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 earnings of $749,000, or $0.05 per share, for the quarter
ended December 31, 2017. This was a significant improvement over
the same quarter the previous year, which had net income of $8,000,
or $0.00 per share.
As was the case in the first quarter, the
improvement in income was mainly due to an investment accounted for
under the equity method in a fund managed by Galileo Global Equity
Advisors Inc. (Galileo). The Company and the Galileo fund made
strategic investments in HIVE Blockchain Technologies, the first
publicly-traded firm involved in the business of mining new digital
currencies, also known as cryptocurrencies.
In addition, the Company saw higher assets under
management (AUM) in its two exchange-traded funds (ETFs). At the
end of the quarter, the U.S. Global Jets ETF (JETS) and U.S. Global
GO GOLD and Precious Metal Miners ETF (GOAU), which launched in
June 2017, collectively held $115.2 million. This is up
substantially from $65.7 million at the end of the same three-month
period in 2016.
Average assets under management, including U.S.
Global Investors Funds, the U.S. Global ETFs, Galileo clients and
offshore clients, were $758.5 million for the quarter ended
December 31, 2017, compared to an average of $850.7 million for the
same quarter a year ago, a decrease of 11 percent. Total assets
under management were $746.0 million as of December 31, 2017,
versus $811.5 million at December 31, 2016, a decrease of 8
percent.
Frank Holmes, CEO and chief investment officer
of U.S. Global Investors, comments, “It’s important for investors
to remember that, since 2000, the price of gold has outperformed
the S&P 500 nearly two-to-one, and last year it returned
slightly more than 13 percent. Despite this, the financial media
continues to have a tendency to downplay gold as an asset class.
“A new gold rally kicked off after the Federal
Reserve hiked rates in mid-December, and the yellow metal started
the new year above $1,300 an ounce, the first time it’s done so
since 2013. With inflation expected to heat up in 2018 on trade
concerns and rising wages, and with geopolitical risks high, I
believe many investors could be more inclined to return to the gold
space as a safe haven. I’m pleased that our U.S. Global GO GOLD and
Precious Metal Miners ETF (GOAU) more than doubled its average
assets from the previous quarter, a clear sign there’s appetite for
a smarter, rules-based alternative to gold investing.
“As for our investment in HIVE Blockchain
Technologies, I’m deeply honored to serve as its chairman and
strategic partner, along with Genesis Mining and its brilliant CEO
Marco Streng. It’s exciting to be at the forefront of this new
technology and see the immediate creation of Ethereum assets.
Cryptocurrencies are reshaping how transactions are made and how
companies raise funds across the globe, while blockchain technology
has the potential to dramatically improve transparency and
efficiency in a number of industries, from manufacturing to
shipping to health care. The year 2017 was the real catalyst,
bringing bitcoin and other digital currencies into mainstream
conversations as bitcoin hit an all-time high of nearly $20,000
apiece in mid-December.”
Cryptocurrencies Remain Highly Volatile,
Speculative Trades
“Since we made public our investment in HIVE in
September, GROW stock’s volatility has increased substantially
compared to the same period last year,” Holmes continues. “The
reason for this is that a number of investors now trade GROW as a
proxy for bitcoin and Ethereum, which are highly volatile and
speculative. GROW’s daily standard deviation for the 12-month
period as of December 31 was 7.13 percent, while bitcoin’s was 5.88
percent. Compare that to the S&P 500, which has an average
daily standard deviation of approximately 1 percent for the 10-year
period, and gold stocks, as measured by the NYSE Arca Gold Miners
Index, which has one closer to 3 percent over the same period.”
Coinbase Generated $1 Billion in Sales
in 2017
“Having said that, the crypto space is rapidly
maturing in a number of different ways. Every day, more and more
businesses accept the currency as a form of payment. Investors can
now buy bitcoin futures. Fidelity and USAA both allow
accountholders to monitor their cryptocurrency holdings. Blockchain
ETFs are beginning to appear on the market—though a couple of
proposed bitcoin ETFs have hit roadblocks getting approval from the
Securities and Exchange Commission (SEC).
“Last year, the cryptocurrency trading platform
Coinbase booked $1 billion in revenue, almost double what company
executives had expected for 2017. Founded only six years ago and
boasting more than 13.5 million accounts, Coinbase has recently
closed the door on any additional venture capital, leaving
investors to hope for an initial public offering (IPO) sometime in
the near future.
“Coinbase is about to face some serious
competition, though, as smartphone-only trading app Robinhood will
begin allowing customers to trade bitcoin and Ethereum in late
February—all commission-free.”
Share Repurchase Program
U.S. Global Investors has continued purchasing
its outstanding stock. For the three months ended December 31,
2017, the Company repurchased 36,748 class A shares using cash of
$117,000. The share repurchase plan may be suspended or
discontinued at any time.
Continued Strong Balance
Sheet
As of December 31, 2017, the Company had net
working capital of approximately $13.4 million. Cash and cash
equivalents totaled $3.0 million, while unrestricted marketable
securities totaled $10.7 million as of the end of the quarter. In
addition, the Company has had no long-term debt since 2004 and owns
its headquarters building.
U.S. Global Continues GROW
Dividends
The Company has also continued to pay monthly
dividends for more than 10 years. A monthly dividend of $0.0025 per
share is authorized through March 2018. Record dates are February
12 and March 12, and future payment dates will be February 26 and
March 26. The continuation of future cash dividends will be
reviewed by the board of directors quarterly.
Earnings Webcast
Information
The Company has scheduled a webcast for 7:30
a.m. Central time on Thursday, February 15, 2018, to discuss the
Company’s key financial results for the quarter. Frank Holmes will
be accompanied on the webcast by Susan McGee, president, general
counsel and chief compliance officer; and Lisa Callicotte, chief
financial officer. 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 |
|
12/31/2017 |
|
12/31/2016 |
Operating Revenues |
$1,993 |
|
|
$1,642 |
|
Operating Expenses |
2,142 |
|
|
1,876 |
|
Operating Income
(Loss) |
(149 |
) |
|
(234 |
) |
Total Other Income |
1,475 |
|
|
249 |
|
Income Before Income
Taxes |
1,326 |
|
|
15 |
|
Tax Expense
(Benefit) |
442 |
|
|
(10 |
) |
Net Income |
884 |
|
|
25 |
|
Less: Net Income (Loss)
Attributable to Non-Controlling Interest |
135 |
|
|
17 |
|
Net Income Attributable
to U.S. Global Investors, Inc. |
$749 |
|
|
$8 |
|
Earnings per share
(basic and diluted) |
$0.05 |
|
|
$0.00 |
|
|
|
|
|
Avg. common shares
outstanding (basic) |
15,160,589 |
|
|
15,218,734 |
|
Avg. common shares
outstanding (diluted) |
15,160,589 |
|
|
15,218,734 |
|
|
|
|
|
Avg. assets under
management (millions) |
$758.5 |
|
|
$850.7 |
|
About U.S. Global Investors, Inc.
The story of U.S. Global Investors goes back
more than 40 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 regarding the U.S. Global Jets ETF (JETS) and
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU), obtain a
statutory and summary prospectus by visiting www.usglobaletfs.com.
Read it carefully before investing.
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 JETS, GOAU and GOGO concentrate their
investments in specific industries, they may be subject to greater
risks and fluctuations than a portfolio representing a broader
range of industries. Airline Companies may be adversely affected by
a downturn in economic conditions that can result in decreased
demand for air travel and may also be significantly affected by
changes in fuel prices, labor relations and insurance costs. JETS,
GOAU and GOGO are non-diversified, meaning they may concentrate
more of their assets in a smaller number of issuers than a
diversified fund. The funds invest 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 funds 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 funds may diverge from that of
the index. Because JETS, GOAU and GOGO may employ a representative
sampling strategy and may also invest in securities that are not
included in the index, they may experience tracking error to a
greater extent than funds that seek to replicate an index. The
funds are not actively managed and may be affected by a general
decline in market segments related to their indexes.
JETS and GOAU distributed by Quasar
Distributors, LLC. U.S. Global Investors is the investment adviser
to JETS, GOAU and GOGO.
Frank Holmes has been appointed non-executive
chairman of the Board of Directors of HIVE Blockchain Technologies.
Both Mr. Holmes and U.S. Global Investors own shares of HIVE,
directly and indirectly.
The Company accounts for its investments in the
Galileo fund under the equity method of accounting. Under the
equity method, the investment is initially recorded at cost, then
the Company’s proportional share of the fund’s net income or loss,
which primarily consists of realized and unrealized gains and
losses on investments offset by fund expenses, is recognized in the
Company’s earnings with a corresponding increase or decrease to the
carrying value of the investment. Distributions received from the
investee reduce the Company’s carrying value of the investment.
The Standard & Poor's 500, often
abbreviated as the S&P 500 Index, or just the S&P, is
an American stock market index based on the market capitalizations
of 500 large companies having common stock listed on the
NYSE or NASDAQ. The S&P 500 index components and
their weightings are determined by S&P Dow Jones
Indices.
The NYSE Arca Gold Miners Index (GDM)
is a modified market capitalization weighted index comprised of
publicly traded companies primarily involved in
the mining of gold and silver in locations
around the world.
Standard deviation is a measure of
the dispersion of a set of data from its mean. It is
calculated as the square root of variance by determining
the variation between each data point relative to the mean. If the
data points are further from the mean, there is higher deviation
within the data set.
Contact:
Holly SchoenfeldtMarketing & Public
Relations Manager
210.308.1268hschoenfeldt@usfunds.com
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