U.S. Global Investors, Inc. (NASDAQ: GROW) (the “Company”), a
boutique registered investment advisory firm with longstanding
experience in global markets and specialized sectors, today
reported a net loss of $1.0 million, or $0.06 per share loss, for
the quarter ended December 31, 2019. That’s compared to a net loss
of $3.2 million, or $0.21 per share loss, for the same three-month
period a year earlier. The decrease in loss is primarily due to
improvement in unrealized investment losses.
Operating loss from continuing operations for the quarter ended
December 31, 2019, was $511,000, compared to a loss of $856,000 for
the quarter ended December 31, 2018, an improvement of $345,000.
Total consolidated operating revenues for the quarter ended
December 31, 2019, increased $94,000, or 11.9 percent, compared
with the quarter ended December 31, 2018, due to higher average
assets under management in equity funds, lower fund expense waivers
and lower performance fees paid out. Total consolidated operating
expenses for the current quarter decreased $251,000, or 15.2
percent, compared with the same quarter in the prior year, due to a
decrease in employee compensation and benefits expenses and a
decrease in fund expenses.
Total consolidated other loss for the three months ended
December 31, 2019, was $440,000 compared with an approximate $3.5
million loss for the three months ended December 31, 2018, a
decrease in loss of approximately $3.0 million. The majority of
other loss is due to investment losses, primarily unrealized losses
on fair valued securities. A significant portion of the unrealized
loss for both three-month periods was related to declines in
technology and cryptocurrency mining equity securities held in
corporate investments. The unrealized loss for HIVE Blockchain
Technologies (“HIVE”), the Company’s strategy for exposure to
cryptocurrencies and blockchain, was $1.0 million in the current
quarter. This unrealized loss was partially offset, however, by net
unrealized gains in other securities of $453,000.
U.S. Global Investors (Canada) Limited (“USCAN”), a wholly owned
subsidiary of the Company, entered into a binding letter of intent
dated December 30, 2019, with Galileo Global Equity Advisors Inc.
(“Galileo”), whereby Galileo, pursuant to a capital restructuring,
will repurchase all of its common shares owned by USCAN for $1.0
million (Canadian). The transaction is subject to the approval of
Canadian securities regulatory authorities and to the satisfaction
of other closing conditions. It is anticipated that the transaction
will close on or about March 2, 2020. After the transaction, the
Company will have no continuing involvement with the operations of
Galileo, except for an equity method investment in a fund managed
by Galileo. This will allow the Company to focus on assets under
management in the U.S. The results of Galileo are included in
“discontinued operations” in the Consolidated Statements of
Operations.
GOAU ETF Approved for Three New Trading Platforms
“I’m thrilled that our gold equities ETF, the U.S. Global GO
GOLD and Precious Metal Miners ETF (GOAU), was made available for
investors to trade on three additional platforms during the
December quarter,” comments Frank Holmes, the Company’s CEO and
chief investment officer. Those platforms are Raymond James,
Oppenheimer & Co. and Janney Montgomery Scott.
“GOAU, which returned 54.1 percent in 2019, is a quant-based
gold equities ETF that, once every quarter, rebalances the three
largest gold royalty and streaming and companies,” Mr. Holmes says.
“What’s more, it kicks out the losers and takes positions in
companies with the strongest growth on a per-share basis and that
are cheapest on a relative basis.
“We couldn’t be more pleased with how well GOAU has performed
since its debut two and a half years ago,” Mr. Holmes continues.
“It’s done exactly what we said it would, and we’re excited for
more investors to discover it now that it’s been approved for
trading on these three new platforms.”
Besides delivering attractive performance, GOAU has seen its
trading volume surge over the past 12 months. Between December 2018
and December 2019, average daily trading volume jumped 708 percent,
from 9,907 shares to 80,010 shares.
“I’m also very happy with how well our premiere gold equities
mutual fund, the Gold and Precious Metals Fund (USERX), has
performed,” Mr. Holmes adds. “The fund returned 51.3 percent in
performance for the 12-month period through December 31, 2019,
beating its benchmark, the FTSE Gold Mines Index, by 866 basis
points. USERX received an incredible five stars overall from
Morningstar, based on risk-adjusted returns, as of December 31. It
also received five stars for the five- and 10-year periods.”
HIVE Has Turned a Corner for the Better
HIVE remains the Company’s strategy for cryptocurrencies and
blockchain since such an ETF has not yet been approved by the
Securities and Exchange Commission (SEC). The investment was valued
at approximately $731,000 at December 31, 2019.
Mr. Holmes serves on the board as non-executive chairman of HIVE
and held shares and options at December 31, 2019. Effective
August 31, 2018, Mr. Holmes was named Interim Executive Chairman of
HIVE while a search for a new CEO is undertaken.
“HIVE is the world’s dominant producer of newly-minted Ether
coins, and I’m pleased to announce that the company experienced a
more than 20 percent increase in daily Ether coin production
compared to its exit run rate for the last 15 days in December
2019. What’s more, electricity costs are trending down at the
company’s mining facility in Sweden,” Mr. Holmes comments. “Shares
in HIVE are seeing substantial daily trading volume following
year-end tax loss selling in mutual funds and ETFs. I believe the
future of the company looks very promising as a number of other
crypto mining companies have capitulated.”
Adequate Liquidity and Capital Resources
As of December 31, 2019, the Company had net working capital of
approximately $10.2 million. With approximately $1.8 million in
cash and cash equivalents and $9.5 million in unrestricted
securities at fair value, the Company has adequate liquidity to
meet its current obligations. The Company has no borrowings or
long-term liabilities except for lease obligations.
Share Repurchase Program
The Company has a share repurchase program, approved by the
Board of Directors, authorizing it to annually purchase up to $2.75
million of its outstanding common shares on the open market through
December 31, 2020. For the three months ended December 31, 2019,
the Company repurchased 2,000 class A shares using cash of $3,000.
The plan may be suspended or discontinued at any time.
GROW Continued Dividends
The Company has continued to pay monthly dividends for more than
10 years. The Board of Directors has authorized a monthly dividend
of $0.0025 per share through March 2020, at which time the Board of
Directors will consider continuation of the dividend.
Earnings Webcast Information
The Company has scheduled a webcast for 7:30 a.m. Central time
on Wednesday, February 12, 2020, to discuss the Company’s key
financial results for the year. Frank Holmes will be accompanied on
the webcast by Lisa Callicotte, chief financial officer, and Holly
Schoenfeldt, marketing and public relations manager. Click here to
register for the earnings webcast or visit www.usfunds.com for more
information.
Selected Financial Data (unaudited):
(dollars in thousands, except per share data)
|
Three months
ended |
|
12/31/2019 |
12/31/2018 |
Operating Revenues |
$887 |
$793 |
Operating Expenses |
1,398 |
1,649 |
Operating Loss |
(511) |
(856) |
|
|
|
Total Other Loss |
(440) |
(3,463) |
Loss from Continuing Operations Before Income Taxes |
(951) |
(4,319) |
|
|
|
Income Tax Benefit |
(25) |
(744) |
Net Loss from Continuing Operations |
(926) |
(3,575) |
Income (loss) from Discontinued Operations |
(117) |
560 |
Net Loss |
(1,043) |
(3,015) |
Less: Net Income (Loss) Attributable to Non-Controlling
Interest |
(40) |
196 |
Net Loss Attributable to U.S. Global Investors, Inc. |
$(1,003) |
$(3,211) |
Loss from continuing operations per share (basic and
diluted) |
$(0.06) |
$(0.24) |
Income (loss) from discontinuing operations per share (basic
and diluted) |
$0.00 |
$0.03 |
Loss per share (basic and diluted) |
$(0.06) |
$(0.21) |
|
|
|
Avg. common shares outstanding (basic) |
15,129,114 |
15,145,702 |
Avg. common shares outstanding (diluted) |
15,129,114 |
15,145,702 |
|
|
|
Avg. assets under management from continuing operations
(millions) |
$507.6 |
$522.3 |
####
About U.S. Global Investors, Inc.
The story of U.S. Global Investors goes back more than 50 years
when it began as an investment club. Today, U.S. Global Investors,
Inc. (www.usfunds.com) is a registered investment adviser that
focuses on niche markets around the world. Headquartered in San
Antonio, Texas, the Company provides money management and other
services to U.S. Global Investors Funds, U.S. Global ETFs and other
international clients.
Forward-Looking Statements and Disclosure
This news release and other statements by U.S. Global Investors
may include certain “forward-looking statements,” including
statements relating to revenues, expenses and expectations
regarding market conditions. You can identify these forward-looking
statements by the use of words such as “outlook,” “believes,”
“expects,” “potential,” “opportunity,” “seeks,” “anticipates” or
other comparable words. Such statements involve certain risks and
uncertainties and should be read with corporate filings and other
important information on the Company’s website, www.usfunds.com, or
the Securities and Exchange Commission’s website at
www.sec.gov.
These filings, such as the Company’s annual report and Form
10-Q, should be read in conjunction with the other cautionary
statements that are included in this release. Future events could
differ materially from those anticipated in such statements and
there can be no assurance that such statements will prove accurate
and actual results may vary. The Company undertakes no obligation
to publicly update or review any forward-looking statements,
whether as a result of new information, future developments or
otherwise.
Please consider carefully a fund’s investment objectives, risks,
charges and expenses. For this and other important information,
obtain a fund prospectus by visiting www.usfunds.com. Read it
carefully before investing. Foreside Fund Services, LLC,
Distributor. U.S. Global Investors is the investment adviser.
Past performance does not guarantee future results.
Total Annualized Returns as of 12/31/2019:
Fund |
One-Year |
Five-Year |
Ten-Year |
Since Inception |
Gross Expense Ratio |
U.S. Global GO GOLD and Precious Metal Miners ETF NAV |
53.37% |
n/a |
n/a |
16.44% (6/27/2017) |
0.60% |
U.S. Global GO GOLD and Precious Metal Miners ETF Share
Price |
54.14% |
n/a |
n/a |
16.71% (6/27/2017) |
0.60% |
Gold and Precious Metals Fund |
51.34% |
15.21% |
-1.43% |
30.79% (7/1/1974) |
1.78% |
FTSE Gold Mines Index |
42.68% |
12.58% |
-3.46% |
n/a |
n/a |
The performance data quoted represents past performance. Past
performance does not guarantee future results. The investment
return and principal value of an investment will fluctuate so that
an investor's shares, when sold or redeemed, may be worth more or
less than their original cost and current performance may be lower
or higher than the performance quoted. Short term performance, in
particular, is not a good indication of the fund’s future
performance, and an investment should not be made based solely on
returns. For GOAU performance data current to the most recent
month-end, please visit www.usglobaletfs.com.
Investing involves risk, including the possible loss of
principal. Shares of any ETF are bought and sold at market price
(not NAV), may trade at a discount or premium to NAV and are not
individually redeemed from the fund. Brokerage commissions will
reduce returns. Because the fund concentrates its investments in
specific industries, the fund may be subject to greater risks and
fluctuations than a portfolio representing a broader range of
industries. The fund is non-diversified, meaning it may concentrate
more of its assets in a smaller number of issuers than a
diversified fund. The fund invests in foreign securities which
involve greater volatility and political, economic and currency
risks and differences in accounting methods. These risks are
greater for investments in emerging markets. The fund may invest in
the securities of smaller-capitalization companies, which may be
more volatile than funds that invest in larger, more established
companies. The performance of the fund may diverge from that of the
index. Because the fund may employ a representative sampling
strategy and may also invest in securities that are not included in
the index, the fund may experience tracking error to a greater
extent than a fund that seeks to replicate an index. The fund is
not actively managed and may be affected by a general decline in
market segments related to the index. Gold, precious metals,
and precious minerals funds may be susceptible to adverse economic,
political or regulatory developments due to concentrating in a
single theme. The prices of gold, precious metals, and precious
minerals are subject to substantial price fluctuations over short
periods of time and may be affected by unpredicted
international monetary and political policies. We suggest
investing no more than 5% to 10% of your portfolio in these
sectors.
MORNINGSTAR
***** |
Overall/64 |
**** |
3-Year/64 |
***** |
5-Year/63 |
***** |
10-Year/46 |
Morningstar ratings based on risk-adjusted return and number of
funds Category: Equity Precious Metals Through: 12/31/2019
Morningstar Ratings are based on risk-adjusted return. The
Morningstar Rating for a fund is derived from a weighted-average of
the performance figures associated with its three-, five- and
ten-year Morningstar Rating metrics. Past performance does not
guarantee future results. For each fund with at least a three-year
history, Morningstar calculates a Morningstar Rating based on a
Morningstar Risk-Adjusted Return measure that accounts for
variation in a fund’s monthly performance (including the effects of
sales charges, loads, and redemption fees), placing more emphasis
on downward variations and rewarding consistent performance. The
top 10% of funds in each category receive 5 stars, the next 22.5%
receive 4 stars, the next 35% receive 3 stars, the next 22.5%
receive 2 stars and the bottom 10% receive 1 star. (Each share
class is counted as a fraction of one fund within this scale and
rated separately, which may cause slight variations in the
distribution percentages.)
GOAU is distributed by Quasar Distributors, LLC. U.S. Global
Investors is the investment adviser to GOAU.
The FTSE Gold Mines Index Series encompasses all gold mining
companies that have a sustainable and attributable gold production
of at least 300,000 ounces a year, and that derive 75% or more of
their revenue from mined gold. Gross mining profit is used to
assess profitability after power costs in cryptocurrency
production, the largest variable expense in mining. A basis
point, or bp, is a common unit of measure for interest rates and
other percentages in finance. One basis point is equal to 1/100th
of 1%, or 0.01% (0.0001).
Holly Schoenfeldt
U.S. Global Investors, Inc.
210.308.1268
hschoenfeldt@usfunds.com
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