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, 2024
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
47-3965991
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
191 Mason Street, Greenwich, CT 06830
(203) 629-9595
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share
AC
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 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 ☐
Accelerated filer ☐
Non-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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
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, 2024 (the last business
day of the registrant’s most recently completed second fiscal quarter) was $88.3 million.
As of March 11, 2025, 2,201,859 shares of class A common stock and 18,950,571 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
176,758 shares of class A and class B common stock, respectively. In addition, there are 301,595 Phantom Restricted Stock Awards
outstanding as of December 31, 2024.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s definitive proxy statement relating to the
2025 Annual Meeting of Shareholders are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this report.
2
Associated Capital Group, Inc.
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2024
Part I
Item 1
Business
4
Business Strategy
5
Competition
6
Intellectual Property
6
Regulation
6
Employees
9
Item 1A
Risk Factors
9
Item 1B
Unresolved Staff Comments
9
Item 1C
Cybersecurity
9
Item 2
Properties
10
Item 3
Legal Proceedings
10
Item 4
Mine Safety Disclosures
10
Part II
Item 5
Market For The Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases
Of Equity Securities
11
Item 6
Selected Financial Data
11
Item 7
Management’s Discussion And Analysis ("MD&A") Of Financial Condition And Results Of
Operations
11
Item 7A
Quantitative And Qualitative Disclosures About Market Risk
18
Item 8
Financial Statements And Supplementary Data
18
Item 9
Changes In And Disagreements With Accountants On Accounting And Financial Disclosure
42
Item 9A
Controls And Procedures
42
Item 9B
Other Information
42
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
42
Part III
Item 10
Directors, Executive Officers and Corporate Governance
42
Item 11
Executive Compensation
43
Item 12
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder
Matters
43
Item 13
Certain Relationships And Related Transactions, and Director Independence
43
Item 14
Principal Accountant Fees And Services
43
Part IV
Item 15
Exhibits, Financial Statement Schedules
43
Item 16
Form 10-K Summary
45
Signatures
46
Power of Attorney
47
Exhibit 21.1 - Subsidiaries of Associated Capital Group, Inc.
Certifications Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
3
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”, “GAMI”, or similar terms refer 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.
PART 1: OVERVIEW
Giving Back to Society
We are committed to allow our shareholders to choose the recipients of our charitable contributions. Based on the program created by
Warren Buffett at Berkshire Hathaway, our corporate charitable giving is unique in that the recipients of AC's charitable contributions
are chosen directly by our shareholders, rather than by (y)our corporate entity.
On August 7, 2024, the Board of Directors approved a $0.20 per share shareholder designated charitable contribution (“SDCC”) for
registered shareholders. In the first quarter of 2025, we completed the distribution of approximately $4.0 million to various organizations
selected by our shareholders for our 2024 program. Since our 2015 spin off as a public company, the shareholders of AC have donated
approximately $42 million, including the most recent SDCC, to over 200 501(c)(3) organizations that address a broad range of local,
national and international concerns.
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 to invest and control businesses that fit our criteria over time. Additionally, we derive income from proprietary
investments.
4
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.
In merger arbitrage, the goal is to earn absolute positive returns. We introduced our first limited partnership, Gabelli Arbitrage (renamed
Gabelli Associates Fund), in February 1985. Our typical investment process begins when a deal is announced, 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 single deal-specific risks. Since inception,
we have compounded net annual returns of 7.1% with 38 of 40 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 $140 million as of December 31, 2024. In addition, the value of
the 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.
The Company is reviewing the launch of new products, including private equity, direct investment and other funds, which leverage
and complement our core strengths in fundamental investing.
5
Assets Under Management
As of December 31, 2024, we managed approximately $1.25 billion in assets vs. $1.59 billion at December 31, 2023. The following
table sets forth total AUM, including investment funds and separately managed accounts, for the dates shown:
December 31,
($ in millions)
2024
2023
2020
2015
Merger Arbitrage
$
1,003 $
1,312 $
1,126 $
869
Long/Short Value(a)
209
244
180
145
Other(b)
36
35
45
66
Total AUM
$
1,248 $
1,591 $
1,351 $
1,080
Composition of AUM (% of Total AUM):
Domestic Clients
35 %
32 %
34 %
65 %
International Clients
65 %
68 %
66 %
35 %
(a) Assets under management represent the assets invested in this strategy that are attributable to Associated Capital Group, Inc.
(b) Includes investment vehicles focused on private equity, merchant banking, non-investment grade credit and capital structure
arbitrage.
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 several core pillars:
●
Gabelli Private Equity Partners, LLC (“GPEP”), formed in August 2017 with $150 million of authorized capital as a “fund-
less” sponsor.
●
Gabelli Principal Strategies Group, LLC (“GPS”) was created in December 2015 to pursue strategic operating initiatives
broadly.
Our direct investing efforts are organized to invest in 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.
We have a proprietary portfolio of cash and investments which we expect to invest primarily in funds that we manage, provide seed
capital for new products, expand our geographic presence, develop new markets and pursue strategic acquisitions and alliances.
Business Strategy
Our business strategy targets global growth through leveraging 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 absolute return, event driven investing through varying market cycles to
earn rates of return independent of the broad markets’ direction. Our proprietary “Private Market Value (PMV) with a CatalystTM”
investing approach remains the principal investment philosophy guiding our global research efforts and forms the backbone of our M&A
investment activities. The PMV methodology is based on investing principles first articulated by Graham & Dodd, and further refined
by our Executive Chair, Mario J. Gabelli. Our M&A portfolios provide access to Gabelli’s deep history of investing in mergers and is a
natural extension of our long standing research-driven investment process oriented toward undervalued assets based on our PMV
methodology. The investment team takes an active approach to merger investing, analyzing the various qualitative and quantitative
aspects of the transaction from announcement to deal completion, coupled with our fundamental understanding of business valuations,
building and monitoring transactions in the portfolio over the deal timeline.
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.
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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.
Opportunities in Private Equity
One of our initiatives is to launch a private equity business to capitalize on the developing opportunities in the capital 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.
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 a 1999 agreement, Mario J. Gabelli assigned his rights,
title and interests in and to the “Gabelli” name for use in connection with investment management services and institutional research
services to GAMCO. In addition, the funds managed by Mario J. Gabelli outside GAMCO and AC 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. Possible sanctions that may be imposed for
non-compliance 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.
7
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 advisers 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 adviser’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 cannot 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
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, 2024, by virtue of being a
member of the group, AC was deemed to hold five percent or more beneficial ownership with respect to approximately 56 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
8
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 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 UK 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.
9
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 may be subject to 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, 2025, we had a full-time staff of 24 teammates, of whom 9 served in the portfolio management, research and trading
areas, 7 served in the marketing and shareholder servicing areas and 8 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, and also have access to their global team of research
analysts and industry conferences hosted by Gabelli Funds.
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”.
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 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 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and
availability of our critical systems and information.
Our cybersecurity risk management program is aligned with the Company’s business strategy. It shares common methodologies,
reporting channels and governance processes that apply to other areas of enterprise risk, including legal, compliance, strategic,
operational, and financial risk. Key elements of our cybersecurity risk management program include:
●
risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services,
and our broader enterprise information technology environment;
●
a security team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and
our response to cybersecurity incidents;
●
the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls;
●
training and risk awareness programs for team members that include periodic and ongoing assessments to drive adoption and
awareness of cybersecurity processes and controls;
●
a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
●
a third-party risk management process for service providers, suppliers, and vendors.
10
In the last three years, the Company has not experienced any material cybersecurity incidents, and expenses incurred from cybersecurity
incidents were immaterial.
The operations of the Company are dependent on technology information and communications systems. A failure of any such system,
or a security breach or cyberattack related thereto, could significantly disrupt the Company’s operations. The service providers of the
Company are also subject to cybersecurity threats. If the Company and/or any service provider of the Company fails to adopt, implement
or adhere to adequate cybersecurity measures, or in the event of a breach of any network, information relating to the Company or the
Company’s operations, as well as personal information relating to the Company’s clients, may be lost, damaged or corrupted, or
improperly accessed, used or disclosed.
Any system failure, security breach or cyberattack on the Company and/or any service provider of the Company could cause the
Company to suffer financial loss, disruption to its business, including its trading capabilities and its ability to transfer payments,
increased operating costs, liability to third parties, regulatory intervention and reputational damage, among other things, any one or all
of which could have a material adverse effect on the Company.
Cybersecurity Governance
Our Board of Directors is responsible for overseeing cybersecurity threats, among other things. Our Chief Technology Officer, who
reports to our Chief Executive Officer and President, provides our senior management and our Board of Directors periodic reports on
our cybersecurity risks and any material cybersecurity incidents.
Our cybersecurity risk management team, in conjunction with various information technology, internal audit, legal and compliance
personnel, has primary responsibility for our overall cybersecurity risk management program.
Our team of cybersecurity professionals, led by our Chief Technology Officer, who has over 20 years of experience in the cybersecurity
space and advanced training in the field of cybersecurity and technology, has primary responsibility for our internal cybersecurity
personnel and our retained external cybersecurity consultants.
Our information technology team also monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and
incidents through various means, which may include briefings with internal personnel, threat intelligence and other information obtained
from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security
tools deployed in the information technology environment.
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 space is leased to affiliates. AC received $133.2 thousand and $133.8 thousand from affiliates (primarily GAMCO) pursuant to lease
agreements for this property for 2024 and 2023, respectively. These amounts are included in other revenues in the consolidated
statements of income.
AC acquired 3 St. James Place, London, UK on March 3, 2020, which was fully leased to GAMCO commencing 2021. For the years
ended December 31, 2024 and 2023, the Company received $285.9 thousand and $227.1 thousand, respectively, under the lease
agreement. These amounts are included in other revenues in the consolidated statements of income.
During 2024 and 2023, AC paid $74.3 thousand and $74.0 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). These amounts are
included in other operating expenses in the consolidated statements of income.
ITEM 3:
LEGAL PROCEEDINGS
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. Management is not aware of any probable or reasonably possible losses at December 31, 2024. See also Note 12,
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.
11
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 (“shares”) are traded on the New York Stock Exchange ("NYSE") under the symbol AC.
As of March 11, 2025, there were 114 and 18 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. On February 6, 2024 and August 7, 2024, the Board of Directors authorized the repurchase of
an additional 350,000 and 200,000 shares, respectively. Our stock repurchase program is not subject to an expiration date. Shares may
be purchased from time to time in the future, however share repurchase amounts and prices may vary after considering a variety of
factors, including the Company's financial position, earnings, other alternative uses of cash, macroeconomic issues, and market
conditions.
The following table provides information for our repurchase of our Class A common stock during the quarter ended December 31, 2024:
Period
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
10/01/24 - 10/31/24
9,599 $
36.24
9,599
407,024
11/01/24 - 11/30/24
17,119
36.56
17,119
389,905
12/01/24 - 12/31/24
36,357
35.45
36,357
353,548
Totals
63,075 $
35.87
63,075
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 1.0 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
Associated Capital Group, Inc. (NYSE: AC), a company incorporated under the laws of Delaware, provides alternative investment
management services and operates a direct investment business. Our revenues are based primarily on the Company’s level of assets
under management (“AUM”).
12
Financial Highlights
Financial Performance
The following is a summary of the Company’s financial performance for the quarters and years ended December 31, 2024 and 2023:
Fourth Quarter
Full Year
2024
2023
2024
2023
AUM - end of period (in millions)
$
1,248 $
1,591 $
1,248 $
1,591
AUM - average (in millions)
1,291
1,581
1,410
1,659
Net income per share-diluted
$
0.20 $
0.76 $
2.08 $
1.72
Book value per share at December 31(a)
$
42.14 $
42.11 $
42.14 $
42.11
(a) Book value per share at December 31, 2024 reflects $2.20 per share of dividends paid in 2024.
Financial Condition Overview
The Company consolidates certain investment partnerships for which it has a controlling financial interest. The following table reflects
the net impact of the consolidated investment partnerships (“Consolidated Entities”) on the consolidated statements of financial
condition (in thousands):
December 31, 2024
Prior to
Consolidated
Assets
Consolidation
Entities
As Reported
Cash and cash equivalents
$
289,991 $
9,560 $
299,551
Investments
584,582
(11,740 )
572,842
Other
52,929
9,967
62,896
Total assets
$
927,502 $
7,787 $
935,289
Liabilities, redeemable noncontrolling interests and equity
Total liabilities
$
34,796 $
2,195 $
36,991
Redeemable noncontrolling interests
-
5,592
5,592
Total equity
892,706
-
892,706
Total liabilities, redeemable noncontrolling interests and equity
$
927,502 $
7,787 $
935,289
December 31, 2023
Prior to
Consolidated
Assets
Consolidation
Entities
As Reported
Cash and cash equivalents
$
299,508 $
17,979 $
317,487
Investments
573,735
(18,272 )
555,463
Other
63,184
7,663
70,847
Total assets
$
936,427 $
7,370 $
943,797
Liabilities, redeemable noncontrolling interests and equity
Total liabilities
$
29,452 $
1,267 $
30,719
Redeemable noncontrolling interests
-
6,103
6,103
Total equity
906,975
-
906,975
Total liabilities, redeemable noncontrolling interests and equity
$
936,427 $
7,370 $
943,797
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 various ongoing geo-political dynamics and their 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 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.
13
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 income before management fee and income taxes and excludes the impact
of consolidating entities and is 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 attributable to noncontrolling interests represents the share of net income attributable to third-party limited partners of
certain investment partnerships we consolidate. Please refer to Notes 1 and 5 in our consolidated financial statements included elsewhere
in this report.
Consolidated Statements of Financial Condition
We ended 2024 with approximately $864.1 million in cash and investments, net of securities sold, not yet purchased of $8.4 million.
This includes $299.6 million of cash and cash equivalents; $68.3 million of short-term U.S. Treasury obligations; $190.6 million of
securities, net of securities sold, not yet purchased, including shares of GAMCO with a market value of $16.9 million; and $305.5 million
invested in affiliated and third-party funds and partnerships, including investments in closed end funds managed by affiliates (primarily
GAMCO) which have a value of $83.7 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 equity attributable to shareholders of the Company was $892.7 million or $42.14 per share as of December 31, 2024, compared to
$907.0 million or $42.11 per share as of the prior year-end. Shareholders’ equity per share is calculated by dividing the total Associated
Capital Group, Inc. equity by the number of common shares outstanding.
Assets Under Management Highlights
We reported assets under management as follows (dollars in millions):
December 31, December 31,
2024
2023
% Change
Merger Arbitrage(a)
$
1,003 $
1,312
(23.6 )
Long/Short Value(b)
209
244
(14.3 )
Other
36
35
2.9
Total AUM(c)
$
1,248 $
1,591
(21.6 )
(a) Includes $408 and $621 of sub-advisory AUM related to GAMCO International SICAV - GAMCO Merger Arbitrage, $68 and $69 of
sub-advisory AUM related to Gabelli Merger Plus+ Trust Plc at December 31, 2024 and 2023, respectively.
(b) Assets under management represent the assets invested in this strategy that are attributable to Associated Capital Group, Inc.
(c) Includes $234 million and $236 million of proprietary capital, respectively.
Changes in our AUM during 2024 were as follows (dollars in millions):
December 31,
Investment
Foreign
December 31,
2023
Inflows
Outflows
Return
Currency(1)
2024
Merger Arbitrage
$
1,312 $
137 $
(453 ) $
36 $
(29 ) $
1,003
Long/Short Value
244
-
(46 )
11
-
209
Other
35
-
(1 )
2
-
36
Total AUM
$
1,591 $
137 $
(500 ) $
49 $
(29 ) $
1,248
(1) Reflects the impact of currency fluctuations in non-US dollar denominated classes of investment funds.
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 decreased on a net basis by $343 million for the year ended December 31, 2024 due to net
investor outflows of $363 million and the impact of currency fluctuations of $29 million from non-US dollar classes of investment
funds, this was offset partially by market appreciation of $49 million. In the merger arbitrage strategy, most of the outflows
($198 million) were tied to GAMCO Merger Arbitrage UCITS (a Luxembourg entity organized as an Undertaking for Collective
Investment in Transferrable Securities).
14
Operating Results for the Year Ended December 31, 2024 as Compared to the Year Ended December 31, 2023
Revenues
Total revenues were $13.2 million for the year ended December 31, 2024, $0.5 million higher than total revenues of $12.7 million for
the year ended December 31, 2023. Total revenues by type were as follows (dollars in thousands):
Year Ended December 31,
Change
2024
2023
$
%
Investment advisory and incentive fees
12,755
12,324
431
3.5
Other revenues
420
359
61
17.0
Total revenues
$
13,175 $
12,683
492
3.9
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 $12.8 million for 2024 compared to $12.3 million for 2023, an increase of $0.4 million. Revenues
generated by the GAMCO International SICAV – GAMCO Merger Arbitrage were $5.0 million versus $3.7 million in the prior year
period. Starting in December 2023, the Company began recognizing 100% of the merger arbitrage SICAV revenues received by Gabelli
Funds, LLC (“Gabelli Funds”). In turn, AC pays the marketing expenses of the SICAV previously paid by Gabelli Funds and remits an
administrative fee to Gabelli Funds for administrative services provided. This change better aligns the financial arrangements with the
services rendered by each party. The net effect of this change had no material impact on our net operating results.
All other revenues were $8.2 million compared to $9.0 million in the year ago quarter. This decrease is the result of lower performance-
based incentive fees and lower average AUM in 2024.
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 $3.0 million in 2024 compared to $3.5 million in 2023.
Other revenues: Other revenues were $0.4 million in 2024 and $0.4 million in 2023.
Expenses
Compensation: Compensation, which includes variable compensation, salaries, bonuses and benefits, was $18.3 million for the year
ended December 31, 2024 compared to $17.2 million for the year ended December 31, 2023. Fixed compensation expense, which
includes salaries, stock-based compensation, bonuses and benefits, increased to $12.4 million in 2024 from $10.9 million in 2023. 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.
Management fees: Management fee expense is incentive-based and entirely variable compensation equal to 10% of income before
management fee and income taxes and excludes the impact of consolidating entities, and is paid to the Executive Chair or his designees
pursuant to his employment agreement with AC. In 2024 AC recorded management fee expense of $5.9 million compared to $5.4
million in 2023.
Other operating expenses: Our other operating expenses were $7.8 million in 2024 compared to $6.9 million in 2023. The increase was
primarily driven by marketing expenses of the SICAV.
Investment and other non-operating income, 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, 2024, net gains from investments were $42.8 million compared to $43.0 million in 2023.
Interest and dividend income: Interest and dividend income increased to $32.5 million in 2024 from $25.3 million in 2023, primarily
due to higher dividend income from our holdings of GAMCO in 2024.
Income Taxes
In 2024, we recorded income tax expense of $8.3 million resulting in an effective tax rate (“ETR”) of 15.8%. In 2023, we recorded an
income tax expense of $9.1 million resulting in an ETR of 19.5%. The decrease in rate from 2023 is primarily driven by the dividends
received deduction from the special dividend from GAMI and deferred tax benefits from the sale of GAMCO shares which reduced
the 2024 rate.
15
Noncontrolling Interests
Net income attributable to noncontrolling interests was $0.1 million in 2024 compared to $0.3 million in 2023. The decrease was driven
primarily by the Gabelli Merger Plus+ Trust tender offers in Q1 2023, which resulted in redemptions of redeemable noncontrolling
interests.
Net Income
Net income for the year ended December 31, 2024 was $44.3 million compared to $37.5 million for the prior year. The change was
primarily driven by higher dividend income in 2024, as described above.
Liquidity and Capital Resources
Our principal assets consist of cash and cash equivalents; short-term treasury securities; marketable securities, primarily equities,
including 0.7 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):
Year Ended December 31,
2024
2023
Cash flows provided by/(used in):
Operating activities
$
26,874 $
145,075
Investing activities
10,980
5,752
Financing activities
(59,208 )
(25,039 )
Net (decrease)/increase in cash, cash equivalents and restricted cash
(21,354 )
125,788
Cash, cash equivalents and restricted cash at beginning of period
347,057
221,269
Cash, cash equivalents and restricted cash at end of period
$
325,703 $
347,057
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, 2024, we had cash and cash equivalents of $299.6 million, investments in U.S. Treasury Bills of
$68.3 million and $190.6 million of investments, net of securities sold, not yet purchased of $8.4 million. Included in cash and cash
equivalents is $9.6 million as of December 31, 2024 which is held by consolidated investment funds and may not be readily available
for the Company to access.
Net cash provided by operating activities was $26.9 million in 2024. Operating cash flows in 2024 are driven by our net income of $44.4
million, $11.4 million of net distributions from investment partnerships, $6.4 million of net decreases to investment securities and $4.7
million change in net receivables/payables. These increases were partially offset by $40.0 million of adjustments for noncash items,
primarily unrealized gains on investment securities, partnership investments and deferred taxes.
Net cash provided by operating activities was $145.1 million in 2023. Operating cash flows in 2023 are driven by $125.9 million of net
decreases in securities primarily the result of rolling investments into less than 90-day treasury bills, our net income of $37.7 million,
$13.0 million of net distributions from investment partnerships and $7.8 million change in net receivables/payables. These increases
were partially offset by $39.3 million of adjustments for noncash items, primarily unrealized gains on investment securities, partnership
investments and deferred taxes.
Net cash provided by investing activities was $11.0 million in 2024 due to proceeds from sales of securities of $50.6 million and return
of capital on securities of $1.2 million, partially offset by purchases of securities of $40.8 million.
Net cash provided by investing activities was $5.8 million in 2023 due to proceeds from sales of securities of $6.0 million and return of
capital on securities of $1.3 million, partially offset by purchases of securities of $1.5 million.
Net cash used in financing activities was $59.2 million in 2024 resulting from dividends paid of $46.8 million, stock buyback payments
of $11.8 million and redemptions of redeemable noncontrolling interests of $0.6 million.
Net cash used in financing activities was $25.0 million in 2023 resulting from stock buyback payments of $16.3 million, redemptions
of redeemable noncontrolling interests of $4.4 million and dividends paid of $4.3 million.
16
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 2, Significant Accounting Policies, in the consolidated financial statements for additional information.
Investments in Securities
Investments in securities are recorded at fair value in the consolidated 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.
Management determines the appropriate classification of securities at the time of purchase. Government debt with maturities of greater
than three months at the time of purchase are considered investments in debt securities. Investments in debt securities are accounted for
as either trading, available for sale or held-to-maturity. The Company's investments in debt securities are all classified as trading
securities.
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 the 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 in which 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”). A VIE is an entity in which either the equity investment at risk is not
sufficient to permit the entity to finance its own activities without additional financial support or the group of holders of the equity
investment at risk lack certain characteristics of a controlling financial interest.
17
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 5, 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 are included in investments in partnerships in the consolidated statements of financial
condition. 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 in net gain from
investments on the consolidated statements of income. Capital contributions are recorded as an increase in investments when payable,
and withdrawals and distributions are recorded as reductions of the investments when receivable. 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. To the extent uncertain tax positions exist, 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 2, Significant Accounting Policies – Recent Accounting Developments, in the consolidated financial statements.
18
Seasonality and Inflation
We do not believe that our operations are subject to significant seasonal fluctuations. We do not believe inflation will significantly affect
our compensation costs, as they are substantially variable in nature. The rate of inflation may affect certain other expenses, however,
such as information technology and occupancy costs. To the extent inflation results in rising interest rates and has other effects upon the
securities markets, it may adversely affect our financial position and results of operations by reducing our AUM, revenues or otherwise.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Smaller reporting companies are not required to provide the information required by this item.
ITEM 8:
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID #34)
19
Consolidated Financial Statements:
Consolidated Statements of Income for the years ended December 31, 2024 and 2023
20
Consolidated Statements of Financial Condition at December 31, 2024 and 2023
21
Consolidated Statements of Equity and Redeemable Noncontrolling Interests for the years ended December 31, 2024 and 2023
22
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
23
Notes to Consolidated Financial Statements:
1. Organization
25
2. Significant Accounting Policies
25
3. Revenue
31
4. Investments in Securities
31
5. Investments in Partnerships and Other Entities
32
6. Fair Value
34
7. Income Taxes
36
8. Earnings per Share
37
9. Related Party Transactions
37
10. Equity
39
11. Segment Information
40
12. Retirement Plan
41
13. Guarantees, Contingencies, and Commitments
41
14. Shareholder Designated Contribution Plan
41
15. Subsequent Events
41
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 shareholders 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, 2024 and 2023, the related consolidated statements of income, equity and redeemable
noncontrolling interests, and cash flows for each of the two years in the period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the
two years in the period ended December 31, 2024, 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 19, 2025
We have served as the Company’s auditor since 2015.
20
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended December 31,
2024
2023
Revenues
Investment advisory and incentive fees
$
12,755 $
12,324
Other revenues
420
359
Total revenues
13,175
12,683
Expenses
Compensation
18,293
17,246
Management fee
5,870
5,446
Other operating expenses
7,765
6,938
Total expenses
31,928
29,630
Operating loss
(18,753 )
(16,947 )
Other income
Net gain from investments
42,767
43,033
Interest and dividend income
32,500
25,258
Interest expense
(267 )
(462 )
Shareholder-designated contribution
(3,512 )
(4,017 )
Total other income, net
71,488
63,812
Income before income taxes
52,735
46,865
Income tax expense
8,307
9,137
Income before noncontrolling interests
44,428
37,728
Income attributable to noncontrolling interests
100
277
Net income attributable to Associated Capital Group, Inc.'s shareholders
$
44,328 $
37,451
Net income per share attributable to Associated Capital Group, Inc.'s shareholders:
Basic
$
2.08 $
1.72
Diluted
$
2.08 $
1.72
Weighted average shares outstanding:
Basic
21,347
21,771
Diluted
21,347
21,771
See accompanying notes.
21
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
December 31, December 31,
ASSETS
2024
2023
Cash and cash equivalents (includes U.S. Treasury Bills with maturities of 3 months or less) $
299,551 $
317,487
Investments in U.S. Treasury Bills with maturities greater than 3 months
68,299
89,155
Investments in equity securities (includes GAMCO stock with a value of $16,920 and
$45,602, respectively)
199,040
196,583
Investments in affiliated registered investment companies
165,515
126,751
Investments in partnerships
139,988
142,974
Receivable from brokers
27,634
16,005
Receivable from brokers (cash held for real estate purchase)
-
14,263
Investment advisory fees receivable
4,142
4,711
Receivable from affiliates
636
876
Income taxes receivable, including deferred tax assets, net
6,021
8,474
Goodwill
3,519
3,519
Other assets
20,944
22,999
Total assets
$
935,289 $
943,797
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Payable to brokers
$
5,491 $
4,459
Compensation payable
17,747
15,169
Securities sold, not yet purchased
8,436
5,918
Accrued expenses and other liabilities
5,317
5,173
Total liabilities
36,991
30,719
Redeemable noncontrolling interests
5,592
6,103
Commitments and contingencies (Note 13)
Equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
-
-
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 6,641,601 shares
issued; 2,233,920 and 2,587,036 shares outstanding, respectively
6
6
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares
issued; 18,950,571 outstanding
19
19
Additional paid-in capital
999,047
999,047
Retained earnings
45,809
48,231
Treasury stock, at cost (4,407,681 and 4,054,565 shares, respectively)
(152,175 )
(140,328 )
Total equity
892,706
906,975
Total liabilities, redeemable noncontrolling interests and equity
$
935,289 $
943,797
As of December 31, 2024 and 2023, certain assets and liabilities include amounts related to a consolidated variable interest
entity (“VIE”) and voting interest entity ("VOE"), see Note 5.
See accompanying notes.
22
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
(Dollars in thousands)
For the year ended December 31, 2024
Additional
Redeemable
Common
Retained
Paid-in
Treasury
Total
Noncontrolling
Stock
Earnings
Capital
Stock
Equity
Interests
Balance at December 31, 2023
$
25 $
48,231 $
999,047 $
(140,328 ) $
906,975 $
6,103
Redemptions of noncontrolling interests
-
-
-
-
-
(611 )
Net income
-
44,328
-
-
44,328
100
Dividends declared ($2.20 per share)
-
(46,750 )
-
-
(46,750 )
-
Purchases of treasury stock
-
-
-
(11,847 )
(11,847 )
-
Balance at December 31, 2024
$
25 $
45,809 $
999,047 $
(152,175 ) $
892,706 $
5,592
For the year ended December 31, 2023
Additional
Redeemable
Common
Retained
Paid-in
Treasury
Total
Noncontrolling
Stock
Earnings
Capital
Stock
Equity
Interests
Balance at December 31, 2022
$
25 $
15,126 $
999,047 $
(124,002 ) $
890,196 $
10,193
Redemptions of noncontrolling interests
-
-
-
-
-
(4,367 )
Net income
-
37,451
-
-
37,451
277
Dividends declared ($0.20 per share)
-
(4,346 )
-
-
(4,346 )
-
Purchases of treasury stock
-
-
-
(16,326 )
(16,326 )
-
Balance at December 31, 2023
$
25 $
48,231 $
999,047 $
(140,328 ) $
906,975 $
6,103
See accompanying notes.
23
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended December 31,
2024
2023
Operating activities
Net income
$
44,428 $
37,728
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net gains from partnerships
(8,441 )
(5,502 )
Depreciation and amortization
361
360
Deferred income taxes
3,251
(914 )
Donated securities
1,431
1,158
Net unrealized gains on securities
(38,088 )
(30,494 )
Net realized losses/(gains) on sales of securities
1,423
(3,964 )
(Increase)/decrease in assets:
Investments in trading securities
6,407
125,899
Investments in partnerships:
Contributions to partnerships
(16,210 )
(3,590 )
Distributions from partnerships
27,637
16,616
Receivable from affiliates
240
1,641
Receivable from brokers
(784 )
8,567
Investment advisory fees receivable
569
(904 )
Income taxes receivable
(798 )
2,760
Other assets
1,694
(4,660 )
Increase/(decrease) in liabilities:
Payable to brokers
1,032
(3,325 )
Compensation payable
2,578
1,233
Accrued expenses and other liabilities
144
2,466
Total adjustments
(17,554 )
107,347
Net cash provided by operating activities
26,874
145,075
Investing activities
Purchases of securities
(40,839 )
(1,486 )
Proceeds from sales of securities
50,634
5,975
Return of capital on securities
1,185
1,263
Net cash provided by investing activities
$
10,980 $
5,752
24
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
Year Ended December 31,
2024
2023
Financing activities
Dividends paid
$
(46,750 ) $
(4,346 )
Purchases of treasury stock
(11,847 )
(16,326 )
Redemptions of redeemable noncontrolling interests
(611 )
(4,367 )
Net cash used in financing activities
(59,208 )
(25,039 )
Net (decrease)/increase in cash, cash equivalents and restricted cash
(21,354 )
125,788
Cash, cash equivalents and restricted cash at beginning of period
347,057
221,269
Cash, cash equivalents and restricted cash at end of period
$
325,703 $
347,057
Supplemental disclosures of cash flow information:
Cash paid for interest
$
267 $
462
Cash paid for taxes
$
5,811 $
7,200
Reconciliation of Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents
$
299,551 $
317,487
Cash held for real estate purchase included in receivable from brokers
-
14,263
Restricted cash included in receivable from brokers
11,621
7,866
Cash included in receivable from brokers
14,531
7,441
Cash, cash equivalents and restricted cash
$
325,703 $
347,057
See accompanying notes.
25
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
1. 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., 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. Our proprietary portfolio of cash and investments will be used
to invest primarily in funds that we will manage, provide seed capital for new products, expand our geographic presence, develop new
markets and pursue strategic acquisitions and alliances.
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”).
On November 30, 2015, GAMCO Investors, Inc. (“GAMCO” or “GAMI”) 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 held 699,749 and 2,386,295
shares as of December 31, 2024 and 2023, respectively.
2. Significant Accounting Policies
Consolidated Financial Statements
All intercompany transactions and balances have been eliminated. Subsidiaries are fully consolidated from the date the Company obtains
control and continue to be consolidated until the date that such control ceases. The Company’s principal market is in the United States.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported on the consolidated
financial statements and accompanying notes. Actual results could differ from those estimates.
Cash Equivalents
Cash equivalents primarily consist of an affiliated money market mutual fund which is highly liquid. U.S. Treasury Bills 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. Investments in debt
securities are accounted for as either trading, available for sale (“AFS”), or held-to-maturity. The Company's investments in debt
securities are all classified as trading securities.
Investments in securities are reflected in Investments in U.S. Treasury Bills, investments in equity securities and investments in affiliated
registered investment companies on the consolidated statements of financial condition.
26
Securities sold, 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.
•
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 do not trade, 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 consist of short-term U.S. Treasury Bills with maturities of three months or less at the time of
purchase and an affiliated money market mutual fund, which is invested solely in U.S. Treasury securities and is highly liquid.
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 or an active dealer market. To the extent these securities are actively traded, valuation adjustments are not applied,
and they are categorized in Level 1 of the fair value hierarchy. Securities categorized as Level 2 investments are valued using other
observable inputs. Nonpublic and infrequently traded investments are included in Level 3 of the fair value hierarchy because significant
inputs to measure fair value are unobservable.
Receivables from Affiliates and Payables to Affiliates
Receivables from affiliates consist primarily of sub-advisory fees due from Gabelli Funds, LLC, 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.
27
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. At December 31, 2023, a cash balance of $14.3 million was held at a broker for a
real estate purchase. In 2024 the Company withdrew its intention to purchase the property, as such there is no balance at December 31,
2024.
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 the 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 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 in which 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”). A VIE is an entity in which either the equity investment at risk is not
sufficient to permit the entity to finance its own activities without additional financial support or the group of holders of the equity
investment at risk lack certain characteristics of a controlling financial interest. 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 entities 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
Redeemable Noncontrolling Interests below for additional information.
Investments in Partnerships
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 financial statement caption investments in partnerships, in the consolidated statements of financial condition, includes investments
in both affiliated and unaffiliated entities.
28
The Company accounts for its investments in partnerships under the equity method. Substantially all of the Company’s equity method
investees are entities that record their underlying investments at fair value. 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 in net gain from investments on the consolidated statements of income. Capital contributions are
recorded as an increase in investments when payable, and withdrawals and distributions are recorded as reductions of the investments
when receivable. Prepaid capital contributions and distributions receivable are included in other assets in the consolidated statements of
financial condition. 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 equity 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. 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.
Major Revenue-Generating Services and Revenue Recognition
The Company’s revenues are derived primarily from investment advisory and incentive fees. Revenues are accounted for as contracts
with customers, and the timing of revenue recognition is based on the Company’s analysis of the provisions of each respective contract.
Depending upon the specific terms, revenue may be recognized over time or at a point in time. Modifications to contracts may affect
the timing of the satisfaction of performance obligations, the determination of the transaction price, and the allocation of the price to
performance obligations, any of which may impact the timing of the recognition of the related revenue.
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. There is a risk of non-payment for our
investment advisory fees receivable and, therefore, a credit loss on these receivables is possible at each reporting date. There were no
such credit losses for the periods presented.
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 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 15%-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. Amounts receivable are included in receivable from affiliates in the consolidated statements of financial condition.
29
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.
Fixed Assets and 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.
Fixed assets as of December 31, 2024 and 2023 consisted of the following (in thousands):
December 31,
2024
2023
Buildings
$
17,748 $
17,748
Equipment
233
217
Total
17,981
17,965
Less: accumulated depreciation
(1,823 )
(1,462 )
Net book value
$
16,158 $
16,503
Allocated Expenses
The Company is charged or incurs certain overhead expenses that are paid by, or paid on our behalf by, other affiliates and are included
in other operating expenses on the consolidated statements of income. These overhead expenses primarily relate to centralized functions,
including finance and accounting, legal, compliance, treasury, tax, internal audit, information technology, human resources and risk
management. These overhead expenses are allocated to the Company by other affiliates (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 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 if the cost was not shared with affiliates
or that we 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.
30
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, 2024 and 2023, 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 2024 or 2023.
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 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 expense on the
consolidated statements of income. Uncertain tax positions and accrued interest and penalties on those uncertain tax positions, if any, are
included within accrued expenses and other liabilities on the consolidated statements of financial condition.
Redeemable 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 and are measured at their redemption values at the end of each period.
For the years ended December 31, 2024 and 2023, net income attributable to noncontrolling interests on the consolidated statements of
income represents the share of net income/(loss) attributable to third-party investors in consolidated entities based on relative ownership.
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. The Company’s investments in securities are held primarily
at third party custodians.
31
Credit Losses
The Company measures all expected credit losses for financial assets held at the reporting date based on historical experience, current
conditions, and reasonable and supportable forecasts. The allowance for credit losses is subject to judgment. Due to the short-term nature
of the Company’s receivables, the Company determined there was minimal credit risk inherent in the Company’s financial assets. For
the years ended December 31, 2024 and 2023, there were no credit losses.
Recent Accounting Developments
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure
requirements. The new standard will require enhanced disclosures about a public company’s significant segment expenses and more
timely and detailed segment information reporting throughout the fiscal period, including for companies with a single reportable
segment. The standard became effective for the Company for the fiscal year ended December 31, 2024, refer to Note 11 for more
information.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The
amendments require disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items
that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU is
effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact that
the adoption of this new standard will have on our consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires disaggregation of certain expense
captions into specified categories in disclosures within the footnotes to the financial statements. This new guidance will be effective on
January 1, 2027 for annual reporting and January 1, 2028 for interim reporting. We are currently evaluating the impact that the adoption
of this new standard will have on our consolidated financial statements and related disclosures.
3. Revenue
Total revenues by type were as follows for the years ended December 31, 2024 and 2023 (in thousands):
Year Ended December 31,
2024
2023
Investment advisory and incentive fees
Asset-based advisory fees
$
4,754 $
5,120
Performance-based advisory fees
2,999
3,462
Sub-advisory fees
5,002
3,742
Sub-total
12,755
12,324
Other
Miscellaneous
420
359
Total
$
13,175 $
12,683
4. Investments in Securities
Investments in securities at December 31, 2024 and 2023, consisted of the following (in thousands):
December 31, 2024
December 31, 2023
Cost
Fair Value
Cost
Fair Value
Debt - Trading Securities:
U.S. Treasury Bills
$
66,721 $
68,299 $
88,300 $
89,155
Equity Securities:
Common stocks
173,436
196,557
198,269
191,346
Mutual funds
686
1,315
566
1,186
Other investments
1,483
1,168
5,166
4,051
Total investments in equity securities
175,605
199,040
204,001
196,583
Total investments in securities
$
242,326 $
267,339 $
292,301 $
285,738
32
Securities sold, not yet purchased at December 31, 2024 and 2023, consisted of the following (in thousands):
December 31, 2024
December 31, 2023
Cost
Fair Value
Cost
Fair Value
Common stocks
$
8,116 $
8,236 $
5,227 $
5,035
Other investments
41
200
631
883
Total securities sold, not yet purchased
$
8,157 $
8,436 $
5,858 $
5,918
Investments in affiliated registered investment companies at December 31, 2024 and 2023 consisted of the following (in thousands):
December 31, 2024
December 31, 2023
Cost
Fair Value
Cost
Fair Value
Closed-end funds
$
67,215 $
83,705 $
39,680 $
53,048
Mutual funds
54,698
81,810
50,136
73,703
Total investments in affiliated registered investment companies
$
121,913 $
165,515 $
89,816 $
126,751
5. Investment Partnerships and Other Entities
The Company is general partner or co-general partner of various affiliated entities whose underlying assets consist primarily of
marketable securities (“Affiliated Entities”). The Company had investments in Affiliated Entities totaling $101.8 million and $107.4
million at December 31, 2024 and 2023, respectively. We also had investments in unaffiliated partnerships, offshore funds and other
entities of $38.1 and $35.6 million at December 31, 2024 and 2023, respectively (“Unaffiliated Entities”).
We evaluate each entity to determine its appropriate accounting treatment and disclosure. 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 reflects the equity in earnings of these Affiliated Entities and Unaffiliated Entities as
net gain from investments on the consolidated statements of income.
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.
Consolidated Entities
The following table reflects the net impact of the consolidated investment partnerships (“Consolidated Entities”) on the consolidated
statements of financial condition (in thousands):
December 31, 2024
Prior to
Consolidated
Assets
Consolidation
Entities
As Reported
Cash and cash equivalents
$
289,991 $
9,560 $
299,551
Investments in U.S. Treasury Bills
64,320
3,979
68,299
Investments in equity securities
139,303
59,737
199,040
Investments in affiliated registered investment companies
220,422
(54,907 )
165,515
Investments in partnerships
160,537
(20,549 )
139,988
Receivable from brokers(1)
20,402
7,232
27,634
Investment advisory fees receivable
4,142
-
4,142
Other assets(1)
28,385
2,735
31,120
Total assets
$
927,502 $
7,787 $
935,289
Liabilities, redeemable noncontrolling interests and equity
Securities sold, not yet purchased
$
8,290 $
146 $
8,436
Payable to brokers and other liabilities(1)
26,506
2,049
28,555
Redeemable noncontrolling interests
-
5,592
5,592
Total equity
892,706
-
892,706
Total liabilities, redeemable noncontrolling interests and equity
$
927,502 $
7,787 $
935,289
33
December 31, 2023
Prior to
Consolidated
Assets
Consolidation
Entities
As Reported
Cash and cash equivalents
$
299,508 $
17,979 $
317,487
Investments in U.S. Treasury Bills
79,714
9,441
89,155
Investments in equity securities
149,154
47,429
196,583
Investments in affiliated registered investment companies
181,641
(54,890 )
126,751
Investments in partnerships
163,226
(20,252 )
142,974
Receivable from brokers
25,026
5,242
30,268
Investment advisory fees receivable
4,714
(3 )
4,711
Other assets(1)
33,444
2,424
35,868
Total assets
$
936,427 $
7,370 $
943,797
Liabilities, redeemable noncontrolling interests and equity
Securities sold, not yet purchased
$
5,639 $
279 $
5,918
Payable to brokers and other liabilities(1)
23,813
988
24,801
Redeemable noncontrolling interests
-
6,103
6,103
Total equity
906,975
-
906,975
Total liabilities, redeemable noncontrolling interests and equity
$
936,427 $
7,370 $
943,797
(1) Represents the summation of multiple assets and liabilities 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):
Year Ended December 31, 2024
Prior to
Consolidated
Consolidation
Entities
As Reported
Total revenues
$
13,430 $
(255 ) $
13,175
Total expenses
30,674
1,254
31,928
Operating loss
(17,244 )
(1,509 )
(18,753 )
Total other income, net
70,070
1,418
71,488
Income before income taxes
52,826
(91 )
52,735
Income tax expense
8,498
(191 )
8,307
Income before noncontrolling interests
44,328
100
44,428
Income attributable to noncontrolling interests, net of taxes
-
100
100
Net income
$
44,328 $
- $
44,328
Year Ended December 31, 2023
Prior to
Consolidated
Consolidation
Entities
As Reported
Total revenues
$
13,125 $
(442 ) $
12,683
Total expenses
28,566
1,064
29,630
Operating loss
(15,441 )
(1,506 )
(16,947 )
Total other income/(expense), net
64,452
(640 )
63,812
Income before income taxes
49,011
(2,146 )
46,865
Income tax expense
11,560
(2,423 )
9,137
Income before noncontrolling interests
37,451
277
37,728
Income attributable to noncontrolling interests, net of taxes
-
277
277
Net income
$
37,451 $
- $
37,451
Variable Interest Entity
With respect to the consolidated VIE, its assets may only be used to satisfy its obligations. The investors and creditors of the 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.
34
The following table presents the balances related to the VIE that is consolidated and included on the consolidated statements of financial
condition as well as the Company’s net interest in the VIE (in thousands):
December 31,
2024
2023
Cash and cash equivalents
$
118 $
302
Investments in equity securities
10,473
9,695
Receivable from brokers
-
166
Accrued expenses and other liabilities(1)
(127 )
(46 )
Redeemable noncontrolling interests
(307 )
(451 )
AC Group's net interests in the consolidated VIE
$
10,157 $
9,666
(1) Represents the summation of multiple assets and liabilities from the consolidated statements of financial condition.
Voting Interest Entity
We have an investment partnership that is consolidated as a VOE for both 2024 and 2023 because AC has a controlling interest in the
entity. This resulted in the consolidation of $72.4 million of assets, $1.9 million of liabilities, and $5.3 million of redeemable
noncontrolling interests for 2024 and $72.4 million of assets, $1.4 million of liabilities, and $5.6 million of redeemable noncontrolling
interests for 2023. AC’s net interest in the consolidated VOE for 2024 and 2023 was $65.2 million and $65.4 million, respectively.
Equity Method Investments
The Company’s equity method investments include investments in domestic partnerships and offshore funds. The Company evaluates
each of its equity method investments to determine if any are significant as defined in the regulations applicable to smaller reporting
companies promulgated by the SEC. As of and for the years ended December 31, 2024 and 2023, no individual equity method investment
held by the Company met the significance criteria. As such, the Company is not required to present summarized income statement
information for any of its equity method investments.
6. 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, 2024 and 2023, and indicate the fair value hierarchy of the valuation techniques utilized by the
Company to determine such fair value (in thousands):
December 31, 2024
Assets
Level 1
Level 2
Level 3
Total
Cash equivalents
$
298,208 $
- $
- $
298,208
Investments in securities (including GAMCO stock):
Trading - U.S. Treasury Bills
68,299
-
-
68,299
Common stocks
193,668
854
2,035
196,557
Mutual funds
1,315
-
-
1,315
Other
43
1,010
115
1,168
Total investments in securities
263,325
1,864
2,150
267,339
Investments in affiliated registered investment companies:
Closed-end funds - equity securities
42,849
-
-
42,849
Preferred securities issued by Closed-end funds (a)
-
-
40,856
40,856
Mutual funds
81,810
-
-
81,810
Total investments in affiliated registered investment companies
124,659
-
40,856
165,515
Total investments held at fair value
387,984
1,864
43,006
432,854
Total assets at fair value
$
686,192 $
1,864 $
43,006 $
731,062
Liabilities
Common stocks
$
8,236 $
- $
- $
8,236
Other
11
189
-
200
Securities sold, not yet purchased
8,247
189
-
8,436
Total liabilities at fair value
$
8,247 $
189 $
- $
8,436
(a) These securities represent privately issued, puttable and callable preferred securities issued by affiliated closed-end funds. These
securities are considered as trading securities at the time of purchase.
35
December 31, 2023
Assets
Level 1
Level 2
Level 3
Total
Cash equivalents
$
315,017 $
- $
- $
315,017
Investments in securities (including GAMCO stock):
Trading - U.S. Treasury Bills
89,155
-
-
89,155
Common stocks
187,963
1,348
2,035
191,346
Mutual funds
1,186
-
-
1,186
Other
3,347
485
219
4,051
Total investments in securities
281,651
1,833
2,254
285,738
Investments in affiliated registered investment companies:
Closed-end funds - equity securities
44,692
-
-
44,692
Preferred securities issued by Closed-end funds (a)
-
-
8,356
8,356
Mutual funds
73,703
-
-
73,703
Total investments in affiliated registered investment companies
118,395
-
8,356
126,751
Total investments held at fair value
400,046
1,833
10,610
412,489
Total assets at fair value
$
715,063 $
1,833 $
10,610 $
727,506
Liabilities
Common stocks
$
5,035 $
- $
- $
5,035
Other
579
304
-
883
Securities sold, not yet purchased
5,614
304
-
5,918
Total liabilities at fair value
$
5,614 $
304 $
- $
5,918
(a) These securities represent privately issued, puttable and callable preferred securities issued by affiliated closed-end funds. These
securities are considered as trading securities at the time of purchase.
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:
Year Ended
December 31,
Assets:
2024
2023
Beginning balance
$
10,610 $
13,774
Total gains/(losses)
90
(34 )
Purchases
34,900
1,000
Sales/return of capital
(2,594 )
(4,130 )
Ending balance
$
43,006 $
10,610
Changes in net unrealized gain/(loss) included in Net gain from investments related to level 3
assets still held as of the reporting date
$
90 $
(34 )
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 years ended December 31, 2024 and 2023, the Company transferred no investments from Level 1 to Level 3 or from Level
3 to Level 1.
The Company uses a discounted cash flow analysis when determining the fair value of privately issued preferred securities of affiliated
closed-end funds that are categorized as Level 3. Projected cash flows in the discounted cash flow analysis represent the relevant
security’s dividend rate plus the assumption of full principal repayment at the preferred security’s earliest available redemption date.
The significant unobservable input used in the fair value measurement of each of the Company’s investments in privately issued
preferred securities of closed-end funds is the discount rate. The discount rate was determined using the interest rates of U.S. Treasury
Bills that are held over a similar period as the preferred security. The discount rates used in the valuation of these investments as of
December 31, 2024 ranged from 4.16% to 4.28% with a weighted average of 4.19% calculated based on the relative fair value.
Significant changes in the discount rate could result in a significantly higher or lower fair value measurement of these Level 3
investments.
The Company uses the market approach as the valuation technique to value its investment in common stocks classified as Level 3,
specifically considering recent transactions.
36
7. Income Taxes
The provision for income taxes for the years ended December 31, 2024 and 2023, consisted of the following (in thousands):
2024
2023
Federal:
Current
$
3,937 $
9,528
Deferred
3,297
1,566
State and local:
Current
1,046
471
Deferred
145
(57 )
Foreign:
Current
73
52
Deferred
(191 )
(2,423 )
Total
$
8,307 $
9,137
A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2024 and 2023, is set forth below:
2024
2023
Statutory Federal income tax rate
21.0 %
21.0 %
State income tax, net of Federal benefit
1.8
0.8
Dividends received deduction
(8.1 )
(0.9 )
Deferred tax asset valuation allowance
(0.1 )
-
Foreign investments
(1.3 )
(6.2 )
Foreign tax rate differential
1.0
2.1
Foreign-derived intangible income
-
0.1
Noncontrolling interests
-
1.6
Nondeductible compensation
1.1
2.1
Other
0.4
(1.1 )
Effective income tax rate
15.8 %
19.5 %
Significant components of our deferred tax assets and liabilities as of December 31, 2024 and 2023, are as follows (in thousands):
2024
2023
Deferred tax assets:
Stock-based compensation expense
$
1,136 $
794
Deferred compensation
843
409
Investments in securities and partnerships
717
5,085
Shareholder-designated contribution carryover
1,302
1,842
Federal & State net operating loss carryforward
1,432
951
Other
156
64
5,586
9,145
Deferred tax liabilities:
Other liabilities
(192 )
(227 )
(192 )
(227 )
Gross deferred tax assets/(liabilities)
5,394
8,918
Valuation allowance
(63 )
(350 )
Net deferred tax assets/(liabilities)
$
5,331 $
8,568
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 $63 and $350 as of
December 31, 2024 and 2023, 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, if any, are included in accrued
expenses and other liabilities on the consolidated statements of financial condition. As of and for the years ended December 31, 2024
and 2023, 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 2021 through 2023 and state examinations for years
after 2017.
37
8. Earnings per Share
Basic earnings per share is computed by dividing net income 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 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 per share are as follows:
Year Ended December 31,
(In thousands, except per share amounts)
2024
2023
Income before noncontrolling interests
$
44,428 $
37,728
Less: Income attributable to noncontrolling interests
100
277
Net income attributable to Associated Capital Group, Inc.'s shareholders
$
44,328 $
37,451
Weighted average number of shares of Common Stock outstanding - basic and diluted
21,347
21,771
Basic and Diluted EPS
$
2.08 $
1.72
9. Related Party Transactions
The following is a summary of certain related party transactions.
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 86% of the outstanding shares of our common stock at December 31, 2024.
Investments in Securities
At December 31, 2024 and 2023, the value of the Company’s investment in GAMCO common stock was $16.9 million and
$45.6 million, respectively. As of December 31, 2024 and 2023, AC and its subsidiaries own approximately 0.7 million and 2.4 million
shares of GAMCO Class A stock. The Company recorded investment income of $5.5 million and $0.4 million in 2024 and 2023,
respectively, from GAMCO, which is included in interest and dividend income on the consolidated statements of income. Unrealized
and realized gain on our holdings of GAMCO were $14.6 million versus $9.3 million in 2023. During 2024, the Company sold 1.15
million shares of GAMCO to GAMCO for proceeds of $30.4 million during 2024 and realized a loss of $3.8 million.
At December 31, 2024 and 2023, the Company invested $290.3 million and $298.6 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. The Company
earned $14.7 million and $17.0 million from the investment in this fund for the years ended December 31, 2024 and 2023, respectively
which is included in interest and dividend income on the consolidated statements of income.
Investments in equity mutual funds advised by our affiliates (primarily Gabelli Funds, an investment advisor under common control
with the Company), totaled $165.5 million and $126.8 million at December 31, 2024 and 2023, respectively, and are included in
investments in affiliated registered investment companies on the consolidated statements of financial condition. Included in other
income in the consolidated statements of income are gains of $10.4 million and $8.9 million from investments and dividends related to
these funds for the years ended December 31, 2024 and 2023, 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 $7.8 million and $8.6 million for the years ended December 31, 2024 and 2023 respectively, and are included in
investment advisory and incentive fees on the consolidated statements of income. Investment advisory fees receivable in the consolidated
statements of financial condition consist of the investment advisory and incentive fees from these affiliated partnerships that were
accrued but not yet paid by December 31, 2024 and 2023, respectively. We had an aggregate investment in these affiliated investment
partnerships of approximately $101.8 million and $107.4 million at December 31, 2024 and 2023, respectively.
Investment Advisory Services
The Company serves as sub-advisor to GAMCO International SICAV – GAMCO Merger Arbitrage, an investment company
incorporated under the laws of Luxembourg (the “SICAV”).
38
GCIA, a wholly owned subsidiary of the Company, received $5.0 million and $3.7 million during 2024 and 2023, respectively, pursuant
to a funds transfer agreement between GCIA and Gabelli Funds. These payments are included in investment advisory and incentive fees
on the consolidated statements of income. Starting in December 2023, the Company began recognizing 100% of the merger arbitrage
SICAV revenues received by Gabelli Funds, LLC (“Gabelli Funds”). In turn, AC pays the marketing expenses of the SICAV previously
paid by Gabelli Funds and remits an administrative fee to Gabelli Funds for administrative services provided. This change better aligns
the financial arrangements with the services rendered by each party. The net effect of this change had no material impact on our net
operating results.
Gabelli Merger Plus+ Trust Plc. (“GMP+”) is an investment company based in the United Kingdom. Our affiliate, Gabelli Funds, is the
investment manager (the “AIFM”) and the Company functions as the sub-advisor. Gabelli Funds receives the management fee of 85
basis points (0.85%) on the net assets of the fund and pays 65 basis points for portfolio management and other services to the Company.
Because the Company has a 93% controlling ownership interest as of December 31, 2024 (92% as of December 2023), it consolidates
GMP+. The Company’s receipt of management and/or incentive fees for services provided to GMP+ 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 income before management fee and income taxes and excludes the impact of consolidating entities. In
2024, the Company recorded management fee expense of $5.9 million compared to $5.4 million in 2023. This fee is recorded as
management fee on the consolidated statements of income.
Affiliated Receivables
At December 31, 2024 and 2023, the receivable from affiliates consisted primarily of sub-advisory fees due from Gabelli Funds.
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 space is leased to affiliates. AC received $133.2 thousand and $133.8 thousand from affiliates (primarily GAMCO) pursuant to lease
agreements for this property for 2024 and 2023, respectively. 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 was fully leased to GAMCO commencing 2021. For
the years ending December 31, 2024 and 2023, the Company received $285.9 thousand and $227.1 thousand, respectively, 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 GAMCO 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). For the years ended December 31, 2024 and 2023, the Company paid $74.3 thousand and
$74.0 thousand under the sublease agreement. These amounts are included in other operating expenses on the consolidated statements
of income.
Other
AC and GAMCO entered into a transitional administrative and management services agreement in connection with the spin-off of AC
from GAMCO on November 30, 2015. The agreement calls for GAMCO 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 GAMCO to AC or by
AC to GAMCO 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, 2024
and 2023, we recorded $3.0 million and $3.0 million, respectively, of compensation expense related to employees shared with GAMCO.
In addition, we recorded approximately $1.0 million and $1.1 million of other operating expense, primarily related to GAMCO’s share
of management and incentive fees in funds we consolidate and the ancillary services provided by GAMCO as noted above, for the years
ended December 31, 2024 and 2023, respectively. Certain officers and employees of the Company receive additional compensation
from GAMCO.
39
10. 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, 2024, approximately 1.0 million shares have been awarded
under the Plan leaving approximately 1.0 million shares available for future grants.
There were no RSAs outstanding as of December 31, 2024 or 2023.
The Company’s Board of Directors periodically grants shares of Phantom Restricted Stock awards (“Phantom RSAs”). Under the terms
of the grants, the Phantom RSAs vest 30% and 70% after three and five years, respectively. The Phantom RSAs will be settled by a cash
payment, net of applicable withholding tax, on the vesting dates. In addition, an amount equivalent to the cumulative dividends declared
on shares of the Company’s Class A Stock during the vesting period will be paid to participants on vesting.
The Phantom RSAs are treated as a liability because cash settlement is required and compensation will be recognized over the vesting
period. In determining the compensation expense to be recognized each period, the Company will re-measure the fair value of the
liability at each reporting date taking into account the remaining vesting period attributable to each award, cumulative dividends and the
current market value of the Company’s Class A Stock. In making these determinations, the Company will consider the impact of
Phantom RSAs that have been forfeited prior to vesting (e.g., due to an employee termination). The Company has elected to consider
forfeitures as they occur.
Based on the closing price of the Company’s Class A Common Stock and cumulative dividends on December 31, 2024 and 2023, the
total liability recorded by the Company in compensation payable in our consolidated statements of financial condition with respect to
the Phantom RSAs was $4.8 million and $3.5 million, respectively.
The following table summarizes our stock-based compensation, as well as unrecognized compensation, for the years ended December
31, 2024 and 2023 respectively. Stock-based compensation expense is included in compensation expense in the consolidated statements
of income (in thousands, unless otherwise noted):
Year Ended December 31,
2024
2023
Stock-based compensation expense
$
2,221 $
1,434
Remaining expense to be recognized, if all vesting conditions are met(1)
6,304
4,956
Weighted average remaining contractual term (in years)
2.1
2.1
(1) Does not include an estimate for projected future dividends.
40
The following table summarizes Phantom RSA ("PRSA") activity:
PRSA's
Weighted
Average Grant
Date Fair Value
Balance at December 31, 2022
210,910 $
36.17
Granted
97,000
39.61
Vested
(74,215 )
36.86
Balance at December 31, 2023
233,695 $
37.38
Granted
97,200
34.28
Forfeited
(2,000 )
36.95
Vested
(27,300 )
35.82
Balance at December 31, 2024
301,595 $
36.52
Stock Repurchase Program
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. On February 6, 2024 and August 7, 2024, the Board of Directors authorized the repurchase of
an additional 350,000 and 200,000 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:
Number of
shares
purchased
Average price
per share
Remaining repurchase authorization January 1, 2023
609,352
Share repurchases under stock repurchase program (1)
(452,688 ) $
36.06
Remaining repurchase authorization December 31, 2023
156,664
Share repurchases under stock repurchase program (1)
(353,116 ) $
33.53
Remaining repurchase authorization December 31, 2024 (2)
353,548
(1) Repurchases totaled $11.8 million and $16.3 million in 2024 and 2023, respectively.
(2) On February 6, 2024, the Board of Directors authorized the repurchase of an additional 350,000 shares. On August 7, 2024, the
Board of Directors authorized the repurchase of an additional 200,000 shares.
Dividends
During 2024 and 2023, the Company declared and paid dividends of $2.20 and $0.20 per share to class A and class B shareholders
totaling $46.8 million and $4.3 million, respectively.
11. Segment Information
The Company operates in one business segment, the investment advisory and alternative asset management business. The Company
conducts its business principally through Gabelli & Company Investment Advisers, Inc. and its wholly owned subsidiary Gabelli &
Partners, LLC. The Company has identified the Executive Chair and the Chief Executive Officer as the chief operating decision maker
(“CODM”), who use net income in the consolidated statements of income to evaluate the results of the business to manage the Company.
The CODM uses net income in deciding whether to reinvest profits or allocate profits to other uses of capital, such as for acquisitions
or to pay dividends. All expense categories on the consolidated statements of income are significant and there are no other significant
segment expenses that would require disclosure. Assets provided to the CODM are consistent with those reported on the consolidated
statements of financial condition. The Company’s operations constitute a single operating segment and, therefore, a single reportable
segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies
used to measure the profit and loss of the segment are the same as those described in Note 2, Significant Accounting Policies.
41
12. 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 $9 thousand and $8 thousand in 2024 and 2023, respectively, and is included in compensation on the consolidated
statements of income.
13. 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 is not aware of any probable or reasonably possible losses at December
31, 2024 and 2023.
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.
14. 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 per share, approved by the Board
of Directors, based upon the actual number of shares registered in the shareholder’s name. The Company recorded an expense of $3.5
million and $4.0 million related to this program for the years ended December 31, 2024 and 2023, respectively, which is included in
shareholder-designated contribution in the consolidated statements of income. As of December 31, 2024 and 2023, the Company has
reflected a liability in the amount of $2.7 million and $2.8 million, respectively, in connection with this program, which is included in
accrued expenses and other liabilities on the consolidated statements of financial condition.
15. Subsequent Events
From January 1, 2025 to March 19, 2025, the Company repurchased 35,582 shares at $36.35 per share.
On February 28, 2025, after reviewing other candidates the Company announced that the Board of Directors had selected Patrick B.
Huvane, Vice President of Corporate Development, to serve as Interim Chief Executive Officer effective March 17, 2025 upon Douglas
R. Jamieson’s retirement as Chief Executive Officer. Mr. Jamieson will continue to serve as a Director of the Company.
42
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
The Company maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that
information, which is required to be timely disclosed, is recorded, processed, summarized, and reported to management within the time
periods specified in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls
and procedures (as defined in the Exchange Act) as of the end of the period covered by this report, have concluded that the Company's
disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the
Company in the reports that it files or reasonable assurance that such information is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms. Our current management, including our CEO and CFO, have 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, 2024.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-
15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control-Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”)). Our internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the
preparation of our financial statements for external purposes in accordance with GAAP. An effective internal control system, no matter
how well designed, has inherent limitations, including the possibility of human error or overriding of controls, and therefore can provide
only reasonable assurance with respect to reliable financial reporting. Because of its inherent limitations, our internal control over
financial reporting may not prevent or detect all misstatements, including the possibility of human error, the circumvention or overriding
of controls, or fraud. Effective internal controls can provide only reasonable assurance with respect to the preparation and fair
presentation of financial statements.
Based on its evaluation, management concluded that, as of December 31, 2024, the Company maintained effective internal control over
financial reporting.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2024, that has materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B: OTHER INFORMATION
During the year ended December 31, 2024, none of our directors or executive officers adopted, modified or terminated any contract,
instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions
of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.
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 2025 Annual Meeting of Stockholders (the “Proxy
Statement”).
43
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.
The Company has policies and procedures governing the purchase, sale and/or other dispositions of our securities by directors, officers
and employees and by the Company that are reasonably designed to promote compliance with insider trading laws, rules and regulations,
and the listing standards of the New York Stock Exchange, which were adopted at the time of the spin-off in 2015. A copy of the policies
and procedures is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
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 Report included herein:
See Index on page 18.
(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.
44
(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
Description of Exhibit
2.1
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).
3.1
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).
3.2
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).
4.1
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).
4.2
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).
10.1
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).
10.2
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).
10.3
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).
10.4
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).
10.5
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).
10.6
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).
10.7
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).
10.8
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).
19.1
Insider Trading Policy
21.1
Subsidiaries of the Company.
24.1
Powers of Attorney (included on page 47 of this Report).
31.1
Certification of CEO pursuant to Rule 13a-14(a).
31.2
Certification of CFO pursuant to Rule 13a-14(a).
32.1
Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
32.2
Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act
of 2002.
45
97.1
Associated Capital Group, Inc. Clawback Policy (Incorporated by reference to Exhibit 97.1 to the Company’s Form 10-
K dated December 31 ,2023 filed with the Commission on March 21, 2024).
101.INS
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)
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
ITEM 16:
FORM 10-K SUMMARY
None.
46
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 19,
2025.
ASSOCIATED CAPITAL GROUP, INC.
By:
/s/ Ian J. McAdams
Name: Ian J. McAdams
Title:
Chief Financial Officer
Date:
March 19, 2025
47
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Peter D. Goldstein, and Ian J. McAdams and each of them,
their true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for them in their name, place and stead,
in any and all capacities, to sign any and all amendments to this report and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the
capacities and on the dates indicated.
Signature
Title
Date
/s/ Patrick B. Huvane
Interim Chief Executive Officer
March 19, 2025
Patrick B. Huvane
(Principal Executive Officer)
/s/ Ian J. McAdams
Chief Financial Officer
March 19, 2025
Ian J. McAdams
(Principal Financial Officer)
/s/ Mario J. Gabelli
Executive Chair of the
March 19, 2025
Mario J. Gabelli
Board and Director
/s/ Marc Gabelli
Vice Chair of the Board and Director
March 19, 2025
Marc Gabelli
/s/ Douglas R. Jamieson
Director
March 19, 2025
Douglas R. Jamieson
/s/ Daniel R. Lee
Director
March 19, 2025
Daniel R. Lee
/s/ Bruce M. Lisman
Director
March 19, 2025
Bruce M. Lisman
/s/ Richard T. Prins
Director
March 19, 2025
Richard T. Prins
/s/ Frederic V. Salerno
Director
March 19, 2025
Frederic V. Salerno
/s/ Salvatore F. Sodano
Director
March 19, 2025
Salvatore F. Sodano
/s/ Elisa M. Wilson
Director
March 19, 2025
Elisa M. Wilson
48
Exhibit 21.1
Subsidiaries of Associated Capital Group, Inc.
The following table lists the direct and indirect subsidiaries of Associated Capital Group, Inc. (the “Company”), except those 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
Jurisdiction of Incorporation or Organization
Gabelli & Company Investment Advisers, Inc.
Delaware
(100%-owned by the Company)
Gabelli & Partners, LLC
Delaware
(100%-owned by Gabelli & Company Investment Advisers, Inc.)
49
Exhibit 31.1
Certifications
I, Patrick B. Huvane, 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:
/s/ Patrick B. Huvane
Name:
Patrick B. Huvane
Title:
Interim Chief Executive Officer
Date:
March 19, 2025
50
Exhibit 31.2
Certifications
I, Ian J. McAdams, 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:
/s/ Ian J. McAdams
Name:
Ian J. McAdams
Title:
Chief Financial Officer
Date:
March 19, 2025
51
Exhibit 32.1
Certification of CEO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Associated Capital Group, Inc. (the “Company”) for the year ended December
31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Patrick B. Huvane, as Interim 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:
/s/ Patrick B. Huvane
Name:
Patrick B. Huvane
Title:
Interim Chief Executive Officer
Date:
March 19, 2025
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.
52
Exhibit 32.2
Certification of CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Associated Capital Group, Inc. (the “Company”) for the year ended December
31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ian J. McAdams, 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:
/s/ Ian J. McAdams
Name: Ian J. McAdams
Title:
Chief Financial Officer
Date:
March 19, 2025
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.