A N N U A L
R E P O R T
2021
WISDOM. PERFORMANCE. BRIGHT FUTURE. TRUST.
Merger Arbitrage Flagship Fund
Year
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Gross
Return
10.81
9.45
8.55
4.35
4.69
9.13
5.33
3.89
5.33
4.32
4.89
9.07
12.40
0.06
6.39
12.39
9.40
5.49
8.90
4.56
7.11
18.10
16.61
10.10
12.69
12.14
14.06
7.90
12.29
7.05
12.00
9.43
23.00
45.84
-13.67
33.40
30.47
Percent Return (%)
Net
Return
90 Day
T-Bill
T-Bill +
400bps
7.78
6.70
5.98
2.65
2.92
6.44
3.43
2.29
3.43
2.63
3.07
6.35
9.15
-0.94
4.26
8.96
6.63
3.69
6.26
2.45
4.56
13.57
12.31
7.21
9.21
8.84
10.27
5.53
8.91
4.78
8.76
6.67
17.55
35.66
-14.54
26.14
22.64
0.05
0.58
2.25
1.86
0.84
0.27
0.03
0.03
0.05
0.07
0.08
0.13
0.16
1.80
4.74
4.76
3.00
1.24
1.07
1.70
4.09
5.96
4.74
5.06
5.25
5.25
5.75
4.24
3.09
3.62
5.75
7.92
8.63
6.76
5.90
6.24
7.82
4.05
4.58
6.25
5.86
4.84
4.27
4.03
4.03
4.05
4.07
4.08
4.13
4.16
5.80
8.74
8.76
7.00
5.24
5.07
5.70
8.09
9.96
8.74
9.06
9.25
9.25
9.75
8.24
7.09
7.62
9.75
11.92
12.63
10.76
9.90
10.24
11.82
Gross
Excess
Return
6.76
4.87
2.30
-1.52
-0.15
4.86
1.30
-0.15
1.28
0.25
0.82
4.94
8.24
-5.74
-2.35
3.63
2.40
0.25
3.83
-1.14
-0.98
8.14
7.87
1.04
3.44
2.89
4.31
-0.34
5.20
-0.57
2.25
-2.49
10.37
35.08
-23.57
23.16
18.65
The performance above refers to our merger arbitrage flagship fund. Both net and gross returns are shown. Net returns are net of management and incen-
tive fees. Gross returns are gross of management and incentive fees. Individual investment returns may differ due to timing of investment and other factors.
Past performance is not indicative of future results.
Average Annual Excess Return
3.49%
Dear Partners/Shareholders:
For the most part, 2021 was a good year for stocks with the major indices ending the year well up into the double digits. The
reopening economy fueled the advance, in response to the resumption of in-person gatherings, work, commerce and sporting
events. As we finished the year, the Omicron COVID variant caused us to “tap the brakes” delaying the return to a fully functioning
“normal”. As we enter 2022, inflation appears to be more than “transitory”, with the Federal Reserve’s anticipated response to
announce interest rate hikes (plural) as the necessary antidote. In our space, the policies and proclivities of Lina Khan, President
Biden’s appointee to lead the Federal Trade Commission, and AG Merrick Garland’s stance on anti-competition may dampen the
appetite for deals. Added to the foregoing, we now have the economic challenges from sanctions on Russia to combat Putin’s
war... never a dull moment!
Looking back at 2021 –
We are privileged to share Associated Capital’s (“AC”) financial results for 2021. As always, we value your trust and support.
• COMMITMENT TO COMMUNITY - (Y)our “S” in ESG - in November, (y)our Board approved the continuation of the
shareholder designated charitable contribution program with a fifty percent increase to $0.30 per share designation for
registered shareholders, up from $0.20 in 2020. This translates into approximately $6.0 million in donations, which brings
our total projected contributions to $31 million since our spin-off from GAMCO in November 2015. Since the inception of
this program, which we initiated following Warren Buffett’s Berkshire Hathaway program, there have been over one hundred
sixty 501(c)3 organizations (listed on the back inside cover) which received designations from our shareholders.
• Our MERGER ARBITRAGE strategy topped last year’s returns with a 10.8% gross return (7.8% net) for 2021, the first double-
digit gross return in well over a decade. 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 $138
million as of December 31, 2021.
• Assets under Management at December 31, 2021 reached a record of $1.8 billion, up $430 million from year-end 2020 due
to record annual net inflows of $356 million as well as $74 million in market appreciation.
Merger Arbitrage
Event-Driven Value
Other
Total AUM
December 31, 2021
1,542
195
44
1,781
December 31, 2020
1,126
180
45
1,351
$
$
$
$
• The activity of PMV Consumer Acquisition Corp. (NYSE:PMVC), a special acquisition vehicle, which we launched in
September 2020 to pursue a business combination with a company in the broadly defined consumer space, has accelerated.
Our first SPAC, the Gabelli Value for Italy S.p.a. (VALU), an Italian company listed on the LSE’s Borsa Italian AIM segment
launched in April 2018 with €110 million of capital. Facing a transaction deadline during the height of the coronavirus
pandemic in Italy, amongst turmoil and uncertainty VALU elected to return capital to shareholders in full.
• We are activating our program of buying privately owned, family started businesses, controlled and operated by the
founding family.
• We paid semi-annual dividends of $0.10 per share, paying out $4.4 million to shareholders.
• Book value ended the year at $42.48 per share versus $40.36 at December 31, 2020.
As previously discussed, Gabelli Private Equity Partners was created to launch a private equity business, somewhat akin to
the success our predecessor firm had in the 1980s. We will continue our outreach initiatives with business owners, corporate
management, and various financial sponsors.
In 2022, we will continue to explore new avenues, including L.P.’s in our investments, to put our capital to work by pursuing deals,
new distribution channels and new products.
Along these lines, we echo the Acquisition Criteria list from Warren Buffett’s Berkshire Hathaway, we cannot improve upon it:
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).
Sincerely,
Mario J. Gabelli
Executive Chairman
Douglas R. Jamieson Chief Executive Officer and President
In 2021, AC made significant advances especially in expanding our marketing successes of the
GAMCO Merger Arbitrage UCITS strategy domiciled in the Eurozone. Our Arb team, led by Ralph
Rocco, delivered another exceptional year of returns. We strengthened the accounting team
under Tim Schott with the addition of Ian McAdams; as well as a new head to our legal team, Peter
Goldstein, in addition to David Goldman and Craig Weynand.
At Gabelli & Partners, the marketing and business development team has done an excellent job
maintaining and expanding relationships across the globe while managing the business within the
parameters of the travel restrictions that paused regular trips here and abroad. We held our 22nd
Annual Arbitrage “Dinner” on November 16th. New inflows in our M&A strategy, which finished
2021 up 10.8% gross; 7.8% net, exceeded $350 million. As for distribution, we continue to explore strategic relationships to
better position our firm and funds across various new channels and markets.
A S S E TS U N D E R MANAG E M E NT
Assets under management (dollars in millions) ended 2021 at $1,781. The increase was largely the result of record net inflows as well
as market appreciation. We continue to see interest in products from new investor groups, especially outside of the United States.
Non-Market Correlated
ENGLISH
ITALIAN
CHINESE
JAPANESE
SPANISH
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
“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.”
Now in five languages. Originally published in 1999 by Gabelli University Press.
Regina M. Pitaro (Deals...Deals...and More Deals, 1999)
“Give a man a fish and you feed him
for a day. Teach a man to arbitrage,
and you feed him forever.”
- Warren Buffett
In 1999, we published one of the few books on merger arbitrage,
Deals…Deals…and More Deals. Our newest 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
available on Amazon.com.
M E RG E R AR B ITR AG E
Gabelli & Partners is a specialized division that provides clients with products
and customized solutions within the “Private Market Value (“PMV”) with
a Catalyst™” method of investing, while utilizing the full resources of the
broader organization. The strategies employed within our portfolios strive to
achieve superior returns while managing risk and maintaining low volatility.
Strategies focus on fundamental, active, event-driven special situations and
merger arbitrage.
(Y)our M&A Portfolio Team
Ralph Rocco
Paolo Vicinelli
Willis Brucker
We have invested in this way since 1977 and introduced our first dedicated alternative portfolio in 1985, Gabelli Associates,
which focuses on absolute returns by investing in announced mergers and acquisitions. Beyond merger investing, we offer
several additional portfolios that building on the firm’s strengths in global event-driven value investing.
We are committed to providing our clients with a high level of services. Our client service representatives are continually
seeking new ways to capture and deliver information more effectively, and are willing to discuss any customized needs of
our clients and partners, such as providing an investment solution by way of: sub advised portfolios, custom share classes,
new investment vehicles and or structures amongst other operational needs.
Our M&A Strategy:
•
Investing in announced mergers and acquisitions or “merger arbitrage”, involves purchasing securities that are the
subject of an acquisition attempt, exchange offer, cash tender offer or similar transaction.
• We use different arbitrage techniques to derive a profit by realizing the price differential (or “spread”) between the
market price of securities and the value ultimately realized from their sale.
•
•
The objective of our risk arbitrage portfolios is to provide positive, “absolute returns” in declining as well as rising equity
market environments. To that end 2021 capped off our 36th of 37 positive years on a gross basis; 35 up years net.
Long-term returns are dependent on the closure of an M&A deal, and not the overall stock market’s movement. This
coupled with our rigorous research approach, active portfolio management and risk parameters have provided our
partners with consistent, non-market correlated returns inception.
We primarily invest in global announced merger and acquisition transactions in the public equity markets and maintain
a diversified portfolio of transactions. Every deal has its own unique set of elements, and our team works on all aspects,
from fundamental and legal research, to trading. We analyze and continuously monitor a pending transaction for all of the
elements of potential risk, including: regulatory, terms, financing, and shareholder approval.
Our teams are experts at analyzing deal risks. The inherent risk in merger investing is a broken deal, not the standard
deviation or price variance. Our merger team has led our clients successfully through various challenging market
environments, including the late 1980s, the early 1990s, 1998 and 2001, and more recently, 2008 and 2020. We have a time
proven and consistent approach to merger investing.
The strategy is offered domestically through partnerships and separately managed accounts. Internationally, the strategy is
offered through offshore corporations and EU-regulated UCITS structures and the London Stock Exchange listed investment
company, Gabelli Merger Plus+ Trust (GMP-LN).
Event Driven Value Offerings:
Within our Event Driven Value and other alternative strategies, we offer specific sector focused portfolios, traditional long
short event driven portfolios, as well as intermediate credit portfolios. Each of these offerings leverages the full resources
of our research organization.
We are research-driven fundamental investors focusing on the “PMV with a Catalyst” method of investing. This method of
analysis involves looking at businesses as a function of their assets and earnings power. We examine businesses as if we were
owners of those businesses, and we believe that we can do that in a rational way by looking at industries on a global basis.
Our investment professionals visit with hundreds of companies each year. Our work is proprietary, bottom up, and involves
the full utilization of public resources.
In this process, we do sector-by-sector analysis, assessing the PMV of a business, and identifying the catalyst in place to
realize returns. A company’s PMV is not constant, and changes as a function of many variables. The objective is to identify
large differences between our estimate of PMV and the stock market price. We then identify the catalyst to realize a return
with minimal influence from the overall direction of the stock market. It is our belief that we can earn superior risk adjusted
returns following this event-driven approach.
2021 Review and 2022 Preview:
• We finished 2021 at an all-time high for deal activity, $5.9 trillion, and an all-time high for our firm’s AUM.
•
The drivers remain in place for robust deal activity in 2022 and beyond. These include direct cross border M&A and other
transactions aimed at global growth. We continue to find attractive investment opportunities in newly announced and
pipeline deals. Recent market volatility has provied additional opportunities for an active portfolio like ours.
• We remain focused on investing in highly strategic, well-financed deals with an added focus on near-term catalysts, and
are upbeat about our prospect to generate absolute returns in 2022.
S PECIAL PU R P OS E ACQ U I S ITI O N CO M PAN I E S
(S PAC S )
SPACs are essentially blind pools raised by a Sponsor to acquire a single unspecified target company within a limited time
frame (typically two years).
Associated Capital launched PMV Consumer Acquisition Corp.(“PMVC”) in September 2020 to pursue an initial business
combination with target companies having an enterprise valuation in the $200 million to $3.5 billion range. PMVC’s structure
and the team’s experience in corporate mergers and acquisitions and financial engineering makes PMVC an attractive partner.
PMV Consumer Acquisition is Associated Capital Group’s second launch of a SPAC and follows the template established for
other SPACs by our affiliates. PMVC is part of Associated Capital’s three-pronged approach to direct investing which includes
its “fund-less” private equity vehicle, Gabelli Private Equity Partners, and Gabelli Principal Strategies (“GPS”) which was
organized to invest in the capital structure of small and mid-sized companies.
Opportunity in Consumer
We believe consumer-oriented companies possess attractive qualities for investors, including: predictable, often recurring
revenue streams; resilient free cash flow generation; and pricing power with an ability to leverage fixed costs to profitably
scale both organically and inorganically.
In consumer and its adjacent sectors, there are also a number of trends: these include demographic shifts in terms of birth
rates, aging, size of the population and per capita income, which will drive consumer spending; an accelerating shift to digital
and omni-channel, which impacts supply chains, manufacturing, distribution, marketing and selling practices; a consumer
focus on brand and company values; and, key differentiators in function, nutrition, and quality as consumers select products
for their functional benefits, including the increased consumer focus on health, wellness and nutrition.
The past performance of our management team and its affiliates is not a guarantee that we will be able to identify a suitable
candidate for our initial business combination or of success with respect to any business combination we may consummate.
Finally, there is no assurance that the SPAC will be successful in completing a business combination or that any business
combination will be successful.
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
CO N D E N S E D CO N SO LI DATI N G BAL AN CE S H E E T (in thousands)
The Company consolidates certain investment partnerships and other SPAC related entities for which it has a controlling financial interest. The following
table reflects the net impact of the consolidated investment partnerships and other entities (“Consolidated Entities”) on the consolidated statements of
financial condition (in thousands):
Assets
Cash and cash equivalents
Investments
Other
Total assets
Liabilities and equity
Total liabilities
Redeemable noncontrolling interests
Total Associated Capital Group, Inc. equity (1)
Noncontrolling interests (1)
Total liabilities and equity
Assets
Cash and cash equivalents
Investments
Other
Total assets
Liabilities and equity
Total liabilities
Redeemable noncontrolling interests
Total equity
Total liabilities and equity
Prior to
Consolidation
December 31, 2021
Consolidated
Entities
315,009
606,382
69,713
991,104
45,024
-
946,080
-
991,104
$
$
$
4,039
16,709
191,484
212,232
20,510
202,456
(8,978)
(1,756)
212,232
Prior to
Consolidation
December 31, 2020
Consolidated
Entities
32,347
869,751
45,709
947,807
46,418
-
901,389
947,807
$
$
7,162
19,188
200,388
226,738
19,910
206,828
-
226,738
$
$
$
$
$
$
$
As Reported
$
$
$
319,048
623,091
261,197
1,203,336
65,534
202,456
937,102
(1,756)
1,203,336
As Reported
$
$
$
$
39,509
888,939
246,097
1,174,545
66,328
206,828
901,389
1,174,545
(1) Debit adjustments to Associated
Capital Group, Inc . equity and
noncontrolling
interests reflects
the amortization of the discount
related to the issuance of PMV
SPAC’s redeemable noncontrolling
interest . The discount is amortized
over a period of 18 months through
an adjustment to additional paid-in
capital and noncontrolling interest
to ownership
(proportionate
interest in PMV Sponsor) and is also
adjusted periodically for income/
loss allocated
redeemable
noncontrolling interest .
to
Q UARTE R LY FI NAN CIAL I N FO R MATI O N
Quarterly financial information for 2021 and 2020 is presented below.
(In thousands, except per share data)
2021
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating (loss)/income before management fee . . . . . . . . . . . . . . . . . . . . .
Other income/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management fee expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Income)/loss allocated to noncontrolling interests . . . . . . . . . . . . . . . . . . . .
Net income to AC shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating (loss)/income before management fee . . . . . . . . . . . . . . . . . . . . .
Other income/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management fee (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income/(loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Income)/loss allocated to noncontrolling interests . . . . . . . . . . . . . . . . . . . .
Net income/(loss) to AC shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:
Basic – Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic – Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic – Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fully Diluted Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes: (1): There were no discontinued operations in 2021.
1st
2,325
6,027
(3,702)
30,682
(2,663)
(5,590)
(172)
18,555
0.83
0.83
1st
2,962
3,602
(640)
(100,091)
-
23,662
(77,069)
(231)
3,945
(73,355)
(3.26)
(0.01)
(3.27)
(3.27)
$
$
$
$
$
$
$
$
$
2nd
2,489
8,580
(6,091)
48,615
(4,320)
(9,020)
532
29,716
1.34
1.34
2nd
2,067
5,728
(3,661)
52,837
-
(11,241)
37,935
(262)
(2,436)
35,237
1.58
(0.01)
1.57
1.57
$
$
$
$
$
$
$
$
$
3rd
2,112
2,055
57
6,157
(226)
(484)
(4,001)
1,503
0.07
0.07
2020
3rd
1,945
5,497
(3,552)
14,007
-
(3,564)
6,891
(139)
(937)
5,815
0.27
(0.01)
0.26
0.26
$
$
$
$
$
$
$
$
$
4th
13,998
14,912
(914)
14,961
(1,217)
(2,611)
(790)
9,429
Total
$ 20,924
31,574
(10,650)
100,415
(8,426)
(17,705)
(4,431)
$ 59,203
0.43
0.43
$
$
2.68
2.68
4th
12,009
13,524
(1,515)
75,599
(3,101)
(18,231)
52,752
-
(1,633)
51,119
2.28
-
2.28
2.28
Total
$ 18,983
28,351
(9,368)
42,352
(3,101)
(9,374)
20,509
(632)
(1,061)
$ 18,816
$
$
$
0.87
(0.03)
0.84
0.84
$
$
$
$
$
$
$
$
$
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
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)
47-3965991
(I.R.S. Employer Identification No.)
191 Mason Street, Greenwich, CT 06830
(Address of principal executive offices)(Zip Code)
(203) 629-9595
(Registrant’s telephone number, including area code)
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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
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 30, 2021 (the last business
day of the registrant’s most recently completed second fiscal quarter) was $124,403,412.
As of March 11, 2022, 3,088,197 shares of class A common stock and 18,962,754 shares of class B common stock were outstanding.
GGCP, Inc., a private company controlled by the Company’s Executive Chair, held 77,165 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 29,866 and
36,758 shares of class A and class B common stock, respectively. In additional, there are 222,905 Phantom Restricted Stock Awards
outstanding as of December 31, 2021.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s definitive proxy statement relating to the 2022
Annual Meeting of Shareholders are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this report.
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 9C
Item 10
Item 11
Item 12
Item 13
Item 14
Item 15
Item 16
Part II
Part III
Part IV
Associated Capital Group, Inc.
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2021
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
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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.
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6
7
7
9
10
10
10
10
10
11
11
11
18
19
51
51
52
52
52
52
52
52
52
52
54
55
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Certifications Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
2
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.
Definitions
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 through which our operations are actually conducted. “GAMCO”, “GBL”, or similar terms refers to our former
parent GAMCO Investors, Inc.
The information provided in response to Item 7. Management’s Discussion and Analysis (“MD&A”) of Financial Condition and
Results of Operations 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.
3
PART 1: OVERVIEW
Giving Back to Society - (Y)our “S” in ESG
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, and sponsoring local organizations.
Continuing in the Company’s tradition of shareholder charitable giving, on November 5, 2021, the Board of Directors of Associated
Capital approved a $0.30 per share shareholder designated charitable contribution (“SDCC”) for registered shareholders. This is a
50% increase from last year’s $0.20 per share contribution. AC’s total contribution, based on the shares registered as of December 1,
2021, is approximately $6.0 million, of which approximately $1.2 million was received from a comparable SDCC program by
GAMCO Investors, Inc., which declared a $0.50 per share SDCC on our 2.4 million shares. Since November 2015, Associated
Capital’s SDCC program of corporate giving has resulted in nearly $31 million in donations to over 160 501(c)(3) organizations
across the United States.
ITEM 1: BUSINESS
(Y)our Business
We are a Delaware corporation, incorporated in 2015, that provides alternative investment management services and operates a direct
investment business that over time invests in businesses that fit our criteria. Additionally, we derive income from proprietary
investments.
Alternative Investment Management
We conduct our investment management activities through our wholly-owned subsidiary Gabelli & Company Investment Advisers,
Inc. (“GCIA”) and its wholly-owned subsidiary, Gabelli & Partners, LLC (“Gabelli & Partners”). GCIA is an investment adviser
registered with the Securities and Exchange Commission (“SEC”) 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 across a range of risk and event arbitrage portfolios and in equity event-driven value strategies. 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 a 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 mainly in the developed global
markets. We primarily employ absolute return strategies with the objective of generating positive returns. We serve a wide variety of
investors globally including private wealth management clients, corporations, corporate pension and profit-sharing plans, foundations
and endowments, as well as serving as sub-advisor to certain third-party investment funds.
In merger arbitrage, the goal is to earn absolute positive returns. We introduced our first limited partnership, Gabelli Arbitrage
(renamed Gabelli Associates), in February 1985. Our typical investment process begins at the time of deal announcement, buying
shares of the target at a discount to the stated deal terms, earning the spread until the deal closes, and reinvesting the proceeds in new
deals in a similar manner. By owning a diversified portfolio of transactions, we mitigate the adverse impact of singular deal-specific
risks. Since inception, we have compounded net annual returns of 7.4% with 35 of 37 positive years, net, overall. As a result, a $10
million investment by a tax free vehicle in this fund at its inception would be worth more than $138 million as of December 31, 2021.
In addition, the value of such an investment would have exhibited significantly less volatility than that of broad equity indices.
As the business and investor base expanded, we launched an offshore version in 1989. Building on our strengths in global event-
driven value investing, several investment vehicles have been added to balance investors’ geographic, strategic and sector-specific
needs. Today, we manage investments in multiple categories, including merger arbitrage, event-driven value and other strategies.
Lastly, during 2021 our Board of Directors approved the launch of a private equity fund.
4
Assets Under Management
As of December 31, 2021, we managed approximately $1.78 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):
Merger Arbitrage
Event-Driven Value (a)
Other (b)
Total (c)
December 31,
2021
2020
$
$
1,542 $
195
44
1,781 $
1,126
180
45
1,351f
(a) Excluding merger arbitrage.
(b) Includes investment vehicles focused on private equity, merchant banking, non-investment-grade credit and capital structure
arbitrage.
(c) Includes $238 and $235 of proprietary capital, respectively.
Proprietary Capital
Proprietary capital is earmarked for our direct investment business that invests in new and existing businesses, using a variety of
techniques and structures. We launched our direct private equity and merchant banking activities in August 2017. 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.
Gabelli Special Purpose Acquisition Vehicles ("SPAC"), which commenced in 2018 with the launch of the Gabelli Value for
Italy S.p.a., a general sector SPAC (VALU) that was listed on the London Stock Exchange's Borsa Italiana AIM segment.
Finally, Gabelli Principal Strategies Group, LLC (“GPS”) was created to pursue strategic operating initiatives broadly.
Our direct investing efforts are organized to invest in various ways, including growth capital, leveraged buyouts and restructurings,
with an emphasis on small and mid-sized companies. Our investment sourcing is across a variety of channels including direct owners,
private equity funds, classic agents, and corporate carve outs (which are positioned for accelerated growth, as businesses seek to
enhance shareholder value through financial engineering). The Company’s direct investing vehicles allow us to acquire companies and
create long-term value with no pre-determined exit timetable. The SPAC vehicles leverage our capital markets expertise and act to
expand deal flow in target industries.
On September 22, 2020, Associated Capital completed the $175 million initial public offering of its special purpose acquisition
corporation (“SPAC”), PMV Consumer Acquisition Corp. (NYSE:PMVC). PMV Consumer Acquisition Corp. (“PMV”) was created
to pursue an initial business combination following the consumer globally with companies having an enterprise valuation in the range
of $200 million to $3.5 billion.
We have a proprietary portfolio of cash and investments which we expect to use to invest primarily in funds that we will manage,
provide seed capital for new products, including SPACs that we or our affiliates sponsor, expand our geographic presence, develop
new markets and pursue strategic acquisitions and alliances.
Morgan Group Holding Co. Spin-Off
On March 16, 2020, the Company’s Board of Directors approved the spin-off of Morgan Group Holding Co. (“Morgan Group”) to
AC’s shareholders. On August 5, 2020, AC distributed its 83.3% stake in Morgan Group to shareholders of record as of July 30, 2020.
Following the 1 for 100 reverse split on June 10, 2020, AC shareholders received approximately 0.022356 shares of Morgan Group
common stock for each share of AC common stock they held.
The historical financial results of Morgan Group have been reflected in the Company’s consolidated financial statements as
discontinued operations for all periods presented through August 5, 2020.
5
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 first articulated by Graham & Dodd, and further refined
by our Executive Chair, 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, on September 22, 2020, Associated Capital announced the $175
million initial public offering of its special purpose acquisition corporation, PMV Consumer Acquisition Corp.
(NYSE:PMVC). PMV Consumer Acquisition Corp. (“PMV”) was created to pursue an initial business combination
following the consumer globally with companies having an enterprise valuation in the range of $200 million to $3.5 billion.
Opportunities in Private Equity
One of our initiatives is to launch a private equity business to take advantage of the opportunities in the market place.
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.
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 we do. 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 founding, no assurance can be given
that our efforts to obtain new business will be successful.
6
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.
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 and the financial markets. Under such laws and regulations,
agencies that regulate investment advisors have broad powers, including the power to limit, restrict or prohibit such an advisor 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, 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
United States Department of Labor, 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 substantially all of our revenues from investment advisory services under investment management agreements. Under the
Advisers Act, our investment management agreements may not be assigned without the client’s consent.
Employee Retirement Income Security Act of 1974 (“ERISA”)
GCIA is subject to ERISA and to regulations promulgated thereunder, insofar as it is a “fiduciary” under ERISA with respect to
certain of its 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.
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
7
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 various regulations
applicable to 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 as applicable to us 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, an entity under common control with AC, 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, 2021, by virtue of being
a member of the group, AC was deemed to hold five percent or more beneficial ownership with respect to approximately 80 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, (iv) federal proxy rules governing stockholder communications; and (v) 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 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. We are following the guidelines with respect to our collateral management arrangements applicable to the
8
EPM of the UCITS funds for which GCIA acts as a sub-advisor. The costs of complying with increasing regulation in the EU may
negatively impact the net performance of the UCITs fund that GCIA sub advises and therefore may result in decreased remuneration
to GCIA for this sub advisory activity.
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 GCIA is not directly subject to
MiFID II: (a) GCIA may be invoiced separately by any EU brokers from whom it purchases research in the future; and (b) clients may
begin to require that GCIA “unbundle” research payments from commission trading.
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.
Clients whose assets we manage in the EU 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
Through The European Union (Withdrawal) Act of 2018, GSIL UK remained subject to the requirements of MiFID II as in effect on
December 31, 2021 (the “Transition End Date”). MiFID II, 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. The Company cannot assure you the extent to which the future amendments
to or replacement of MiFID II or other EU regulations will be adopted into UK law and continue to apply to GSIL UK after the
Transition End Date.
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 11, 2022, we had a full-time staff of 25 teammates, of whom 8 served in the portfolio management, research and trading
areas, 8 served in the marketing and shareholder servicing areas and 9 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 AC’s spin-off from GAMCO on November 30, 2015.
9
Status as a Smaller Reporting 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 not available to other
public companies that are not “smaller reporting companies.”
We ceased to be an emerging growth company after December 31, 2020.
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.
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
Our offices are owned by a wholly owned subsidiary of AC and are located at 191 Mason Street, Greenwich, CT 06830. A portion of
the office space is leased to affiliates. During 2021 AC received $118.1 thousand from affiliates (primarily GAMCO) pursuant to lease
agreements for this property.
AC acquired 3 St. James Place, London, UK on March 3, 2020 which is fully leased to GAMCO in 2021. During 2021 AC received
$275.4 thousand from GAMCO pursuant to the lease agreement for this property.
During 2021 and 2020, AC paid $73.7 thousand and $144 thousand, respectively, to GAMCO pursuant to a sublease based on the
percentage of square footage occupied by several AC teammates (including pro rata allocation of common space) at GAMCO’s
offices at One Corporate Center, Rye, NY 10580.
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. However, management believes such amounts, both those that are probable
and those that are reasonably possible, are not material to the Company’s consolidated financial condition, operations, or cash flows at
December 31, 2021. See also Note L, Guarantees, Contingencies and Commitments, to the consolidated financial statements in Part II,
Item 8 of this Form 10-K.
ITEM 4: MINE SAFETY DISCLOSURES
Not applicable.
10
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
Shares of our Class A common stock are traded on the New York Stock Exchange under the symbol AC.
As of March 11, 2022, there were 109 and 21 holders of record of the Company’s Class A and Class B common stock, respectively.
These figures do not include 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.
The following table provides information for our repurchase of our Class A common stock during the quarter ended December 31,
2021:
Period
10/01/21 - 10/31/21
11/01/21 - 11/30/21
12/01/21 - 12/31/21
Totals
Total
Number
of Shares
Repurchased
Average
Price Paid Per
Share, net of
Commissions
Total Number of
Shares Repurchased
as Part of Publicly
Announced Plans
or Programs
Maximum
Number of Shares
That May Yet Be
Purchased Under the
Plans or Programs
2,276 $
2,026
-
4,302 $
36.86
36.08
-
36.49
2,276
2,026
-
4,302
679,170
677,144
677,144
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.
The number of shares remaining available for future issuance under equity compensation plans is 1.3 million.
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
Overview
In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China and spread quickly to numerous countries,
including the United States. On March 11, 2020, COVID-19 was identified as a global pandemic by the World Health Organization.
As world leaders focused on the unprecedented human and economic challenges of COVID-19, global equity markets plunged as the
coronavirus pandemic spread. In the remainder of 2020 and continuing through 2021, as a result of unprecedented fiscal and monetary
stimulus and the fast tracking of COVID-19 vaccines, the markets have rebounded strongly. The pandemic and resulting economic
dislocations did not have a significant adverse impact on our AUM. As a result of this pandemic, the majority of our employees
(“teammates”) were working remotely. The Company’s remote work arrangements were mostly discontinued as of July 2021. As
restrictions around the globe begin to lift, our teams will once again seek to meet and engage our current and prospective investors in
their local jurisdictions.
There continues to be no material impact of remote work arrangements on our operations, including our financial reporting systems,
internal control over financial reporting, and disclosure controls and procedures, and there has been no material challenge in
implementing our business continuity plan.
11
Financial Highlights
Financial Performance
The following is a summary of the Company’s financial performance for the Quarters and Years ended December 31, 2021 and 2020:
($000s except per share data or as noted)
AUM - end of period (in millions)
AUM - average (in millions)
Net income/(loss) per share-diluted
Book Value Per Share
Financial Condition Overview
Fourth Quarter
Full Year
2021
2020
2021
2020
$
$
$
1,781 $
1,735
0.43 $
42.48 $
1,351 $
1,286
2.29 $
40.36 $
1,781 $
1,595
2.68 $
42.48 $
1,351
1,399
0.84
40.36
The Company consolidates certain investment partnerships and other entities for which it has a controlling financial interest. The
following table reflects the net impact of the consolidated investment partnerships and other entities (“Consolidated Entities”) on the
consolidated statements of financial condition (in thousands):
Assets
Cash
Investments
Other
Total assets
Liabilities and equity
Total liabilities
Redeemable noncontrolling interests
Total Associated Capital Group, Inc. equity(1)
Noncontrolling interests(1)
Total liabilities and equity
Assets
Cash
Investments
Other
Total assets
Liabilities and equity
Total liabilities
Redeemable noncontrolling interests
Total equity
Total liabilities and equity
Prior to
Consolidation
December 31, 2021
Consolidated
Entities
As Reported
315,009
606,382
69,713
$
991,104 $
45,024
-
946,080
-
$
991,104 $
4,039
16,709
191,484
212,232 $
20,510
202,456
(8,978 )
(1,756 )
212,232 $
319,048
623,091
261,197
1,203,336
65,534
202,456
937,102
(1,756)
1,203,336
Prior to
Consolidation
December 31, 2020
Consolidated
Entities
As Reported
32,347
869,751
45,709
947,807 $
46,418
-
901,389
947,807 $
7,162
19,188
200,388
226,738 $
19,910
206,828
-
226,738 $
39,509
888,939
246,097
1,174,545
66,328
206,828
901,389
1,174,545
$
$
(1) Debit adjustments to Associated Capital Group, Inc. equity and noncontrolling interests reflects the amortization of the discount related to the issuance of PMV
SPAC’s redeemable noncontrolling interest. The discount is amortized over a period of 18 months through an adjustment to additional paid-in capital and
noncontrolling interest (proportionate to ownership interest in PMV Sponsor) and is also adjusted periodically for income/loss allocated to redeemable noncontrolling
interest.
12
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 attracts 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 ongoing dynamics created by COVID-19 and its impact on the
global economy and markets, 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 generally equating to 15-20% 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.
Compensation includes variable and fixed compensation and related expenses paid to officers, portfolio managers, sales, trading,
research and all other professional staff. Variable compensation is paid to sales personnel and portfolio management and may
represent up to approximately 55% of revenues.
Management fee expense is incentive-based equal to 10% of adjusted aggregate pre-tax profits paid to the Executive Chair or his
designees for his services pursuant to an employment agreement.
Other operating expenses include general and administrative operating costs.
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 2021 with approximately $942 million in cash and investments, net of securities sold, not yet purchased of $13 million.
This includes $319 million of cash and cash equivalents; $61 million of short-term U.S. Treasury obligations; $260 million of
securities, net of securities sold, not yet purchased, including shares of GAMCO with a market value of $60.4 million; and $289
million invested in affiliated and third-party funds and partnerships, including investments in closed end funds managed by an affiliate
(primarily GAMCO) which have a value of $64 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 attributable to shareholders of the Company was $937 million or $42.48 per share as of December 31,
2021, compared to $899 million or $40.36 per share as of the prior year-end. Shareholders’ equity per share is calculated by dividing
the total equity by the number of common shares outstanding. The increase in equity from the end of 2020 was largely attributable to
net income for the year, partially offset by dividends, share repurchases and the impact of amortization of the discount related to the
issuance of PMV SPAC’s redeemable noncontrolling interest.
Assets Under Management Highlights
We reported assets under management as follows (dollars in millions):
Year Ended December 31,
Merger Arbitrage
Event-Driven Value
Other
Total AUM (a)
$
$
1,542 $
195
44
1,781 $
(a) Includes $238 million and $235 million of proprietary capital, respectively.
13
2021
2020
% Change
36.90
8.33
(2.22)
31.83
1,126
180
45
1,351
Changes in our AUM during 2021 were as follows (dollars in millions):
Merger Arbitrage
Event-Driven Value
Other
Total AUM
Year Ended December 31, 2021
Beginning
Inflows
Outflows
Investment
Return (net) Ending
$
$
1,126 $
180
45
1,351 $
566 $
5
-
571 $
(200) $
(12)
(3)
(215) $
50 $
22
2
74 $
1,542
195
44
1,781
The majority of our AUM have calendar year-end measurement periods, and our incentive fees are primarily recognized in the fourth
quarter. Assets under management increased on a net basis by $356 million for the year ended December 31, 2021 coupled with $74
million in market appreciation.
Operating Results for the Year Ended December 31, 2021 as Compared to the Year Ended December 31, 2020
Revenues
Total revenues were $20.9 million for the year ended December 31, 2021, $1.9 million higher than total revenues of $19.0 million for
the year ended December 31, 2020. Total revenues by type were as follows (dollars in thousands):
Investment advisory and incentive fees
Other revenues
Total revenues
Year Ended December 31,
Change
2021
2020
$
$
$
20,530 $
394
20,924 $
18,288 $
695
18,983 $
2,242
(301)
1,941
%
12.3
(43.3)
10.2
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 and incentive fees were $20.5 million for 2021 compared to $18.3 million for 2020, an increase of $2.2 million. This
increase is the result of the higher average AUM over the period.
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 $12.4 million in 2021, up $1.9 million from $10.5 million in 2020, due to higher assets under management
coupled with superior investment performance.
Other revenues: Other revenues were $0.4 million for 2021 compared to $0.7 million for 2020, a decrease of $0.3 million.
Expenses
Compensation: Compensation, which includes variable compensation, salaries, bonuses and benefits, was $24.5 million for the year
ended December 31, 2021, an increase of $5.1 million from $19.4 million for the year ended December 31, 2020. Fixed compensation
expense, which includes salaries, bonuses and benefits, increased to $11.1 million in 2021 from $9.5 million in 2020. 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 2021, these variable payouts (based on the
investment performance of the products with incentive fees) were $13.4 million, an increase of $3.5 million from $9.9 million in 2020.
Stock-based compensation, which primarily consists of awards accounted for as liabilities, was $2.1 million in 2021, an increase of
$2.3 million from $(0.2) million recorded in 2020 due to increases in the Company's share price in 2021 coupled with a new grant of
awards in May 2021.
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 Chair or his designees pursuant to his employment agreement with AC. In
2021 and 2020, AC recorded management fee expense of $8.4 million and $3.1 million, respectively.
Other operating expenses: Our other operating expenses were $7.1 million in 2021 compared to $8.9 million in 2020, a decrease of
$1.8 million primarily due to a one-time credit recorded in 2021 of $1.5 million.
14
Investment and other non-operating income/(expense), net
Net gain from investments: Net gain from investments is directly related to the performance of our proprietary portfolio. For the year
ended December 31, 2021, net gains from investments were $93.4 million compared to $36.9 million in the prior year primarily driven
by investment income on our holdings of GBL as well as other portfolio increases.
Interest and dividend income: Interest and dividend income increased to $12.1 million in 2021 from $8.7 million in 2020 primarily
due to the $5.1 million ($2 per share) special dividend declared on our holdings of GAMCO in 2021.
Income Taxes
In 2021 we recorded income tax expense of $17.7 million resulting in an effective tax rate (“ETR”) of 21.8%. In 2020 we recorded
income tax expense of $9.4 million resulting in an ETR of 31.4%. The decrease in rate from 2020 is primarily driven by foreign
investments which increased the 2020 rate by 9.9%.
Noncontrolling Interests
Net income attributable to noncontrolling interests was $4.4 million in 2021 compared to $1.0 million in 2020. The increase of $3.4
million was driven primarily by Gabelli Merger Plus+ Trust and mark to market earnings from PMV SPAC.
Net Income/(Loss)
Net income for the year ended December 31, 2021 was $59.2 million compared to net income of $18.8 million for the prior year. The
change was primarily driven by higher gains on our investment portfolio primarily driven by the 2021 market recovery from the
COVID-19 pandemic.
Liquidity and Capital Resources
Our principal assets consist of cash and cash equivalents; short-term treasury securities; marketable securities, primarily equities,
including 2.4 million shares of GAMCO; 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):
Cash flows provided by (used in) continuing operations:
Operating activities
Investing activities
Financing activities
Net increase from continuing operations
Cash flows provided by (used in) discontinued operations:
Operating activities
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Year Ended December 31,
2021
2020
$
$
238,194 $
65,285
(14,394)
289,085
(279,483)
(174,072)
150,949
(302,606)
-
289,085
39,509
328,594 $
114
(302,492)
342,001
39,509
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 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, 2021, we had cash and cash equivalents of $319.0 million, investments in U.S. Treasury Bills of
$61.0 and $260.2 million of investments net of securities sold, not yet purchased of $12.9 million. Included in cash and cash
equivalents are $4.0 million and $7.2 million as of December 31, 2021 and 2020, respectively, which were held by consolidated
investment funds and may not be readily available for the Company to access.
Net cash provided by operating activities from continuing operations was $238.2 million in 2021 due to $278.1 million of net
decreases of securities and net contributions to investment partnerships and our net income of $63.6, offset by $82.9 million of
15
adjustments for noncash items, primarily gains on investments securities and partnership investments and deferred taxes, and $20.6
million in net receivables/payables.
Net cash used in operating activities from continuing operations was $279.5 million in 2020 due to $295.8 million in net purchases of
trading securities, including $315.4 million of net purchases of U.S. Treasury Bills, $10.7 of net income adjusted for noncash items,
primarily unrealized gains on securities and equity in net gains from partnerships, net distributions from Investment Partnerships of
$31.0 million and increases in net receivables/payables of $4.0 million.
Net cash provided by investing activities from continuing operations was $65.3 million in 2021 due to proceeds from sales of
securities of $35.3 million and return of capital on securities of $38.7 million, partially offset by purchases of securities of $8.7
million.
Net cash used in investing activities from continuing operations was $174.1 million in 2020 due to the investment of cash in a trust
account by the PMV SPAC of $175 million, the purchase of our building in London for $11.1 million and purchases of securities of
$2.7 million partially offset by proceeds from sales of securities of $13.1 million and return of capital on securities of $1.6 million.
Net cash used in financing activities from continuing operations was $14.4 million in 2021 resulting from stock buyback payments of
$7.6 million, dividends paid of $4.4 million and redemptions of redeemable noncontrolling interests of $2.3 million.
Net cash provided by financing activities from continuing operations was $150.9 million in 2020 resulting from contributions from
redeemable noncontrolling interests of $162.6 million primarily related to contributions to PMV SPAC and nonredeemable
noncontrolling interests of $2.4 million reduced by dividends paid of $6.7 million and stock buyback payments of $7.4 million. Cash
provided by discontinued operations from the spin-off of Morgan Group was $0.1 million.
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.
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.
See Note B, Significant Accounting Policies, 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 net gain from investments on the consolidated
statements of income.
16
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. The Company has investments in debt
securities accounted for as trading, including investments in marketable securities held in trust by PMV.
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
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 for 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.
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 Other 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 managed funds. 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
17
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 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 Note B, Significant Accounting Policies – Recent Accounting Developments, in the consolidated financial statements.
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.
18
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 (PCAOB ID #34)
Consolidated Financial Statements:
Consolidated Statements of Income for the years ended December 31, 2021 and 2020
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021 and 2020
Consolidated Statements of Financial Condition at December 31, 2021 and 2020
Consolidated Statements of Equity for the years ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
Notes to Consolidated Financial Statements:
A. Organization
B. Significant Accounting Policies
C. Revenue
D. Investments in Securities
E. Investments in Partnerships and Other Entities
F. Fair Value
G. Income Taxes
H. Earnings per Share
I. Related Party Transactions
J. Equity
K. Retirement Plan
L. Guarantees, Contingencies, and Commitments
M. Shareholder Designated Contribution Plan
N. Discontinued Operations
O. Subsequent Events
Page
20
21
22
23
24-26
27-28
29
30
36
37
38
42
44
46
46
48
49
49
50
50
50
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.
19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Associated Capital Group, Inc.
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, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity,
and cash flows, for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period
ended December 31, 2021, 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.
Critical Audit Matters
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required
to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/S/ Deloitte & Touche, LLP
Stamford, Connecticut
March 17, 2022
We have served as the Company’s auditor since 2015.
20
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Revenues
Investment advisory and incentive fees
Other revenues
Total revenues
Expenses
Compensation
Management fee
Other operating expenses
Total expenses
Operating loss
Other income/(expense)
Net gain from investments
Interest and dividend income
Interest expense
Shareholder-designated contribution
Total other income, net
Income/(loss) before income taxes
Income tax expense/(benefit)
Income/(loss) from continuing operations, net of taxes
Income/(loss) from discontinued operations, net of taxes
Income/(loss) before noncontrolling interests
Income/(loss) attributable to noncontrolling interests
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
Net income/(loss) per share attributable to Associated Capital Group, Inc.’s shareholders:
Basic - Continuing operations
Basic - Discontinued operations
Basic - Total
Diluted - Continuing operations
Diluted - Discontinued operations
Diluted - Total
Weighted average shares outstanding:
Basic
Diluted
Actual shares outstanding
See accompanying notes.
Year Ended December 31,
2021
2020
$
20,530 $
394
20,924
24,457
8,426
7,117
40,000
(19,076)
93,405
12,109
(310)
(4,789)
100,415
81,339
17,705
63,634
-
63,634
4,431
59,203 $
2.68 $
-
2.68 $
2.68 $
-
2.68 $
$
$
$
$
$
18,288
695
18,983
19,436
3,101
8,915
31,452
(12,469)
36,864
8,675
(180)
(3,007)
42,352
29,883
9,374
20,509
(632)
19,877
1,061
18,816
0.87
(0.03)
0.84
0.87
(0.03)
0.84
22,120
22,120
22,369
22,369
22,058
22,274
21
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Income/(loss) before noncontrolling interests
Less: Comprehensive income/(loss) attributable to noncontrolling interests
Comprehensive income/(loss) attributable to Associated Capital Group, Inc.
See accompanying notes.
Year Ended December 31,
2021
2020
$
$
63,634 $
4,431
19,877
1,061
59,203 $
18,816
22
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
December 31,
2021
December 31,
2020
ASSETS
Cash and cash equivalents
Investments in U.S. Treasury Bills
Investments in equity securities (Including GBL stock with a value of $60.4 million and $48.9 million,
$
respectively)
Investments in affiliated registered investment companies
Investments in partnerships
Receivable from brokers
Investment advisory fees receivable
Receivable and investment in note receivable from affiliates
Deferred tax assets, net
Goodwill
Other assets
Investments in marketable securities held in trust
Total assets
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Payable to brokers
Income taxes payable, including deferred tax liabilities, net
Compensation payable
Securities sold, not yet purchased
Payable to affiliates
Accrued expenses and other liabilities
Deferred underwriting fee payable
PMV warrant liability
Total liabilities
Redeemable noncontrolling interests
Commitments and contingencies (Note J)
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; 6,629,254 shares issued,
respectively; 3,095,169 and 3,311,127 shares outstanding, respectively
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued;
18,962,918 outstanding, respectively
Additional paid-in capital
Retained earnings
Treasury stock, at cost (3,534,085 and 3,318,127 shares, respectively)
Total Associated Capital Group, Inc. equity
Noncontrolling interests
Total equity
Total liabilities and equity
As of December 31, 2021 and 2020, certain balances include amounts related to consolidated variable
interest entities (“VIEs”) and voting interest entities (“VOEs”). See Footnote E.
See accompanying notes.
23
$
$
$
319,048 $
60,996
39,509
344,453
273,087
134,548
154,460
42,478
8,315
10,094
-
3,519
21,682
175,109
1,203,336 $
249,887
170,605
123,994
24,677
7,346
4,743
2,207
3,519
28,565
175,040
1,174,545
9,339 $
8,575
19,730
12,905
-
3,580
6,125
5,280
65,534
6,496
9,746
18,567
17,571
2,188
5,635
6,125
-
66,328
202,456
206,828
6
6
19
990,069
68,435
(121,427)
937,102
(1,756)
935,346
1,203,336 $
19
999,047
13,649
(113,783)
898,938
2,451
901,389
1,174,545
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share data)
For the Three Months Ended March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021
Associated Capital Group, Inc. shareholders
Common
Stock
Retained
Earnings
Additional
Paid-in
Capital
Treasury
Stock
Total
Noncontrolling
Interests
Total
Equity
Redeemable
Noncontrolling
Interests
Balance at December
31, 2020
$
25 $
13,649 $ 999,047 $ (113,783) $ 898,938 $
2,451 $ 901,389 $
206,828
Contributions from
redeemable
noncontrolling
interests
Redemptions of
noncontrolling
interests
Net income
Purchase of treasury
stock
Balance at March 31,
-
-
-
-
-
-
18,555
-
-
-
-
-
-
-
136
-
- 18,555
-
-
- 18,555
-
(12,066)
172
-
-
(4,198)
(4,198)
- (4,198)
-
2021
$
25 $
32,204 $ 999,047 $ (117,981) $ 913,295 $
2,451 $ 915,746 $
195,070
Contributions from
redeemable
noncontrolling
interests
Net income/(loss)
Dividends declared
($0.10 per share)
Purchase of treasury
stock
Accretion of
redeemable
noncontrolling
interest
Other changes to
redeemable
noncontrolling
interests
Balance at June 30,
-
-
-
-
-
-
-
29,716
(2,211)
-
-
-
-
- 29,716
-
-
- 29,716
-
665
(532)
-
(2,211)
- (2,211)
-
-
(1,893)
(1,893)
- (1,893)
-
-
-
(6,001)
-
(6,001)
(2,892)
(8,893)
8,893
-
-
-
-
-
-
(7,527)
2021
$
25 $
59,709 $ 993,046 $ (119,874) $ 932,906 $
(441) $ 932,465 $
196,569
Redemptions of
noncontrolling
interests
Net income/(loss)
Purchase of treasury
stock
Accretion of
redeemable
noncontrolling
interest
Balance at September
-
-
-
-
1,503
-
-
-
-
-
1,503
-
122
-
1,625
(2,161)
3,879
-
-
(1,396)
(1,396)
- (1,396)
-
-
-
(1,028)
-
(1,028)
(478)
(1,506)
1,506
30, 2021
$
25 $
61,212 $ 992,018 $ (121,270) $ 931,985 $
(797) $ 931,188 $
199,793
Redemptions of
noncontrolling
interests
Net income/(loss)
-
-
-
9,429
-
-
24
-
-
-
9,429
-
15
-
9,444
(973)
775
Dividends declared
($0.10 per share)
Purchase of treasury
stock
Accretion of
redeemable
noncontrolling
interest
Other changes to
redeemable
noncontrolling
interests
Balance at December
-
-
-
-
(2,206)
-
-
-
-
(2,206)
(157)
(157)
-
-
(2,206)
(157)
-
-
-
(1,949)
-
(1,949)
(974)
(2,923)
2,923
-
-
-
-
-
-
(62)
31, 2021
$
25 $
68,435 $ 990,069 $ (121,427) $ 937,102 $
(1,756) $ 935,346 $
202,456
See accompanying notes.
25
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share data)
For the three months ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020
Associated Capital Group, Inc. shareholders
Retained
Earnings/
(Accumulated
Deficit)
Additional
Paid-in
Capital
Common
Stock
Treasury
Stock
Total
Noncontrolling
Interest
Total
Equity
Redeemable
Noncontrolling
Interests
Balance at December
31, 2019
$
25 $
(701) $ 1,003,450 $ (106,342) $ 896,432 $
1,003 $ 897,435 $
50,385
Redemptions of
noncontrolling
interests
Net income/(loss)
Purchase of treasury
stock
Balance at March 31,
-
-
-
-
(73,355)
-
-
-
-
- (73,355)
-
-
(52) (73,407)
(531)
(3,945)
-
-
(3,225)
(3,225)
- (3,225)
-
2020
$
25 $
(74,056) $ 1,003,450 $ (109,567) $ 819,852 $
951 $ 820,803 $
45,909
-
35,237
(2,237)
-
-
-
-
-
- 35,237
-
-
(48) 35,189
(1,167)
2,436
-
(2,237)
- (2,237)
-
-
(1,068)
(1,068)
- (1,068)
2020
$
25 $
(41,056) $ 1,003,450 $ (110,635) $ 851,784 $
903 $ 852,687 $
47,178
-
-
-
5,815
-
(4,403)
-
-
-
-
-
-
-
(4,403)
-
5,815
-
-
(903)
(5,306)
156,049
-
2,072
-
2,072
5,815
-
-
(1,101)
(1,101)
- (1,101)
30, 2020
$
25 $
(35,241) $ 999,047 $ (111,736) $ 852,095 $
2,072 $ 854,167 $
204,164
Contributions from
redeemable
noncontrolling
interests
PMV Sponsor
members' interest
Net income/(loss)
Dividends declared
($0.10 per share)
Purchase of treasury
stock
Balance at December
-
-
-
-
-
-
-
51,120
(2,230)
-
-
-
-
-
-
-
-
-
- 51,120
-
379
379
- 51,120
-
(2,230)
- (2,230)
-
-
(2,047)
(2,047)
- (2,047)
1,031
-
1,633
-
-
31, 2020
$
25 $
13,649 $ 999,047 $ (113,783) $ 898,938 $
2,451 $ 901,389 $
206,828
See accompanying notes.
26
Redemptions of
noncontrolling
interests
Net income/(loss)
Dividends declared
($0.10 per share)
Purchase of treasury
stock
Balance at June 30,
-
-
-
-
Contributions from
redeemable
noncontrolling
interests
Spin-off of MGHL
PMV Sponsor
members' interest
Net income
Purchase of treasury
stock
Balance at September
-
-
-
-
-
-
-
-
937
-
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Operating activities
Net income/(loss)
Less: Loss from discontinued operations, net of taxes
Income/(loss) from continuing operations
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Equity in net (gains) from partnerships
Depreciation and amortization
Deferred income taxes
Donated securities
Unrealized (gains)/losses on securities
Dividends received as securities
Realized (gains)/losses on sales of securities
(Increase)/decrease in assets:
Investments in trading securities
Investments in partnerships:
Contributions to partnerships
Distributions from partnerships
Receivable from affiliates
Receivable from brokers
Investment advisory fees receivable
Other assets
Increase/(decrease) in liabilities:
Payable to affiliates
Payable to brokers
Income taxes payable
Compensation payable
Accrued expenses and other liabilities
Total adjustments
Net cash provided by/(used in) operating activities
Investing activities
Maturities of marketable securities held in trust
Purchases of marketable securities held in trust, net
Purchases of securities
Proceeds from sales of securities
Return of capital on securities
Purchase of building
Investment of cash in Trust Account
Net cash provided by/(used in) investing activities
Year Ended December 31,
2021
2020
$
63,634 $
-
63,634
19,877
632
20,509
(23,392)
379
8,742
2,213
(26,791)
(5,066)
(38,971)
(15,000)
52
(209)
891
(20,213)
-
3,299
281,986
(295,795)
(15,172)
11,308
(285)
(10,097)
(916)
(1,454)
(2,188)
2,843
(7,706)
1,163
(2,036)
174,560
238,194
(4,829)
35,847
(405)
(1,535)
2,236
(4,383)
1,705
(8,393)
6,176
(970)
1,534
(299,992)
(279,483)
175,109
(175,109)
(8,738)
35,329
38,694
-
-
65,285 $
-
-
(2,749)
13,115
1,646
(11,084)
(175,000)
(174,072)
$
27
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
Financing activities
Dividends paid
Purchase of treasury stock
Contributions/(redemptions) from/(of) redeemable noncontrolling interests
Contributions from nonredeemable noncontrolling interests
Net cash provided by (used in) financing activities
Cash flows of discontinued operations
Net cash provided by (used in) operating activities
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
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 at end of period
Non-cash activity:
Year Ended December 31,
2021
2020
(4,417)
(7,644)
(2,333)
-
(14,394)
(6,716)
(7,441)
162,655
2,451
150,949
-
114
289,085 (302,492)
342,001
39,509
39,509
328,594 $
310 $
16,741 $
177
2,000
319,048
9,546
328,594 $
39,509
-
39,509
$
$
$
$
- On September 21, 2020 a deferred underwriting fee of $6.1 million was recorded.
- On December 30, 2020 equity securities in the amount of $4.2 million were distributed from investments in partnerships to
investments in equity securities.
See accompanying notes.
28
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, and we derive investment income/(loss) from
proprietary investment of cash and other assets in our operating business.
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 across a range of risk and event arbitrage portfolios and in equity
event-driven value strategies. The businesses earn management and incentive fees from their advisory activities. Management fees are
largely based on a percentage of assets under management. Incentive fees are based on a 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”).
PMV Consumer Acquisition Corp.
On September 22, 2020, Associated Capital announced the $175 million initial public offering of its special purpose acquisition
corporation, PMV Consumer Acquisition Corp. (NYSE:PMVC).
PMV Consumer Acquisition Corp. (“PMV”, or “PMV SPAC”) was created to pursue an initial business combination following the
consumer globally with companies having an enterprise valuation in the range of $200 million to $3.5 billion. PMV Consumer
Acquisition Holding Company, LLC (“Sponsor”) was created to assist PMV in sourcing, analyzing and consummating acquisition
opportunities for that initial business combination.
The Sponsor and PMV have been consolidated in the financial statements of AC beginning in September 2020 because AC has a
controlling financial interest in these entities. This resulted in the consolidation of $163.8 million of assets, $11.5 million of liabilities,
$161.8 million of redeemable noncontrolling interests and $1.8 million of noncontrolling interests relating to PMV and the Sponsor as
of December 31, 2021. In addition, there are several other entities that are consolidated within the financial statements. The details on
the impact of consolidating these entities on the consolidated financial statements can be seen in Note E. Investment Partnerships and
Other Entities.
See Note E for a further discussion of PMV Consumer Acquisition Corp. as well as its registration statement, Annual Reports, and
Quarterly Reports, which are all located on the U.S. Securities and Exchange Commission website https://www.sec.gov under the
symbol PMVC.
AC 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 2,417,500 shares as of December 31, 2021.
Morgan Group Spin-off
On March 16, 2020, the Company’s Board of Directors approved the spin-off of Morgan Group Holding Co. (“Morgan Group”) to
AC’s shareholders. On August 5, 2020, AC distributed its 83.3% stake in Morgan Group to shareholders of record as of July 30, 2020.
Following the 1 for 100 reverse split on June 10, 2020, AC shareholders received approximately 0.022356 shares of Morgan Group
common stock for each share of AC common stock they held.
The historical financial results of Morgan Group have been reflected in the Company’s consolidated financial statements as
discontinued operations for all periods presented through August 5, 2020.
29
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.
Amounts in Note E, Investment Partnerships and Other Entities, related to PMV SPAC were reported in the impact of consolidating
VOE table as of December 31, 2020. This prior year disclosure in Note E has been revised to correctly include the assets, liabilities,
redeemable noncontrolling interests and total net interests of PMV SPAC of $14.1 million in the VIE table.
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 with any unrealized gains or losses reported in
current period earnings in net gain from investments on the consolidated statements of income. 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 net gain from investments on the consolidated statements of income.
Management determines the appropriate classification of debt securities at the time of purchase. Government debt securities with
maturities of greater than three months at the time of purchase are considered investments in debt securities. A majority of our
investments in debt securities are accounted for as trading securities, except in 2020 in which investments in marketable securities
held in trust by PMV were accounted for as held to maturity.
Investments in securities are reflected in U.S. Treasury Bills, investments in equity securities, investments in affiliated registered
investment companies and investments in marketable securities held in trust.
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
from investments on the consolidated statements of income.
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 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.
30
• 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 short-term Treasury Bills and 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.
Investment in note receivable from affiliate – Investment in note receivable from affiliate is not measured at fair value on a recurring
basis, however fair value is estimated based on observed market inputs for similar instruments and therefore, is classified as Level 2.
PMV warrant liability – PMV warrant liability is valued based on quoted prices from an exchange and is categorized in Level 1 of the
fair value hierarchy.
Investments in marketable securities held in trust account
At December 31, 2021 and 2020, debt securities of our consolidated SPAC, PMV, are held in a trust account and consist of U.S.
Treasury Bills accounted for as trading and held-to-maturity, respectively, in accordance with ASC 320 “Investments – Debt and
Equity Securities.” Trading securities are recorded at fair value, with changes in fair value recorded in the consolidated statements of
income. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying consolidated balance sheet and
adjusted for the amortization or accretion of premiums or discounts.
Receivables from Affiliates and Payables to Affiliates
Receivables from affiliates consist primarily of sub-advisory fees due from Gabelli Funds, LLC, a subsidiary of GAMCO. 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 AC Spin-off.
Receivables from and Payables to Brokers
Receivables from and payables to brokers consist of amounts related to purchases and sales of securities, restricted cash held on
deposit and 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 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
31
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 more than an insignificant economic interest 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 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.
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 are 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 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
investments 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 from investments on the
consolidated statements of income. See Note D, Investments in Securities, for additional information.
32
Major Revenue-Generating Services and Revenue Recognition
The Company’s revenues are derived primarily from investment advisory and incentive fees.
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.
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-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 services.
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.
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 and are included in other assets on the consolidated statements of financial condition.
33
Fixed assets as of December 31, 2021 and 2020 consisted of the following:
Buildings
Equipment
Total
Less: accumulated depreciation
Net book value
Allocated Expenses
2021
2020
$
$
17,745 $
206
17,951
(761)
17,190 $
17,727
186
17,913
(383)
17,530
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 (primarily GAMCO) 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.
The compensation expense and related payroll taxes and benefits of certain dual employees that provide services to both AC and
affiliates are allocated 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 Chair or his designees in
accordance with his employment agreement.
Stock-Based Compensation
From time to time, the Company’s Board of Directors approves grants of Phantom Restricted Stock awards (“Phantom RSAs”). The
Phantom RSAs are 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. The Company amortizes each award based on the applicable 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.
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, 2021 and 2020, 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 2021 or 2020.
Income Taxes
For purposes of the preparation of the consolidated financial statements, the provision for income taxes is computed using the asset
34
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
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 or other entities 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.
Redeemable noncontrolling Interests-PMV
The Company accounts for the common stock held by noncontrolling interest holders of our consolidated SPAC, PMV, as subject to
possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Conditionally redeemable common stock (including common stock that features redemption rights that is
either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the
Company’s control) is classified as temporary equity. PMVs common stock features certain redemption rights that are considered to
be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2021,
common stock held by noncontrolling interest holders is presented at redemption value in redeemable noncontrolling interests, outside
of the stockholders’ equity section of the Company’s balance sheet.
The discount amount related to the issuance of redeemable noncontrolling interest is being amortized over a period of 18 months
through an adjustment to additional paid-in capital and noncontrolling interest (proportionate to our ownership of the SPAC Sponsor)
and is also adjusted periodically for income/loss allocated to redeemable noncontrolling interest.
For the years ended December 31, 2021 and 2020, 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.
PMV Warrant Liability
In connection with their initial public offering, PMV sold 17,500,000 Units, at $10.00 per Unit. Each Unit consists of one share of
Class A common stock and one-half of one redeemable warrant (“Public Warrant”).
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the
warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging
(“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the
definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity
classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of
each subsequent quarterly period end date while the warrants are outstanding.
35
For warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value
on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized in
net gain from investments on the consolidated statements of income.
The warrant liability related to the Public Warrant was charged against the redeemable noncontrolling interest of PMV.
Offering Costs
Offering costs incurred by the initial public offering of PMV consist of legal, accounting, underwriting fees and other costs. Offering
costs amounting to $9,957,390, including deferred underwriting fees of $6,125,000, net of a $175,000 credit paid by the under writer,
were allocated as follows, $502,848 in offering costs was charged to expense and $9,454,542 was charged to redeemable
noncontrolling interest of PMV, similar to the warrant liability.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash
equivalents and receivables 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,
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 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. Further, 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The
amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The
amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending
the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a
material impact on our financial condition or results of operations.
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
36
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.
Total revenues by type were as follows for the years ended December 31, 2021 and 2020 (in thousands):
Revenues
Investment advisory and incentive fees
Asset-based advisory fees
Performance-based advisory fees
Sub-advisory fees
Other
Miscellaneous
Total
D. Investments in Securities
Year Ended December 31,
2021
2020
$
5,021 $
7,006
8,503
20,530
5,415
5,706
7,167
18,288
394
394
695
695
$
20,924 $
18,983
Investments in securities at December 31, 2021 and 2020 consisted of the following (in thousands):
Debt - Trading Securities:
U.S. Treasury Bills
Equity Securities:
Common stocks
Mutual funds
Other investments
Total equity securities
Total investments in securities
2021
2020
Cost
Fair Value
Cost
Fair Value
$
60,992 $
60,996 $
344,367 $ 344,453
239,383
524
6,253
246,160
307,152 $
265,156
1,351
6,580
273,087
334,083 $
546
8,806
239,240 237,377
1,294
11,216
248,592
249,887
592,959 $ 594,340
$
Investments in marketable securities held in trust
$
175,109
$
175,109
Our held to maturity investments at December 31, 2021 and 2020 consisted of the following (in thousands):
December 31, 2021
Amortized Cost
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Held to maturity:
Investment in note receivable from affiliate(1)
$ 5,066 $ - $ -
$ 5,066
(1) Investment in note receivable from affiliate relates to 2-Year Puttable and Callable Subordinated Notes due 2023 issued as part of
a 2021 special dividend on GAMCO’s Class A Common Stock and Class B Common Stock. The Company has the intent to hold these
investments until maturity, and as such they were recorded at amortized cost.
Amortized Cost
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
December 31, 2020
Held to maturity:
Investments in marketable securities held in trust(2) $
175,040 $ - $ -
$ 175,040
(2) At December 31, 2020, marketable securities held in the trust account through PMV were comprised primarily of U.S. Treasury
Bills which mature in less than one year with an amortized cost and fair value of approximately $175 million, due to the short maturity
profile.
37
Securities sold, not yet purchased at December 31, 2021 and 2020 consisted of the following (in thousands):
Equity securities:
Common stocks
Other investments
Total securities sold, not yet purchased
2021
2020
Cost
Fair Value
Cost
Fair Value
$
$
9,021 $
2,767
11,788 $
9,838 $
3,067
12,905 $
14,369 $
1,209
15,578 $
16,090
1,481
17,571
Investments in affiliated registered investment companies at December 31, 2021 and 2020 consisted of the following (in thousands):
Equity securities:
Closed-end funds
Mutual funds
Total investments in affiliated registered investment companies
E. Investment Partnerships and Other Entities
2021
2020
Cost
Fair Value
Cost
Fair Value
$
$
42,484 $
49,362
91,846 $
64,381 $
70,167
134,548 $
76,462 $ 106,719
63,886
48,395
124,857 $ 170,605
The Company is general partner or co-general partner of various affiliated entities whose underlying assets consist primarily of
marketable securities (“Affiliated Entities”). We also had investments in unaffiliated partnerships, offshore funds and other entities of
$41.9 and $24.9 million at December 31, 2021 and 2020, 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.
Investments in partnerships that are not required to be consolidated are accounted for using the equity method and are included in
investments in partnerships on the consolidated statements of financial condition. The Company had investments in Affiliated Entities
totaling $112.6 million and $99.1 million at December 31, 2021 and 2020 respectively. The Company reflects the equity in earnings of
these Affiliated Entities and Unaffiliated Entities as net gain from investments on the consolidated statements of income.
The summarized financial information of the Company’s equity method investments as of and for the years ended December 31, 2021
and 2020 are as follows:
Total assets
Total liabilities
Total equity
Net income/(loss)
(in millions)
2021
2020
$
1,818 $
358
1,460
1,653
326
1,327
Year Ended December 31,
2021
2020
239
64
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 and Affiliated 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.
PMV Consumer Acquisition Corp.
The Company consolidates the assets, liabilities and the results of operations of both PMV and Sponsor. The Company invested $4.0
million, or approximately 62% of the $6.48 million total Sponsor partnership commitment. The Sponsor is managed primarily by
Company executives. The Company has determined that the Sponsor is a variable interest entity (VIE) and that the Company is the
38
primary beneficiary and therefore consolidates the assets and liabilities and results of operations of the Sponsor. In addition, the
Company has determined that PMV is a VIE due to the lack of equity at risk and therefore is consolidated by the Sponsor, who is
deemed to be the primary beneficiary. Neither AC nor PMV have a right to the benefits from nor does it bear the risks associated with
the U.S Treasury Bills held in trust assets held by PMV. Further, if the Company were to liquidate, the marketable securities held in
trust assets would not be available to its general creditors, and as a result, the Company does not consider these assets available for the
benefit of its investors.
The registration statement for the PMV initial public offering was declared effective on September 21, 2020. On September 24, 2020,
PMV consummated the initial public offering of 17,500,000 units (the “Units” and, with respect to the shares of common stock
included in the Units Sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $175,000,000.
Simultaneously with the closing of the initial public offering, PMV consummated the sale of 6,150,000 warrants (the “Private
Warrants”) at a price of $1.00 per Private Warrant in a private placement to the Sponsor, generating gross proceeds of $6,150,000.
AC invested $10 million in the Class A shares in PMV and the Sponsor invested $6.15 million in Private Warrants, both of which
eliminate in the consolidation of PMV.
Following the closing of the initial public offering on September 24, 2020, an amount of $175,000,000 ($10.00 per Unit) from the net
proceeds of the sale of the Units in the initial public offering and the sale of the Private Warrants was placed in a trust account (the
“Trust Account”) located in the United States, which are generally invested in U.S. Treasury Bills.
PMV will have until September 24, 2022 to complete a business combination. If PMV is unable to complete a business combination
by September 24, 2022, PMV will cease all operations except for the purpose of winding up, and as promptly as reasonably possible
but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account. The deferred fee will be
forfeited by the underwriters solely in the event that we fail to complete a business combination within the required time period,
subject to the terms of the underwriting agreement.
The following table reflects the net impact of the consolidated investment partnerships and other entities (“Consolidated Entities”) on
the consolidated statements of financial condition (in thousands):
Assets
Cash and cash equivalents
Investments in U.S. Treasury Bills
Investments in securities
Investments in affiliated registered investment companies
Investments in partnerships
Receivable from brokers
Investment advisory fees receivable
Other assets (1)
Investments in marketable securities held in trust
Total assets
Liabilities and equity
Securities sold, not yet purchased
Accrued expenses and other liabilities (1)
Redeemable noncontrolling interests
Total equity
Total liabilities and equity
Prior to
Consolidation
December 31, 2021
Consolidated
Entities
As Reported
$
315,009 $
60,996
184,229
186,474
174,683
21,993
8,320
39,400
-
991,104 $
11,199 $
33,825
-
946,080
991,104 $
$
$
$
4,039 $
-
88,858
(51,926)
(20,223)
20,485
(5)
(4,105)
175,109
212,232 $
1,706 $
18,804
202,456
(10,734)
212,232 $
319,048
60,996
273,087
134,548
154,460
42,478
8,315
35,295
175,109
1,203,336
12,905
52,629
202,456
935,346
1,203,336
39
Assets
Cash and cash equivalents
Investments in U.S. Treasury Bills
Investments in securities
Investments in affiliated registered investment companies
Investments in partnerships
Receivable from brokers
Investment advisory fees receivable
Other assets (1)
Investments in marketable securities held in trust
Total assets
Liabilities and equity
Securities sold, not yet purchased
Accrued expenses and other liabilities (1)
Redeemable noncontrolling interests
Total equity
Total liabilities and equity
Prior to
Consolidation
December 31, 2020
Consolidated
Entities
As Reported
$
32,347 $
334,954
167,317
221,318
146,162
6,662
7,400
31,647
947,807 $
9,514 $
36,904
-
901,389
947,807 $
$
$
$
7,162 $
9,499
82,570
(50,713)
(22,168)
18,015
(54)
7,387
175,040
226,738 $
8,057 $
11,853
206,828
-
226,738 $
39,509
344,453
249,887
170,605
123,994
24,677
7,346
39,034
175,040
1,174,545
17,571
48,757
206,828
901,389
1,174,545
(1) Represents the summation of multiple captions from the consolidated statements of financial condition
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, net
Income before income taxes
Income tax expense
Income before noncontrolling interests
Income attributable to noncontrolling interests
Net income
Total revenues
Total expenses
Operating loss
Total other income, net
Income before income taxes
Income tax expense/(benefit)
Income from continuing operations, net of taxes
Loss from discontinued operations, net of taxes
Income before noncontrolling interests
Income/(loss) attributable to noncontrolling interests
Net income
Year Ended December 31, 2021
Prior to
Consolidation
Consolidated
Entities
As Reported
23,852 $
39,245
(15,393)
92,301
76,908
17,705
59,203
-
59,203 $
(2,928) $
755
(3,683)
8,114
4,431
-
4,431
4,431
- $
20,924
40,000
(19,076)
100,415
81,339
17,705
63,634
4,431
59,203
Year Ended December 31, 2020
Prior to
Consolidation
Consolidated
Entities
As Reported
19,473 $
28,652
(9,179)
38,033
28,854
9,426
19,428
(632)
18,796
(20)
18,816 $
(490) $
2,800
(3,290)
4,319
1,029
(52)
1,081
-
1,081
1,081
- $
18,983
31,452
(12,469)
42,352
29,883
9,374
20,509
(632)
19,877
1,061
18,816
$
$
$
$
40
Variable Interest Entities
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.
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 brokers
Investments in partnerships and affiliates
Investments in marketable securities held in trust
Other assets
Accrued expenses and other liabilities
PMV Warrant liability
Redeemable noncontrolling interests
Nonredeemable noncontrolling interests
AC Group’s net interests in consolidated VIEs
Voting Interest Entities
December 31,
2021
December 31,
2020
$
$
1,911 $
11,227
1,106
-
175,109
103
(7,074 )
(5,280 )
(162,314 )
1,757
16,545 $
3,930
14,589
2,784
376
175,040
7,367
(6,425)
-
(167,382)
(2,451)
27,828
We have an investment partnership that is consolidated as a VOE for both 2021 and 2020 because AC has a controlling interest in the
entity. This resulted in the consolidation of $109.3 million of assets, $8.4 million of liabilities, and $40.1 million of redeemable
noncontrolling interests for 2021 and $112.6 million of assets, $13.6 million of liabilities, and $39.4 million of redeemable
noncontrolling interests for 2020. AC’s net interest in the consolidated VOE for 2021 and 2021 was $60.8 million and $59.6 million,
respectively.
Equity Method Investments
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.
41
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, 2021 and 2020 and indicate the fair value hierarchy of the valuation techniques utilized by the
Company to determine such fair value (in thousands):
Assets
Cash equivalents
Investments in securities (including GBL
stock):
Trading - U.S. Treasury Bills
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
PMV warrant liability
Total liabilities at fair value
December 31, 2021
Quoted Prices in Active
Markets for Identical
Assets (Level 1)
$
314,172
Significant Other
Observable
Inputs (Level 2)
-
$
Significant
Unobservable
Inputs (Level 3)
-
$
Total
$
314,172
60,996
260,763
1,351
4,833
327,943
56,381
70,167
126,548
454,491
768,663
9,838
1,959
11,797
5,280
17,077
$
$
$
-
2,320
-
1,220
3,540
-
-
-
3,540
3,540
-
1,108
1,108
-
1,108
$
$
$
-
2,073
-
527
2,600
8,000
-
8,000
10,600
10,600
-
-
-
-
-
$
$
$
60,996
265,156
1,351
6,580
334,083
64,381
70,167
134,548
468,631
782,803
9,838
3,067
12,905
5,280
18,185
$
$
$
42
Assets
Cash equivalents
Investments in securities (including GBL
stock):
Trading - U.S. Treasury Bills
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
December 31, 2020
Quoted Prices in Active
Markets for Identical
Assets (Level 1)
$
34,010
Significant Other
Observable
Inputs (Level 2)
-
$
Significant
Unobservable
Inputs (Level 3)
-
$
Total
$
34,010
344,453
231,901
1,294
6,133
583,781
104,719
63,886
168,605
752,386
786,396
16,090
543
16,633
$
$
$
-
5,440
-
621
6,061
-
-
-
6,061
6,061
-
938
938
$
$
$
-
36
-
4,462
4,498
2,000
-
2,000
6,498
6,498
-
-
-
$
$
$
344,453
237,377
1,294
11,216
594,340
106,719
63,886
170,605
764,945
798,955
16,090
1,481
17,571
$
$
$
The following table presents additional information about assets and liabilities by major category measured at fair value on a recurring
basis as of the dates specified (in thousands) and for which the Company has utilized Level 3 inputs to determine fair value:
Assets:
Beginning balance
Total gains/(losses)
Purchases
Sales/return of capital
Transfers
Ending balance
Year Ended December 31, 2021
Year Ended December 31, 2020
Common
Stocks
Other
Total
Common
Stocks
Other
Total
$
$
36 $
9
-
-
-
45 $
6,462 $
(555)
6,053
(1,046)
(359)
10,555 $
6,498 $
(546)
6,053
(1,046)
(359)
10,600 $
89 $
(53)
-
-
-
36 $
4,134
16
2,000
(1,800)
2,112
6,462
$
$
4,223
(37)
2,000
(1,800)
2,112
6,498
Changes in net unrealized gain/(loss) included
in net gain from investments related to Level
3 assets still held as of the reporting date
$
9 $
(555) $
(546) $
(31) $
(22)
$
(53)
Year Ended December 31, 2021
PMV
Warrant
Liability
Other
Total
Liabilities:
Beginning balance
Total (gains)/losses
Issuances
Transfers
Ending balance
Changes in net unrealized (gain) included in
$
$
net gain from investments related to Level 3
assets still held as of the reporting date
$
- $
(3,053)
8,333
(5,280)
- $
- $
- $
-
-
-
- $
-
(3,053)
8,333
(5,280)
-
- $
-
43
There was no PMV Warrant liability balance for the year ended December 31, 2020.
Total realized and unrealized gains and losses for level 3 assets are reported in net gain from investments in the consolidated
statements of income.
During the year ended December 31, 2021, the Company transferred no investments from Level 1 to Level 3. For the year ended
December 31, 2020, the Company transferred investments with a value of approximately $2,221,000, respectively, from Level 1 to
Level 3 due to the unavailability of observable inputs. For the years ended December 31, 2021 and 2020, the Company transferred
investments with a value of approximately $359,000 and $109,000 from Level 3 to Level 1 due to increased availability of market
price quotations.
Transfers out of Level 3 liabilities during the year ended December 31, 2021 reflected the transfer of the PMV Warrant Liability to
Level 1 principally due increased availability of market price quotations.
The aforementioned warrant liabilities are not subject to qualified hedge accounting.
The following table presents the carrying amounts and estimated fair values of financial assets that are not measured at fair value on a
recurring basis (in thousands) and their respective levels within the fair value hierarchy:
Assets
Investment in note receivable from affiliate(1)
Total assets
As of December 31, 2021
Level Within
Fair Value
Hierarchy
Fair Value
Amortized
Cost
2
$
$
5,066 $
5,066 $
5,066
5,066
(1) Included in Receivable and investment in note receivable from affiliates in the consolidated statement of financial condition.
There was no balance in 2020.
G. Income Taxes
The provision for income taxes for the years ended December 31, 2021 and 2020 consisted of the following (in thousands):
Federal:
Current
Deferred
State and local:
Current
Deferred
Foreign:
Current
Deferred
Total
2021
2020
$
$
8,512 $
7,966
453
722
36
16
17,705 $
9,051
(193)
532
(16)
-
-
9,374
44
A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2021 and 2020 is set forth
below:
Statutory Federal income tax rate
State income tax, net of Federal benefit
Dividends received deduction
Deferred tax asset valuation allowance
Foreign investments
Foreign-derived intangible income
Noncontrolling interests
Nondeductible compensation
Other
Effective income tax rate
2021
2020
21.0
1.2
(1.0)
(0.5)
(0.5)
(0.7)
(1.1)
2.0
1.4
21.8%
21.0%
1.3
(1.4)
1.5
9.9
-
(1.3)
-
0.4
31.4%
Significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows (in thousands):
Deferred tax assets:
Stock-based compensation expense
Deferred compensation
Shareholder-designated contribution carryover
Other
Deferred tax liabilities:
Investments in securities and partnerships
Other liabilities
Gross deferred tax assets /(liabilities)
Valuation allowance
Net deferred tax assets/(liabilities)
2021
2020
$
$
683 $
277
2,990
755
4,705
(9,683)
(182)
(9,865)
(5,160)
(1,336)
(6,496) $
430
1,825
3,244
53
5,552
(1,300)
(201)
(1,501)
4,051
(1,844)
2,207
The Company believes that it is more-likely-than-not that the benefit from a portion of the shareholder-designated charitable
contribution carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $1,336
and $1,844 as of December 31, 2021 and 2020, respectively, on the deferred tax assets related to these charitable contribution
carryforwards.
The Company records penalties and interest related to tax uncertainties in income taxes. These amounts are included in accrued
expenses and other liabilities on the consolidated statements of financial condition. As of and for the periods ended December 31,
2021 and 2020, the Company had not established a liability for uncertain tax positions as no such positions existed.
The Company remains subject to income tax examination by the IRS for the years 2018 through 2020 and state examinations for years
after 2016.
Prior to 2021 the Company filed certain state and local tax returns jointly with GAMCO under a tax sharing agreement.
45
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, plus any potentially dilutive securities (if any) outstanding during the period.
The computations of basic and diluted net income/(loss) per share are as follows (in thousands, except per share data):
(In thousands, except per share amounts)
Income/(loss) from continuing operations
Less:
Income/(loss) attributable to noncontrolling interests
Net income/(loss) from continuing operations attributable to Associated Capital Group, Inc.’s
shareholders
Year Ended December 31,
2021
2020
$
63,634 $
20,509
4,431
1,061
59,203
19,448
Income/(loss) from discontinued operations
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
$
-
59,203 $
(632)
18,816
Weighted average number of shares of Common Stock outstanding - basic
22,120
22,369
Weighted average number of shares of Common Stock outstanding - diluted
22,120
22,369
Basic
Net income/(loss) from continuing operations
Net income/(loss) from discontinued operations
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per
share
Diluted:
Net income/(loss) from continuing operations
Net income/(loss) from discontinued operations
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per
share
I. Related Party Transactions
The following is a summary of certain related party transactions.
$
$
$
$
2.68 $
-
2.68 $
2.68 $
-
2.68 $
0.87
(0.03)
0.84
0.87
(0.03)
0.84
GGCP, Inc., a private company controlled by the Executive Chair, indirectly owns a majority of our Class B stock, representing
approximately 96% of the combined voting power and 84% of the outstanding shares of our common stock at December 31, 2021.
Investments in Securities
At December 31, 2021 and 2020, the value of the Company’s investment in GAMCO common stock (GBL) was $60.4 million and
$48.9 million, respectively. As of December 31, 2021 and 2020, AC and its subsidiaries own approximately 2.4 million and 2.8
million shares respectively of GAMCO Class A stock. The Company recorded investment income of $5.4 million and $2.8 million in
2021 and 2020, respectively from GAMCO which is included in interest and dividend income on the consolidated statements of
income. For the year, the GBL stock price increased 40.8% to $24.98 per share, resulting in a $20.4 million net realized and unrealized
gain for the Company versus a net realized and unrealized loss of $5.5 million in 2020.
At December 31, 2021 and 2020, the Company invested $6.0 million and $31.5 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
year ended December 31, 2021, the Company earned insignificant interest and for the year ended December 31, 2020, the Company
earned $1.6 million from the investment in this fund.
Investments in equity mutual funds advised by our affiliates (primarily Gabelli Funds, an investment advisor under common control
with the Company), totaled $134.5 million and $170.7 million at December 31, 2021 and 2020, respectively, and are included in
46
investments in affiliated registered investment companies on the consolidated statements of financial condition. Included in other
income/(expense) are $24.2 million and $12.0 million of gains from investments and dividends related to these funds for the years
ending December 31, 2021 and 2020, respectively.
Investments in Partnerships
The Company serves as an investment advisor and/or general partner for certain affiliated investment partnerships and receives
management fees and performance-based incentive fees for providing such services. Investment advisory and incentive fees relating to
such services were $12.0 million and $10.5 million for the years ending December 31, 2021 and 2020 respectively, and are included in
investment advisory and incentive fees on the consolidated statements of income. We had an aggregate investment in these affiliated
Investment Partnerships of approximately $112.6 million and $99.1 million at December 31, 2021 and 2020, respectively.
Investment Advisory Services
Pursuant to a sub-advisory agreement between Gabelli & Company Investment Advisors, Inc. (“GCIA”), a wholly owned subsidiary
of the Company, and Gabelli Funds, Gabelli Funds pays GCIA 90% of the net revenues received by Gabelli Funds 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 $8.9 million and $7.2 million during
2021 and 2020, respectively under this sub-advisory agreement. These payments are included in investment advisory and incentive
fees on the consolidated statements of income. In addition, GAMCO makes certain payments to employees of the company primarily
related to marketing of SICAV.
The Company also serves as sub-advisor to Gabelli Merger Plus+ Trust Plc., a closed-ended investment company based in the United
Kingdom, which is consolidated due the Company’s controlling interest in the entity. As such, the Company’s portion of management
and/or incentive fees received for services provided are eliminated in the consolidation of the entity.
Compensation
In accordance with an employment agreement, the Company pays the Executive Chair, 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
2021 and 2020, the Company recorded management fee expense of $8.4 million and $3.1 million, respectively. These fees are
recorded as management fee on the consolidated statements of income.
Affiliated Receivables/Payables
At December 31, 2021 and 2020, the receivable and investment in note receivable from affiliates consisted primarily of sub-advisory
fees due from Gabelli Funds, and for 2021 the balance also included the 2-Year Puttable and Callable Subordinated Notes due 2023
issued as part of a 2021 special dividend on GAMCO’s Class A Common Stock and Class B Common Stock.
There were no material payables to affiliates at December 31, 2021. At December 31, 2020, the payable to affiliates primarily
consisted of expenses paid by affiliates on behalf of the Company which were settled in 2021.
Leases
Our offices are owned by a wholly owned subsidiary of AC and are located at 191 Mason Street, Greenwich, CT 06830. A portion of
the office space is leased to affiliates. During 2021 AC received $118.1 thousand from affiliates (primarily GAMCO) pursuant to lease
agreements for this property. These amounts are included in other revenues on the consolidated statements of income.
AC acquired a building at 3 St. James Place, London, UK on March 3, 2020 which is fully leased to GAMCO commencing 2021. For
the year ended December 31, 2021, the Company received $275.4 thousand under the lease agreement. These amounts are included in
other revenues on the consolidated statements of income.
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 Rye office. For the years ended December 31, 2021 and 2020, the Company paid $73.7
thousand and $144 thousand under the sublease agreement. These amounts are included in other operating expenses on the
consolidated statements of income.
47
Other
AC and GBL entered into a transitional administrative and management services agreement in connection with the spin-off of AC
from GBL on November 30, 2015. The agreement calls for GBL to provide to AC certain administrative services including but not
limited to: human resources, compliance, legal, payroll, information technology, and operations. The agreement is terminable by either
party on 30 days’ prior written notice to the other party. All services provided under the agreement by GBL to AC or by AC to GBL
are charged at cost. Amounts charged under this agreement are included in compensation expense, if related to fixed or variable
compensation, or other operating expenses, on the consolidated statements of income. For the years ended December 31, 2021 and
2020 we recorded $5.5 million and $4.1 million, respectively, of compensation expense related to employees shared with GBL. In
addition, we recorded approximately $1.8 million and $0.9 million of other operating expense, primarily related to GBL’s share of
management and incentive fees in funds we consolidate and the ancillary services provided by GBL as noted above, for the years
ended December 31, 2021 and 2020 respectively. Certain officers and employees of the Company receive additional compensation
from GBL.
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 restricted stock awards (“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, 2021, approximately 0.7 million
shares have been awarded under the Plan leaving approximately 1.3 million shares for future grants.
There were no RSAs outstanding as of December 31, 2021 or 2020.
Based on the closing price of the Company’s Class A Common Stock on December 31, 2021 and 2020, the total liability recorded by
the Company in compensation payable in our consolidated statements of financial condition with respect to the Phantom RSAs was
$3.0 million and $1.8 million, respectively.
The following table summarizes our stock-based compensation as well as unrecognized compensation for the periods ended December
31, 2021 and 2020 respectively. Stock-based compensation expense is included in compensation expense in the consolidated
statements of income:
(In thousands, unless otherwise noted)
Stock-based compensation expense
Remaining expense to be recognized if all vesting conditions are met(1)
Year Ended December 31,
2021
2020
$
$
2,092 $
(163)
6,640 $
3,674
Weighted average remaining contractual term (in years)
2.2
2.3
(1) Does not include an estimate for projected future dividends.
48
The following table summarizes Phantom RSA activity:
Balance at January 1, 2021
Granted
Forfeited
Vested
Balance at December 31, 2021
Stock Repurchase Program
RSA’s
Weighted
Average Grant
Date Fair Value
155,500
100,500
(8,000)
(25,095)
222,905
$
$
36.42
35.82
36.64
37.40
36.03
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.
The following table presents the Company's stock repurchase activity and remaining authorization:
Remaining repurchase authorization January 1, 2020
Share repurchase plan (1)
Remaining repurchase authorization December 31, 2020
Share repurchase plan (1)
Remaining repurchase authorization December 31, 2021
(1) Repurchases totaled $7.6 million and $7.4 million in 2021 and 2020, respectively,
Dividends
Number of shares
purchased
Average price per
share
1,094,356
(201,254)
893,102
(215,958)
677,144
$
$
36.98
35.40
During 2021 and 2020, the Company declared and paid dividends of $0.20 per share to class A and class B shareholders totaling $4.4
and $4.5 million, respectively.
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 $7,200 and $19,000 in 2021 and 2020, respectively, and is included in compensation on the consolidated statements of
income.
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 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, 2021.
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.
49
M. 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 $0.30 per share based upon the
actual number of shares registered in the shareholder’s name. The Company recorded an expense of $4.8 million and $3.0 million
related to this program for the years ended December 31, 2021 and 2020, respectively, which is included in shareholder-designated
contribution in the consolidated statements of income. As of December 31, 2021 and 2020, the Company has reflected a liability in the
amount of $1.5 million and $2.0 million, respectively, in connection with this program which is included in accrued expenses and
other liabilities on the consolidated statement of financial condition.
N. Discontinued Operations
As a result of the Morgan Group spin-off, the results of its operations through August 5, 2020 have been classified in the consolidated
statements of income as discontinued operations for all periods presented. There was no gain or loss on the spin-off for the Company,
and it was a tax-free spin-off to AC’s shareholders.
Other than a transition services agreement, Associated Capital does not have any significant continuing involvement in the operations
of Morgan Group after the spin-off, and Associated Capital will not have the ability to influence operating or financial policies of
Morgan Group. All stockholders received 0.022356 shares of Morgan Group stock for each share of AC stock that they held on the
record date for the distribution.
Operating results for the period from January 1, 2020 through August 5, 2020 were as follows:
Year Ended December 31, (1)
2020
Revenues
Institutional research services
Other
Total revenues
Expenses
Compensation
Other operating expenses
Total expenses
Operating loss
Other income (expense)
Net loss from investments
Interest and dividend income
Total other income, net
Income/(loss) from discontinued operations before income taxes
Income tax provision/(benefit)
Income/(loss) from discontinued operations, net of taxes
Net income/(loss) attributable to noncontrolling interests
Net income/(loss) attributable to AC shareholders discontinued operations, net of taxes
(1) During 2020, reflects the period through August 5, 2020
$
$
2,924
36
2,960
2,276
1,699
3,975
(1,015)
(8)
81
73
(942)
(205)
(737)
(105)
(632)
For the year ended December 31, 2020, operating cash flows from discontinued operations was $114 thousand provided by operating
activities. There were no investing or financing cash flows for the period.
O. Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the financial statements.
50
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 CFO, 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, 2021.
Based on this evaluation of our disclosure controls and procedures, management has concluded that our disclosure controls and
procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information required to
be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the
Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed,
summarized, and reported within the time periods specified in the SEC’s rules and forms.
Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting
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.
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.
Based on its evaluation, management concluded that, as of December 31, 2021, the Company maintained effective internal control
over financial reporting.
Prior Material Weakness in Internal Control over Financial Reporting has been Remediated
We identified a material weakness in our internal control over financial reporting that existed as of both December 31, 2019 and 2020,
relating to 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 during 2019 and 2020 related to
non-routine transactions that were corrected before issuance of our Form 10Qs and 10K for periods in 2019 and 2020. This material
weakness resulted in an increased risk of a material misstatement in the financial statements.
During 2021 we hired a new Chief Financial Officer in January and a new Manager of External Reporting and Technical Accounting
in May. These new personnel developed and executed a plan to remediate the material weakness, which included:
i)
ii)
iii)
iv)
adding additional SEC reporting and technical accounting experience,
implementing new policies, procedures and processes,
enhancing certain controls, and
expanding the use of our financial systems used for accounting and financial reporting.
Based upon the successful execution of the remediation plan above and the testing and evaluation of the effectiveness of our internal
control over financial reporting, we have concluded that the material weakness referred to above has been remediated and no longer
existed as of December 31, 2021.
51
Changes in Internal Control Over Financial Reporting
Other than the changes to internal controls related to the remediation of the material weakness described above, there were no changes
during the quarter ended December 31, 2021 in our internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B: OTHER INFORMATION
None.
ITEM 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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 to the Company’s Proxy Statement for the 2021 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 2022 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.
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 19.
52
(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
10.2
10.3
10.4
10.5
10.6
10.7
10.8
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.
(Incorporated by reference to Exhibit 4.2 of the Company’s Report on Form 10-K filed with the Commission on March
16, 2020).
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).
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).
53
21.1
24.1
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Subsidiaries of the Company.
Powers of Attorney (included on page 56 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.
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document)
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
ITEM 16: FORM 10-K SUMMARY
None.
54
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 Greenwich, State of Connecticut, on March 17,
2022.
ASSOCIATED CAPITAL GROUP, INC.
By: /s/ Timothy H. Schott
Name: Timothy H. Schott
Title: Chief Financial Officer
Date: March 17, 2022
55
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Peter Goldstein and Timothy H. Schott 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
/s/ Douglas R. Jamieson
Douglas R. Jamieson
/s/ Timothy H. Schott
Timothy H. Schott
/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/ Richard T. Prins
Richard T. Prins
/s/ Frederic V. Salerno
Frederic V. Salerno
/s/ Salvatore F. Sodano
Salvatore F. Sodano
/s/ Elisa M. Wilson
Elisa M. Wilson
President,
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Executive Chair of the
Board and Director
Director
Director
Director
Director
Director
Director
Director
Date
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 17, 2022
56
Subsidiaries of Associated Capital Group, Inc.
Exhibit 21.1
The following table lists the direct and indirect subsidiaries of Associated Capital Group, Inc. (the “Company”), except those
subsidiaries when considered in the aggregate would not constitute a “significant subsidiary” as defined in the rules promulgated
under the Securities Act. 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.
Name
Gabelli & Company Investment Advisers, Inc.
(100%-owned by the Company)
Gabelli & Partners, LLC
(100%-owned by Gabelli & Company Investment Advisers, Inc.)
Jurisdiction of Incorporation or Organization
Delaware
Delaware
57
Certifications
Exhibit 31.1
I, Douglas R. Jamieson, certify that:
1.
I have reviewed this annual report on Form 10-K of Associated Capital Group, Inc.;
2. 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;
3. 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;
4. 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) 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;
b) 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;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by this
report; and
d) 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;
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) 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
b) 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:
Name:
Title:
Date:
/s/ Douglas R. Jamieson
Douglas R. Jamieson
Chief Executive Officer and Director
March 17, 2022
58
Certifications
Exhibit 31.2
I, Timothy H. Schott, certify that:
1.
I have reviewed this annual report on Form 10-K of Associated Capital Group, Inc.;
2. 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;
3. 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;
4. 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) 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;
b) 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;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by this
report; and
d) 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;
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) 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
b) 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:
Name:
Title:
/s/ Timothy H. Schott
Timothy H. Schott
Chief Financial Officer
Date:
March 17, 2022
59
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, 2021 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.
By:
Name:
Title:
/s/ Douglas R. Jamieson
Douglas R. Jamieson
Chief Executive Officer and Director
Date:
March 17, 2022
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.
60
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, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Timothy H. Schott, as Chief
Financial 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.
By:
Name:
Title:
Date:
/s/ Timothy H. Schott
Timothy H. Schott
Chief Financial Officer
March 17, 2022
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.
61
ENGLISH
ITALIAN
CHINESE
JAPANESE
SPANISH
This page was intentionally left blank
Board of Directors
Mario J. Gabelli, CFA
Executive Chair
Associated Capital Group, Inc.
Douglas R. Jamieson
Chief Executive Officer and President
Associated Capital Group, Inc.
Marc Gabelli
Co-Chief Executive Officer
Gabelli Securities International Limited (UK)
Daniel R. Lee
Chief Executive Officer and Director
Full House Resorts, Inc.
Bruce M. Lisman
Former Chairman
JP Morgan’s Global Equity Division
Officers
Douglas R. Jamieson
Chief Executive Officer and President
Timothy H. Schott
Executive Vice President and Chief Financial Officer
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
Richard T. Prins
Retired Partner
Skadden, Aprs, Slate, Meagher & Flom LLP
Frederic V. Salerno
Former Vice Chairman
Verizon Communications Inc.
Salvatore F. Sodano
Former Vice Chairman
Broadridge Financial Solutions, Inc.
Elisa M. Wilson
President
Gabelli Foundation, Inc.
Peter D. Goldstein
Executive Vice President, Chief Legal Officer
and Secretary
Investment Services Information
Alternative Investments
Contact: Michael M. Gabelli
Managing Director and President
914-921-5135
email: alternatives@gabelli.com
Gabelli & Partners
Contact: Jeffrey M. Illustrato
C.O.O.
914-921-7711
Email: jillustrato@gabelli.com
Annual Meeting
Our 2022 Virtual Annual Meeting of Shareholders
will be held at 9:00 a.m. on June 2, 2022.
“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 through 2021. To date, AC has donated approximately $31 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
Veterans ♦ Disabled Veterans National
Relief International ♦ Disabled American
USA ♦ Don Bosco Community Center of
Foundation ♦ Doctors Without Borders
Television Center ♦ Eastchester Volunteer
Port Chester ♦ Downtown Community
♦ Eva’s Village ♦ Fair field University ♦
Ambulance Corps. ♦ Elevation Chapel
Charitable Gift Fund ♦ Folds of Honor
Feeding America ♦ Fidelity Investments
York at Binghamton ♦ Fountain Valley
Foundation ♦ The State University of New
Futures in Education ♦ Gilchrist Hospice
School of Colorado ♦ Friends of Animals ♦
Hospital ♦ Greenwich International Film
Care ♦ Give Me an Answer ♦ Greenwich
♦ Hank’s Yanks Baseball Foundation ♦
Festival ♦ Groton School ♦ Haley House
Martin Institute ♦ Hindu Society of Nevada
Heifer Project International ♦ Hetrick-
Humanitarian Relief Foundation ♦ Hospital
♦ Homeless Prenatal Program ♦ Honeywell
Conception Church - Bronx, NY ♦ Injured
for Special Surgery Fund ♦ Immaculate
Scholarship Fund ♦ Interfaith Nutrition
Marine Semper Fi Fund ♦ Inner-City
for Tibet ♦ Iona College ♦ Jack Miller
Network
International Campaign
Principles ♦ Jewish Communal Fund ♦
Center for Teaching America’s Founding
Joel Barlow High School, Regional School
Jewish Federation of Greater Pittsburgh ♦
Center Foundation ♦ Junior League of
District #9 ♦ John F. Kennedy Medical
♦ Kids in Crisis ♦ Lee Memorial Health
Greenwich Connecticut ♦ K9s for Warriors
Hudson Valley ♦ Leukemia and Lymphoma
System Foundation ♦ Legal Services of the
Angeles Team Mentoring ♦ Make-A-Wish
Society ♦ LongHouse Reserve ♦ Los
Foundation of Metro New York ♦ Manhattan
College ♦ Marc Lustgarten Pancreatic
Cancer Foundation ♦ Marin Country Day School ♦ Marine 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
©2022