UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 6, 2020

ASSOCIATED CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (203) 629-9595

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter).

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. ☒

Securities registered pursuant to Section 12(b) of the Act:

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Item 2.02

Results of Operations and Financial Condition.

 

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

On May 6, 2020, Associated Capital Group, Inc. (NYSE: AC), (“Associated Capital”), announced its results of operations for the quarter ended March 31, 2020.  A copy of the related press release is being filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference in its entirety.

The information furnished under Item 2.02, including the exhibit attached hereto, is not deemed “filed” for purposes Section 18 of the Securities Exchange Act of 1934 and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except otherwise as expressly stated in such filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

99.1

Associated Capital Group’s Press Release, dated May 6, 2020.

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Associated Capital Group, Inc.

Kenneth D. Masiello

Chief Accounting Officer

Date: May 6, 2020

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Exhibit 99.1

ASSOCIATED CAPITAL GROUP, INC.

Reports First Quarter Results

 

 

 

Greenwich, CT, May 6, 2020 – Associated Capital Group, Inc. (“AC” or the “Company”), a diversified financial services and investment management company, today reported its financial results for the first quarter ended March 31, 2020.

As world leaders focused on the unprecedented human and economic challenges of COVID-19, global equity markets plunged in reaction to the spreading coronavirus pandemic. The events unfolding in March resulted in the worst month for stocks since 2008 and the worst first quarter since 1937.

(Y)our team is observing social distancing guidelines and remains fully operational and focused, with teammates in the office on a rotating schedule. Over the years we have invested in technology and infrastructure that allow teammates to work remotely in anticipation of the need to invest seamlessly from remote locations.

Commitment to Community

 

Our firm has long held the belief that generating returns for our stakeholders, while important, is not the only factor in measuring our corporate success.  One key facet of our principles is how we conduct our business.  Since our spin off in 2015, we have offered a program of corporate giving through our shareholder-designated charitable contribution (SDCC) program.  Through the SDCC program, AC shareholders select organizations to receive charitable grants from Associated Capital.  This year, the majority of our shareholders participated by designating their preferred 501(c)(3) organizations for our corporate giving.  We contributed $4.5 million to such charities in 2019.  Since the inception of this program in 2015, we have donated more than $20.0 million to over 160 charities across the United States.

First Quarter Results

Financial Highlights

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

First Quarter Overview

 

Net investment and other non-operating losses were $100.1 million for the quarter versus a gain of $38.7 million a year ago.   This reflects the mark-to-market impact of our ownership of 2.9 million shares of GBL as well as the mark-to-market losses on our entire investment portfolio,  including our investment in the Gabelli Merger Plus+ Trust (GMP:LSE).

 

The benefit for income taxes was $23.8 million for the first quarter of 2020 versus a tax provision of $6.2 million in the comparable quarter of 2019.

Assets Under Management (AUM)

Assets under management at March 31, 2020 were $1.5 billion, $243 million lower than December 31, 2019.  The portfolios declined by $154 million in addition to $89 million in net redemptions.

 

Alternative Investment Management

 

•	Event-Driven Asset Management

 

The alternative investment strategies focus on fundamental, active, event-driven special situations and merger arbitrage.  During the quarter merger arbitrage was not immune to the market’s volatility.  Merger spreads widened as levered multi-strategy and quantitative hedge funds faced margin calls, forcing them to sell positions indiscriminately to de-lever and raise cash. For the quarter, our fund slipped -7.1%, (-7.4% net of fees). It is important to note that none of the deals in our portfolio were terminated in March. The strategy is offered domestically through partnerships and to institutional investors.  Internationally, the strategy is offered through corporations and EU regulated UCITS structures and the London Stock Exchange listed investment company, Gabelli Merger Plus Trust (GMP-LN).

•	Direct Investing

 

The third leg of our private equity activities was the formation of Gabelli Principal Strategies Group, LLC. (“GPS”) to pursue strategic operating initiatives.  These businesses are organized to invest directly in various ways, with a focus on leveraged buyouts and restructurings of small and mid-sized companies.   These vehicles allow us to acquire companies and create long-term value with no pre-determined exit timetable, leveraging our capital markets expertise through direct investing vehicles.

 

G.research – Spin-off

 

On October 31, 2019, we consummated the merger between G.research, LLC (“G.research”) and Morgan Group Holding Co. (“Morgan Group”). As a result of the transaction, G.research became a wholly owned subsidiary of Morgan Group (MGHL:OTC).  Associated Capital holds 83.3% of the outstanding shares of Morgan Group.

On March 16, 2020 our board of directors approved the distribution of AC’s shares of Morgan Group to shareholders.

 

Shareholder Dividends and Buybacks

 

At its meeting on May 5, 2020 the Board of Directors declared a semi-annual dividend of $0.10 per share payable June 30, 2020 to shareholders of record on June 16, 2020.

 

During the first quarter, AC repurchased approximately 82,000 Class A shares at an average investment of $39.43 per share for a total outlay of $3.2 million.

 

 

At March 31, 2020, there were 3.4 million Class A shares and 19.0 million Class B shares outstanding.

 

About Associated Capital Group, Inc.

 

Associated Capital Group, Inc. (NYSE:AC), based in Greenwich Connecticut, is a diversified global financial services company that provides alternative investment management through Gabelli & Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli Securities, Inc.). The proprietary capital is earmarked for our direct investment business that invests in new and existing businesses.  The direct investment business is developing along three core pillars; Gabelli Private Equity Partners, LLC (“GPEP”), formed in August 2017 with $150 million of authorized capital as a “fund-less” sponsor; the SPAC business (Gabelli special purpose acquisition vehicles), launched in April 2018; and, Gabelli Principal Strategies Group, LLC (“GPS”) created to pursue strategic operating initiatives.

NOTES ON NON-GAAP FINANCIAL MEASURES

Operating Loss Before Management Fee

Operating loss before management fee expense represents a non-GAAP financial measure used by management to evaluate its business operations. We believe this measure is useful in illustrating the operating results of the Company as management fee expense is based on pre-tax income before management fee expense, which includes non-operating items including investment gains and losses from the Company’s proprietary investment portfolio and interest expense.  The management fee is calculated based on the year to date income before management fee and income taxes.

The reconciliation of operating loss to operating loss before management fee expense (non-GAAP) is provided below.

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

 

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

 

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements.  Some of the factors that could cause our actual results to differ from our expectations or beliefs include a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, and a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors contained in our Form 10 and other public filings. Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.

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