- Quarter End AUM of $32.2 billion; Average AUM of $31.6 billion for the Third Quarter
- Third Quarter Fully Diluted EPS of $0.69 versus $0.52 in the Third Quarter of 2023
- $261.0 million in Cash, Cash Equivalents, Seed Capital, and Investments and no Debt
Financial Highlights
| (In thousands, except percentages and per share data) | |||||||||||||
| Three Months Ended | |||||||||||||
| September 30,
2024 | June 30, 2024 | September 30,
2023 | |||||||||||
| U.S. GAAP | |||||||||||||
| Revenue | $ | 57,546 | $ | 57,644 | $ | 59,475 | |||||||
| Expenses | 35,917 | 41,994 | 41,954 | ||||||||||
| Operating income | 21,629 | 15,650 | 17,521 | ||||||||||
| Non-operating income | 1,027 | 2,535 | 303 | ||||||||||
| Net income | 16,834 | 15,017 | 13,137 | ||||||||||
| Diluted earnings per share | $ | 0.69 | $ | 0.61 | $ | 0.52 | |||||||
| Operating margin | 37.6 | % | 27.1 | % | 29.5 | % | |||||||
Giving Back to Society - $75 million since IPO
Since our initial public offering in February 1999, our firm's combined charitable donations total approximately $80 million, including $48 million through the shareholder designated charitable contribution program. Based on the program created by Warren Buffett at Berkshire Hathaway, our corporate charitable giving is unique in that the recipients of GAMI's charitable contributions are chosen directly by our shareholders, rather than by our corporate officers. Since its inception in 2013, GAMI shareholders have designated charitable gifts to approximately 350 charitable organizations.
On August 6, 2024, GAMI's board of directors authorized the creation of a private foundation to continue our charitable giving program with an initial contribution of $5 million.
Revenue
| (In thousands) | Three Months Ended | ||||||
| September 30, 2024 | September 30,
2023 | ||||||
| Investment advisory and incentive fees | |||||||
| Funds | $ | 38,847 | $ | 37,755 | |||
| Institutional and Private Wealth Management | 14,977 | 15,457 | |||||
| SICAV | 5 | 1,555 | |||||
| Total | $ | 53,829 | $ | 54,767 | |||
| Distribution fees and other income | 3,717 | 4,708 | |||||
| Total revenue | $ | 57,546 | $ | 59,475 | |||
The quarter over quarter increase in Funds revenues was primarily the result of higher average assets under management while the decrease in Institutional and Private Wealth Management revenues was primarily the result of lower beginning of the quarter equity assets under management, which are generally used to calculate the revenues. The decrease in SICAV revenues reflects a change in the agreement for the merger arbitrage SICAV, an open-end fund available to non-U.S. shareholders, which became effective in December 2023. The change better aligns the financial arrangements with the services rendered by each party in managing the fund and did not have a material impact on the financial results. The decrease in distribution fees and other income was primarily the result of a decrease in equity mutual funds AUM that pay distribution fees.
Expenses
| (In thousands) | Three Months Ended | ||||||
| September 30, 2024 | September 30,
2023 | ||||||
| Compensation | $ | 22,566 | $ | 28,192 | |||
| Management fee | 2,517 | 1,980 | |||||
| Distribution costs | 6,033 | 5,992 | |||||
| Other operating expenses | 4,801 | 5,790 | |||||
| Total expenses | $ | 35,917 | $ | 41,954 | |||
- The lower compensation expense in the third quarter of 2024 reflected $5.5 million of waived compensation.
- The $0.5 million increase in management fee is attributable to the higher pre-management fee income of $5.4 million; and,
- Other operating expenses this quarter were lower versus the third quarter of 2023 reflecting the change in the agreement for the merger arbitrage SICAV beginning in December 2023.
The operating margin, which represents the ratio of operating income to revenue, was 37.6% for the third quarter of 2024 compared with 29.5% for the third quarter of 2023.
Non-Operating Income
| (In thousands) | Three Months Ended | ||||||||
| September 30, 2024 | September 30, 2023 | ||||||||
| Gain / (loss) from investments, net | $ | 3,370 | $ | (1,952 | ) | ||||
| Interest and dividend income | 2,947 | 2,542 | |||||||
| Interest expense | (290 | ) | (287 | ) | |||||
| Charitable giving contribution | (5,000 | ) | - | ||||||
| Total non-operating income | $ | 1,027 | $ | 303 | |||||
Non-operating income increased $0.7 million for the quarter, reflecting the higher mark-to-market values on our investment portfolio for the quarter and an increase in interest and dividend income. This was offset by the $5 million contribution to the private foundation to support our ongoing charitable giving program.
Other Financial Highlights
The effective income tax rate for the third quarter of 2024 was 25.7% versus 26.3% for the third quarter of 2023.
Cash, cash equivalents, and investments were $261.0 million with no debt at September 30, 2024.
Assets Under Management
| (In millions) | As of | |||||||||
| September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||
| Mutual Funds | $ | 8,440 | $ | 8,035 | $ | 7,546 | ||||
| Closed-end Funds | 7,459 | 7,052 | 6,727 | |||||||
| Institutional & PWM (a) (b) | 10,984 | 10,436 | 10,034 | |||||||
| SICAV (c) | 9 | 9 | 622 | |||||||
| Total Equities | 26,892 | 25,532 | 24,929 | |||||||
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