U.S. Global Investors, Inc. (NASDAQ: GROW) (the “Company”), a
boutique registered investment advisory firm with longstanding
experience in global markets and specialized sectors from gold to
cryptocurrencies, today is pleased to report financial results for
the fiscal year ended June 30, 2021.
For the 12-month period, total operating revenues were $21.7
million, an increase of over 380% year-over-year (YoY). For the
quarter, revenues were $7.3 million, a 15% increase
quarter-over-quarter (QoQ) and 292% increase YoY. Net income for
the 12-month period was $32.0 million, or $2.12 per share, compared
to a net loss of $4.7 million, or $0.31 loss per share, a year
earlier. For the quarter, net income was $4.7 million, an increase
of 217% from the same three-month period a year ago. Average assets
under management (AUM) for the 12-month period ended June 30, 2021,
were $3.4 billion, compared to $0.7 billion for the year ended June
30, 2020, an increase of $2.7 billion, or about 380%. Operating
margin for the fiscal year was 38%, compared to an operating loss
during the same period last year. Earnings from operations were
$8.2 million and investment income was $28.3 million.
“On behalf of everyone at U.S. Global Investors, I want to thank
our shareholders for their patience as we worked diligently to
complete the audit,” says Frank Holmes, CEO and Chief Investment
Officer. “It’s important for investors to keep in mind that GROW
remains volatile. For the 12-month period through September 30,
2021, GROW had a one-day standard deviation of ±5% and a 10-day
deviation of ±15%. That puts the stock’s volatility slightly above
Tesla’s and in a similar range as Bitcoin and Ethereum’s.”
JETS Continued to Attract Healthy Inflows; Risk Factors
Could Favor GOAU
The Company’s two ETFs, the U.S. Global Jets ETF (JETS) and U.S.
Global GO GOLD and Precious Metal Miners ETF (GOAU), generated a
combined $17.1 million in advisory fees during fiscal 2021, an
increase of approximately 880% from a year earlier.
JETS continued to attract assets during fiscal year 2021, after
the initial market shock in Spring 2020 that prompted new retail
investors to seek exposure to highly impacted industries, the
commercial airlines industry included. In March 2021, the smart
beta 2.0 airlines ETF reached a new exciting milestone by
surpassing $4 billion in AUM.
In June 2021, the Company, in a partnership with HANetf,
launched the U.S. Global Jets UCITS ETF (JETS), Europe’s first and
only global airlines industry ETF. This move marked the second time
during the year that the Company expanded its product line to
international markets, the first case being in April 2021 when
it launched its airlines ETF on the Mexican Stock Exchange
(BMV). Based in London, HANetf is Europe’s first independent
full-service provider of Undertakings for Collective Investment in
Transferable Securities (UCITS) ETFs, with over $2 billion in AUM.
Exchange-traded funds that qualify as UCITS can be registered in
Europe and offered to investors throughout the European Union (EU)
using standardized regulatory requirements. Once approved, they
become exempt from regulation in individual countries.
“We’re pleased to see that demand for JETS has remained strong,
even as new variants of the coronavirus have threatened to create
new travel restrictions,” says Mr. Holmes. “On December 6, 2021,
JETS saw a new daily record in trading volume, with more than 33
million shares traded. This closely followed a new pandemic high in
the number of people traveling by air in the U.S. over the
Thanksgiving break, according to the Transportation Security
Administration (TSA). Approximately 2.5 million people boarded
commercial jets on November 28, 2021, the highest figure since the
start of the pandemic.”
Compared to JETS, attracting new fund flows into the U.S. Global
GO GOLD and Precious Metal Miners ETF (GOAU) has been more
challenging, particularly in the months since the gold price peaked
at approximately $2,060 an ounce in early August 2020. Even though
GOAU invests in precious metal producers and streaming companies,
and not physical bullion, its share price has closely tracked the
price of gold as it fell off its highs.
“Gold looks highly undervalued by the market right now, which is
made clear by the steady decline in the number of physical ounces
held in known gold-backed ETFs,” Mr. Holmes continues. “Some people
point to Bitcoin’s role as ‘digital gold’ as the primary reason why
investment demand for traditional gold and gold mining ETFs has
been muted this past year, but I happen to believe that both asset
classes can be inclusive of one another. Gold’s historical price
drivers appear to be in place, including high rates of money
printing and inflation, large amounts of negative yielding
government bonds around the world and geopolitical uncertainty, and
so we are working to bring GOAU to the attention of even more
retail and institutional investors.”
HIVE, the Company’s Exposure to the Crypto Space, Now
Trading on the Nasdaq
As of June 30, 2021, the Company held investments carried at
fair value of $35.3 million and a cost basis of $23.1 million. In
addition, the Company held other investments of approximately $3.5
million, held-to-maturity investments of $1.0 million and
investments of $532,000 accounted for under the equity method of
accounting.
HIVE Blockchain Technologies Ltd. (“HIVE”) remains the Company’s
exposure to the rapidly expanding cryptocurrency mining industry.
The first publicly listed crypto mining firm, HIVE began trading on
the Nasdaq’s Capital Markets Exchange on July 1, 2021, under the
ticker HVBT.
During the year ended June 30, 2021, the Company purchased
securities of HIVE, for $15.0 million. The securities are comprised
of 8% interest-bearing unsecured convertible debentures, payable in
quarterly installments with a final maturity in January 2026, and 5
million common share purchase warrants in the capital of HIVE. The
principal amount of each debenture is convertible into common
shares in the capital of HIVE at a conversion rate of $2.34, and
the remaining principal amount is $14.3 million as of June 30,
2021. Each whole warrant, expiring in January 2024, entitles the
Company to acquire one common share at a price of $3.00 (Canadian).
As of June 30, 2021, the Company’s investment in HIVE does not
represent ownership of HIVE.
Cryptocurrency markets and related securities have been, and are
expected to continue to be, volatile. There has been significant
volatility in the market price of HIVE, which has materially
impacted the value of the investments included on the Company’s
balance sheet. Frank Holmes serves on the board as non-executive
chairman of HIVE and held shares and options at June 30, 2021.
Effective August 31, 2018, Mr. Holmes was named Interim Executive
Chairman of HIVE while a search for a new CEO is undertaken.
A Successful Year for the Global Luxury Goods Fund
(USLUX)
The end of fiscal 2021 marked approximately one year since the
Global Luxury Goods Fund (USLUX) was included in the Company’s
line-up of mutual funds, providing investors access to some of the
most world’s most recognizable names in luxury and high-end retail.
As of this writing, USLUX remained the only U.S.-based mutual fund
with a luxury goods strategy.
Since it became available under the ticker USLUX on July 1,
2020, the quant-based fund returned 56.78% as of June 30, 2021,
outperforming its benchmark, the S&P 1500 Composite Index,
which increased 41.55%.
“Initially, there were some doubts about us introducing a luxury
goods fund in the middle of a pandemic and economic downturn, but
the numbers show it was a sound decision,” comments Mr. Holmes.
“Retail sales in general were unexpectedly strong in fiscal 2021,
thanks to near-zero interest rates, unprecedented money printing
and more than one round of stimulus checks. LVMH Moet Hennessey
Louis Vuitton, the biggest European company by market cap and one
of the largest holdings in USLUX, reported record revenue in the
first half of the year, generating 28.7 billion euros ($34.0
billion). Profits for fashion and leather goods were 5.7 million
euros ($6.7 million), also a new record high for the luxury
conglomerate.”
After plunging due to the global health crisis, the personal
luxury goods market returned to pre-pandemic growth in 2021, with
sales estimated to top 283 billion euros ($325 billion) by
year-end, according to a new report by Bain & Company. That
would represent a slight increase from then-record sales of 281
billion euros ($318 billion) in 2019.
Adequate Liquidity and Capital Resources
As of June 30, 2021, the Company had net working capital of
approximately $21.6 million. With approximately $14.4 million in
cash and cash equivalents and $10.2 million in securities recorded
at fair value, excluding convertible securities, the Company has
adequate liquidity to meet its current 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, 2021. The repurchase program has been in place since
December 2012. As of June 30, 2021, approximately $2.5 million
remains available for repurchase under this authorization. The
Company uses an algorithm to buy back stock on down days.
During fiscal year 2021, the Company repurchased 53,151 of its
class A shares on the open market using cash of $314,000. To date,
the Company has repurchased a total of 719,682 class A shares under
the repurchase program using cash of $1.8 million. The program may
be suspended or discontinued at any time.
GROW Dividends
Dividends totaling $552,000 and $88,000 were paid to holders of
class A and class C common stock, respectively, in fiscal year
2021. The dividend rate for both classes was $0.0025 per month
during fiscal year 2020 and through January 2021 and $0.0050 from
February 2021 through September 2021. The monthly dividend of
$0.0075 is authorized through March 2022 and will be considered for
continuation at that time by the Board.
Earnings Webcast Information
The Company has scheduled a webcast for 7:30 a.m. Central time
on Thursday, December 9, 2021, 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)
|
Year ended
June 30, |
|
2021 |
2020 |
Operating Revenues |
$21,654 |
$4,476 |
Operating Expenses |
13,489 |
6,879 |
Operating Income (Loss) |
8,165 |
(2,403) |
|
|
|
Total Other Income (Loss) |
29,273 |
(2,236) |
Income (Loss) from Continuing Operations Before Income
Taxes |
37,438 |
(4,639) |
|
|
|
Income Tax Expense (Benefit) |
5,477 |
(175) |
Net Income (Loss) from Continuing Operations |
31,961 |
(4,464) |
Loss from Discontinued Operations |
- |
(338) |
Net Income (Loss) |
31,961 |
(4,802) |
Less: Net Loss Attributable to Non-Controlling Interest |
- |
(118) |
Net Income (Loss) Attributable to U.S. Global Investors,
Inc. |
$31,961 |
$(4,684) |
|
|
|
Net income (loss) per share (basic and diluted) |
$2.12 |
($0.31) |
|
|
|
Avg. common shares outstanding (basic) |
15,067,044 |
15,108,394 |
Avg. common shares outstanding (diluted) |
15,067,953 |
15,108,394 |
|
|
|
Avg. assets under management from continuing operations
(billions) |
$3.4 |
$0.7 |
####
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 and U.S. Global ETFs.
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. U.S. Global mutual funds are
distributed by Foreside Fund Services, LLC, Distributor. U.S.
Global Investors is the investment adviser.
Total Annualized Returns as of 6/30/2021:
Fund |
One-Year |
Five-Year |
Ten-Year |
Gross Expense Ratio |
Global Luxury Goods Fund |
56.27% |
14.53% |
8.54% |
1.58% |
S&P Composite 1500 Index |
42.12% |
17.38% |
14.63% |
n/a |
Performance data quoted above is historical. Past performance is
no guarantee of future results. Results reflect the reinvestment of
dividends and other earnings. For a portion of periods, the fund
had expense limitations, without which returns would have been
lower. Current performance may be higher or lower than the
performance data quoted. The principal value and investment return
of an investment will fluctuate so that your shares, when redeemed,
may be worth more or less than their original cost. Performance
does not include the effect of any direct fees described in the
fund’s prospectus which, if applicable, would lower your total
returns. Performance quoted for periods of one year or less is
cumulative and not annualized. Obtain performance data current to
the most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
Foreside Fund Services, LLC, Distributor. U.S. Global Investors
is the investment adviser. JETS and GOAU are distributed by Quasar
Distributors, LLC. U.S. Global Investors is the investment adviser
to JETS and GOAU. Foreside Fund Services, LLC and Quasar
Distributors, LLC are affiliated.
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 funds. Brokerage commissions will reduce returns.
Stock markets can be volatile and share prices can fluctuate in
response to sector-related and other risks as described in the fund
prospectus. Foreign and emerging market investing involves special
risks such as currency fluctuation and less public disclosure, as
well as economic and political risk. Companies in the consumer
discretionary sector are subject to risks associated with
fluctuations in the performance of domestic and international
economies, interest rate changes, increased competition and
consumer confidence. 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. The outbreak of the COVID-19 pandemic
and the resulting actions to control or slow the spread has had a
significant detrimental effect on the global and domestic
economies, financial markets and industries, including airlines.
U.S. Global Investors continues to monitor the impact of COVID-19,
but it is too early to determine the full impact this virus may
have on commercial aviation. Should this emerging macro-economic
risk continue for an extended period, there could be an adverse
material financial impact to the U.S. Global Jets ETF.
All opinions expressed and data provided are subject to change
without notice. Some of these opinions may not be appropriate to
every investor.
A smart-beta ETF is a type of exchange-traded fund
that uses a rules-based system for selecting investments to be
included in the fund. The Consumer Confidence Index (CCI) is a
survey, administered by The Conference Board, that measures how
optimistic or pessimistic consumers are regarding their expected
financial situation. The S&P Composite 1500 combines three
leading indices, the S&P 500, the S&P MidCap 400 and the
S&P SmallCap 600, to cover approximately 90% of U.S. market
capitalization. It is designed for investors seeking to replicate
the performance of the U.S. equity market or benchmark against a
representative universe of tradable stocks. Mutual fund investing
involves risk. Principal loss is possible. Companies in the
consumer discretionary sector are subject to risks associated with
fluctuations in the performance of domestic and international
economies, interest rate changes, increased competition and
consumer confidence. The performance of such companies may also be
affected by factors relating to levels of disposable household
income, reduced consumer spending, changing demographics and
consumer tastes, among others.
Fund portfolios are actively managed, and holdings may change
daily. Holdings are reported as of the most recent quarter-end.
Holdings in the Global Luxury Goods Fund as a percentage of net
assets as of 6/30/2021: LVMH Moet Hennessy Louis Vuitton SA
7.79%.
- The DNA of Volatility
- USLUX Beat Its Benchmark Since Changing Its Name and Investment
Strategy
Holly Schoenfeldt
U.S. Global Investors, Inc.
210.308.1268
hschoenfeldt@usfunds.com
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