectively, to Associated Capital Group, Inc.’s Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage you to read the certificate of incorporation, bylaws and applicable provisions of the Delaware General Corporation Law (the “DGCL”) for additional information. DESCRIPTION OF CLASS A COMMON STOCK Voting Rights The holders of AC Class A Common Stock and the AC Class B Common Stock have identical voting rights except that: • holders of AC Class A Common Stock are entitled to one vote per share while holders of AC Class B Common Stock are entitled to ten votes per share on all matters to be voted on by stockholders; and • holders of AC Class A Common Stock are not eligible to vote on matters relating exclusively to AC Class B Common Stock and vice versa. Holders of shares of AC Class A Common Stock and AC Class B Common Stock are not entitled to cumulate their votes in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes that are entitled to be cast by the holders of all shares of AC Class A Common Stock and AC Class B Common Stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any preferred stock. Except as otherwise provided by law, and subject to any voting rights granted to holders of any outstanding preferred stock, amendments to the certificate of incorporation generally must be approved by a majority of the combined voting power of all AC Class A Common Stock and AC Class B Common Stock voting together as a single class. Amendments to the certificate of incorporation that would alter or change the powers, preferences or special rights of the AC Class A Common Stock or the AC Class B Common Stock so as to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Dividends Holders of AC Class A Common Stock and AC Class B Common Stock will receive an equal amount per share in any dividend declared by our Board, subject to any preferential rights of any outstanding preferred stock. Dividends consisting of shares of AC Class A Common Stock and AC Class B Common Stock may be paid only as follows: • shares of AC Class A Common Stock may be paid only to holders of AC Class A Common Stock and shares of AC Class B Common Stock may be paid only to holders of AC Class B Common Stock; and 5334598-1 Exhibit 4.2 • shares will be paid proportionally with respect to each outstanding share of AC Class A Common Stock and AC Class B Common Stock. Other Rights On liquidation, dissolution or winding up of AC, after payment in full of the amounts required to be paid to holders of preferred stock, if any, all holders of AC common stock, regardless of class, are entitled to share ratably in any assets available for distribution to holders of shares of common stock. No shares of AC common stock are subject to redemption or have preemptive rights to purchase additional shares of AC common stock. In the event of any corporate merger, consolidation, purchase or acquisition of property or stock, or other reorganization in which any consideration is to be received by the holders of AC Class A Stock or the holders of AC Class B Common Stock as a class, the holders of AC Class A Common Stock and the holders of AC Class B Common Stock will receive the same consideration on a per share basis; except that, if such consideration shall consist in any part of voting securities (or of options or warrants to purchase, or of securities convertible into or exchangeable for, voting securities), the holders of AC Class B Common Stock may receive, on a per share basis, voting securities with up to ten times the number of votes per share as those voting securities to be received by the holders of AC Class A Common Stock (or options or warrants to purchase, or securities convertible into or exchangeable for, voting securities with up to ten times the number of votes per share as those voting securities issuable upon exercise of the options or warrants, or into which the convertible or exchangeable securities may be converted or exchanged, received by the holders of AC Class A Common Stock). Accordingly, except with respect to voting rights, the holders of AC Class B Common Stock will not receive greater value than the holders of AC Class A Common Stock in an extraordinary corporate transaction involving AC. Listing The Class A Common Stock is listed on the NYSE under the symbol “AC.” Transfer Agent and Registrar The transfer agent and registrar for the AC common stock is Computershare Trust Company, N.A. 5334598-1 Subsidiaries of Associated Capital Group, Inc. The following table lists the direct and indirect subsidiaries of Associated Capital Group, Inc. (the “Company”), except those entities which are consolidated. In accordance with Item 601 (21) of Regulation S-K, the omitted subsidiaries considered in the aggregate as a single subsidiary would not constitute a “significant subsidiary” as defined under Rule 1-02(w) of Regulation S-X. Exhibit 21.1 Name Gabelli & Company Investment Advisers, Inc. (100%-owned by the Company) Gabelli & Partners LLC (100%-owned by Gabelli & Company Investment Advisers, Inc.) Gabelli Arbitrage Holdings LLC (100%-owned by the Company) Gabelli Trading Holdings LLC (100%-owned by the Company) Institutional Services Holdings, LLC (100%-owned by the Company) Morgan Group Holding Co. (83.3% -owned by the Company) G.research, LLC (100%-owned by Morgan Group Holding Co.) Jurisdiction of Incorporation or Organization Delaware Delaware Delaware Delaware Delaware Delaware Delaware Exhibit 31.1 I, Douglas R. Jamieson, certify that: Certifications 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of Associated Capital Group, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of income and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) b) c) d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by this report; and Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) b) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. By: /s/ Douglas R. Jamieson Name: Douglas R. Jamieson Title: Chief Executive Officer Date: March 16, 2020 Certifications Exhibit 31.2 I, Kenneth D. Masiello, certify that: 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of Associated Capital Group, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of income and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) b) c) d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by this report; and Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) b) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. By: /s/ Kenneth D. Masiello Name: Kenneth D. Masiello Title: Chief Accounting Officer Date: March 16, 2020 Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1 In connection with the Annual Report on Form 10-K of Associated Capital Group, Inc. (the “Company”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Douglas R. Jamieson, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of income of the Company. /s/ Douglas R. Jamieson By: Name: Douglas R. Jamieson Title: Chief Executive Officer Date: March 16, 2020 This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended. Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 In connection with the Annual Report on Form 10-K of Associated Capital Group, Inc. (the “Company”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Kenneth D. Masiello, as Chief Accounting Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) (2) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of income of the Company. /s/ Kenneth D. Masiello By: Name: Kenneth D. Masiello Title: Chief Accounting Officer Date: March 16, 2020 This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended. ENGLISH ITALIAN CHINESE JAPANESE SPANISH This page was intentionally left blank Board of Directors Marc Gabelli Co-Chief Executive Officer Gabelli Securities International Limited (UK) Daniel R. Lee Chief Executive Officer and Director Full House Resorts, Inc. Salvatore F. Sodano Vice Chairman Broadridge Financial Solutions, Inc. Mario J. Gabelli, CFA Executive Chairman Associated Capital Group, Inc. Officers Mario J. Gabelli, CFA Executive Chairman Douglas R. Jamieson Chief Executive Officer and President Corporate and Shareholder Information Investor Relations For our 10-K and other shareholder information, as well as information on our products and services, visit our website at www.associated-capital-group.com or write to: 191 Mason Street Greenwich, CT 06830 203-629-9595 email: investor@associated-capital-group.com Transfer Agent Computershare 250 Royall Street Canton, MA 02021 (781) 575-2000 Trading Information New York Stock Exchange Class A Common Stock Symbol - AC Website www.associated-capital-group.com Douglas R. Jamieson Chief Executive Officer and President Bruce M. Lisman Former Chairman JP Morgan’s Global Equity Division Frederic V. Salerno Former Vice Chairman Verizon Communications Inc. Elisa M. Wilson President Gabelli Foundation, Inc. Kevin Handwerker Executive Vice President, General Counsel and Secretary Kenneth D. Masiello, CPA Chief Accounting Officer Agnes Mullady Executive Vice President Investment Services Information Alternative Investments Contact: Michael M. Gabelli Managing Director and President 914-921-7787 email: alternatives@gabelli.com Institutional Research Contact: Vincent Amabile President 914-921-5150 email: vamabile@gabelli.com Annual Meeting Our 2020 Annual Meeting of Shareholders will be held at 9:00 a.m. on May 5, 2020. “The more you give, the more you receive” Our shareholders designated contributions to the following 501(c)(3) organizations The Board of Directors of Associated Capital Group, Inc. established an inaugural Shareholder Designated Charitable Contribution program in 2016. The company continued this initiative into 2018. To date, AC has donated approximately $20 million on behalf of its shareholders. Under the program, each registered shareholder could designate one charitable organization (two charitable organizations for holders with 8,000 shares or more) to which AC contributed on the shareholder’s behalf. AC’s program tracks the shareholder program launched by GAMCO Investors, Inc. in April 2013 which was based, in part, on the program established by Berkshire Hathaway in 1981. The Berkshire Hathaway program continued for over 20 years, until 2003. Warren Buffett’s letter to shareholders at the inception of Berkshire’s program explained that charitable giving in this manner provides significant benefits to shareholders. Each eligible shareholder is able to choose whether a contribution of corporate funds based on his/her ownership interest is to be made, and if so, to specify the recipient of that contribution. The shareholder’s judgment – not the judgment of the company’s directors or management – controls the contribution process. ♦ ♦ ♦ We are fortunate to live in the wealthiest nation in the world and to have the ability to share our good fortune. SINCE 2016, WE WERE ABLE TO SUPPORT MANY WORTHY ENDEAVORS, INCLUDING THESE DESIGNATED BY OUR SHAREHOLDERS. In addition, our teammates have donated countless hours of service to scores of charitable organizations. Abilis ♦ Alzheimer’s Disease & Related Disorders Association ♦ Alzheimer’s Foundation of America ♦ America Needs You ♦ American Associates of Ben-Gurion University of the Negev ♦ American Cancer Society ♦ American Heart Association ♦ American Macular Degeneration Foundation ♦ American National Red Cross ♦ American Refugee Committee ♦ Amigos Del Museo Del Barrio ♦ Archbishop Wood High School ♦ Arizona State University Foundation ♦ Arthritis Foundation ♦ Atlantis Educational Foundation ♦ Aurora Ice Association ♦ Bay Area Discovery Museum ♦ Bedford Audubon Society ♦ Blythedale Children’s Hospital ♦ Bob Woodruff Family Foundation ♦ Boston College Trustees ♦ Boys and Girls Club of Truckee Meadows ♦ Bristol Riverside Theater Co. ♦ Brunswick School ♦ Cathedral of St. John the Baptist ♦ Catholic Big Sisters & Big Brothers ♦ Catholic Charities of the Archdiocese of New York ♦ CCM of Westchester ♦ Center for All Abilities ♦ Central Scholarship Bureau ♦ Chaminade High School ♦ Change for Kids ♦ Chicago Chesed Fund ♦ Christian Brothers Academy ♦ Church-in-the-Garden ♦ CityArts ♦ Citymeals-on- Wheels ♦ Columbia University ♦ Columbus Citizens Foundation ♦ Cornell University ♦ Cow Hollow Preschool ♦ Cristo Rey Jesuit High School ♦ Direct Relief International ♦ Disabled American Veterans ♦ Disabled Veterans National Foundation ♦ Doctors Without Borders USA ♦ Don ♦ Downtown Community Television Center Bosco Community Center of Port Chester ♦ Elevation Chapel ♦ Eva’s Village ♦ ♦ Eastchester Volunteer Ambulance Corps. Fidelity Investments Charitable Gift Fund Fairfield University ♦ Feeding America ♦ University of New York at Binghamton ♦ Folds of Honor Foundation ♦ The State Friends of Animals ♦ Futures in Education ♦ Fountain Valley School of Colorado ♦ Answer ♦ Greenwich Hospital ♦ Greenwich ♦ Gilchrist Hospice Care ♦ Give Me an ♦ Haley House ♦ Hank’s Yanks Baseball International Film Festival ♦ Groton School ♦ Hetrick-Martin Institute ♦ Hindu Foundation ♦ Heifer Project International Program Society of Nevada ♦ Homeless Prenatal Honeywell Humanitarian Surgery Fund ♦ Immaculate Conception Relief Foundation ♦ Hospital for Special Semper Fi Fund ♦ Inner-City Scholarship Church - Bronx, NY ♦ Injured Marine International Campaign for Tibet ♦ Iona Fund ♦ Interfaith Nutrition Network ♦ America’s Founding Principles ♦ Jewish College ♦ Jack Miller Center for Teaching Greater Pittsburgh ♦ Joel Barlow High Communal Fund ♦ Jewish Federation of F. Kennedy Medical Center Foundation ♦ School, Regional School District #9 ♦ John K9s for Warriors ♦ Kids in Crisis ♦ Lee Junior League of Greenwich Connecticut ♦ Services of the Hudson Valley ♦ Leukemia Memorial Health System Foundation ♦ Legal Reserve ♦ Los Angeles Team Mentoring and Lymphoma Society ♦ LongHouse New York ♦ Manhattan College ♦ Marc Make-A-Wish Foundation of Metro ♦ ♦ Marin Country Day School ♦ Marine Lustgarten Pancreatic Cancer Foundation Corps Scholarship Foundation ♦ Masters School ♦ McMaster University Ontario ♦ Meals on Wheels Association of America ♦ Memorial Sloan-Kettering Cancer Center ♦ Millbrook School ♦ Mount Sinai Medical Center ♦ National Audubon Society ♦ National Brain Tumor Society ♦ Natural Resources Defense Council ♦ Nature Conservancy ♦ New Israel Fund ♦ New Jersey Institute of Technology Foundation ♦ New York and Presbyterian Hospital ♦ New York City Relief ♦ Northeastern University ♦ Northern Nevada HIV Outpatient Program Education and Services ♦ Northwell Health Foundation ♦ Operation Smile ♦ Pacific House ♦ Peck Slip School Parent Teachers Association ♦ Pediatric Cancer Research Foundation ♦ Pennsylvania Troopers Helping Troopers Foundation ♦ Perlman Music Program ♦ Planned Parenthood Federation of America ♦ Planned Parenthood of Southern New England ♦ Planned Parenthood Shasta Diablo ♦ Prospects, Opportunity and Enrichment ♦ Putnam-Indian Field School ♦ Rainforest Action Network ♦ Rainforest Alliance ♦ Randolph Foundation ♦ Rector Wardens Vestry Men of St. Bartholomew’s Church ♦ Rochester Institute of Technology ♦ Saint Ignatius School ♦ Salvation Army National Corp. ♦ San Diego Opera Association ♦ San Miguel Academy of Newburgh ♦ SATO Project ♦ Save the Children Federation ♦ Science Buddies ♦ Seamen’s Church Institute of New York and New Jersey ♦ Shriners Hospitals for Children ♦ Sierra Nevada Journeys ♦ South Bronx Educational Foundation ♦ Special Young Adults ♦ St. Joseph’s Indian School ♦ St. Jude Children’s Research Hospital ♦ St. Thomas’ Church Whitemarsh Bethlehem Park & Camp Hill Road ♦ Step Up International ♦ Student U ♦ Susan G. Komen Breast Cancer Foundation ♦ The Arc of Palm Beach County ♦ The Littlest Lamb ♦ The Miller Center Foundation ♦ The Roman Catholic Church of St. Robert Bellarmine Church ♦ The University of Pennsylvania ♦ The Windward School ♦ Top of Michigan Mountain Bike Association ♦ Troy University Foundation ♦ Tuesday’s Children ♦ Tuxedo Park School ♦ University of Texas Foundation ♦ University of Wisconsin Foundation ♦ Variety Child Learning Center ♦ Villanova University ♦ Volunteers of America ♦ Westchester ARC Foundation ♦ Wilton Education Foundation ♦ Wilton Library Association ♦ Woman’s Club of Rye ♦ World Eye Cancer Hope ♦ World Vision ♦ Yale-New Haven Hospital ♦ Young Men’s Christian Association of Stamford ♦ Zacharias Sexual Abuse Center ♦ 191 Mason Street, Greenwich, CT 06830 www.associated-capital-group.com 203-629-9595 | info@associated-capital-group.com 

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