UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2021
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______
Commission file number 001-37387

ASSOCIATED CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware
 
47-3965991
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

191 Mason Street, Greenwich, CT
 
06830
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code (203) 629-9595
Securities registered pursuant to Section 12(b) of the Act:

 
Title of each class
 
Trading
Symbol
 
Name of each exchange on
which registered
Class A Common Stock, par value $0.001 per share
 
AC
 
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer ☐
Accelerated filer ☐
 
Non-accelerated filer
Smaller reporting company
   
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Ruic I 2b-2) Yes No ☒.
 
Indicate the number of shares outstanding of each of the Registrant’s classes of Common Stock, as of the latest practical date.

Class  
Outstanding at July 30, 2021
 
Class A Common Stock, .001 par value
 
3,135,742
 
Class B Common Stock, .001 par value
 
18,962,918


As of July 30, 2021, 3,135,742 shares of class A common stock and 18,962,918 shares of class B common stock were outstanding. GGCP, Inc., a private company controlled by the Company’s Executive Chairman, held 77,165 shares of class A common stock and indirectly held 18,423,741 shares of class B common stock. Other executive officers and directors of GGCP, Inc. held 19,100 and 36,758 shares of class A and class B common stock, respectively. In addition, there are 248,500 Phantom Restricted Stock Awards outstanding as of June 30, 2021.



ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
 
INDEX
     
     
PART I.
FINANCIAL INFORMATION
Page
     
Item 1.
3
     
Item 2.
24
     
Item 3.
31
     
Item 4.
31
     
PART II.
OTHER INFORMATION *
 
     
Item 1.
34
     
Item 2.
34
     
Item 6.
35
     
 
37

* Items other than those listed above have been omitted because they are not applicable.

2


ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
(Dollars in thousands, except per share data)

   
June 30,
2021
   
December 31,
2020
 
ASSETS
           
             
Cash and cash equivalents
 
$
269,271
   
$
39,509
 
Investments in U.S. Treasury Bills
   
74,993
     
344,453
 
Investments in equity securities (Including GBL stock with a value of $63.2 million and $48.9 million, respectively)
   
284,916
     
249,887
 
Investments in affiliated registered investment companies
   
190,721
     
170,605
 
Investments in partnerships
   
143,001
     
123,994
 
Receivable from brokers
   
38,310
     
24,677
 
Investment advisory fees receivable
   
1,301
     
7,346
 
Receivable and investment in note receivable from affiliates
   
8,955
     
4,743
 
Deferred tax assets, net
    -
     
2,207
 
Goodwill
   
3,519
     
3,519
 
Other assets
   
17,888
     
28,565
 
Investments in marketable securities held in trust
   
175,076
     
175,040
 
Total assets
 
$
1,207,951
   
$
1,174,545
 
                 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
               
                 
Payable to brokers
 
$
12,234
   
$
6,496
 
Income taxes payable, including deferred tax liabilities, net
   
14,370
     
9,746
 
Compensation payable
   
17,018
     
18,567
 
Securities sold, not yet purchased
   
16,466
     
17,571
 
Payable to affiliates
   
-
     
2,188
 
Accrued expenses and other liabilities
   
5,196
     
5,635
 
Deferred underwriting fee payable
   
6,125
     
6,125
 
PMV warrant liability
    7,508
      -  
Total liabilities
   
78,917
     
66,328
 
                 
Redeemable noncontrolling interests
   
196,569
     
206,828
 
                 
Commitments and contingencies (Note J)
           
     
       
 
Equity:
               
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
   
     
 
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 6,629,254 shares
issued, respectively; 3,138,048 and 3,311,127 shares outstanding, respectively
   
6
     
6
 
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued;
18,962,918 outstanding, respectively
   
19
     
19
 
Additional paid-in capital
   
993,046
     
999,047
 
Retained earnings
   
59,709
     
13,649
 
Treasury stock, at cost (3,491,206 and 3,318,127 shares, respectively)
   
(119,874
)
   
(113,783
)
Total Associated Capital Group, Inc. equity
   
932,906
     
898,938
 
Noncontrolling interests
   
(441)
     
2,451
 
Total equity
   
932,465
     
901,389
 
Total liabilities and equity
 
$
1,207,951
   
$
1,174,545
 

As of June 30, 2021 and December 31, 2020, certain balances include amounts related to consolidated variable interest entities (“VIEs”) and voting interest entities (“VOEs”).  See Footnote E.

See accompanying notes.

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands, except per share data)

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2021
   
2020
    2021     2020  
Revenues
                       
Investment advisory and incentive fees
 
$
2,388
   
$
1,858
    $ 4,613     $ 4,558  
Other
   
101
     
209
      201       471  
Total revenues
   
2,489
     
2,067
      4,814       5,029  
Expenses
                               
Compensation
   
5,023
     
3,148
      8,891       5,380  
Management fee
   
4,320
     
-
      6,983       -  
Other operating expenses
   
3,557
     
2,580
      5,716       3,950  
Total expenses
   
12,900
     
5,728
      21,590       9,330  
                                 
Operating loss
   
(10,411
)
   
(3,661
)
    (16,776 )     (4,301 )
Other income (expense)
                               
Net gain/(loss) from investments
   
42,306
     
51,685
      73,627       (50,404 )
Interest and dividend income
   
6,811
     
1,215
      8,000       3,489  
Interest expense
   
(63
)
   
(65
)
    (154 )     (114 )
Shareholder-designated contribution
   
(439
)
   
2
      (2,176 )     (225 )
Total other income (expense), net
   
48,615
     
52,837
      79,297       (47,254 )
Income/(loss) before income taxes
   
38,204
     
49,176
      62,521       (51,555 )
Income tax expense/(benefit)
   
9,020
     
11,241
      14,610       (12,421 )
Income/(loss) from continuing operations, net of taxes
   
29,184
     
37,935
      47,911       (39,134 )
Income/(loss) from discontinued operations, net of taxes
   
-
     
(262
)
    -       (493 )
Income/(loss) before noncontrolling interests
   
29,184
     
37,673
      47,911       (39,627 )
Income/(loss) attributable to noncontrolling interests
   
(532
)
   
2,436
      (360 )     (1,509 )
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
 
$
29,716
   
$
35,237
    $ 48,271     $ (38,118 )
                                 
Net income/(loss) per share attributable to Associated Capital Group, Inc.’s shareholders:
                               
Basic - Continuing operations
 
$
1.34
   
$
1.58
    $ 2.18     $ (1.68 )
Basic - Discontinued operations
   
-
     
(0.01
)
    -       (0.02 )
Basic - Total
 
$
1.34
   
$
1.57
    $ 2.18     $ (1.70 )
                                 
Diluted - Continuing operations
 
$
1.34
   
$
1.58
    $ 2.18     $ (1.68 )
Diluted - Discontinued operations
   
-
     
(0.01
)
    -       (0.02 )
Diluted - Total
 
$
1.34
   
$
1.57
    $ 2.18     $ (1.70 )
                                 
Weighted average shares outstanding:
                               
Basic
   
22,118
     
22,378
      22,169       22,410  
Diluted
   
22,118
     
22,378
      22,169       22,410  
                                 
Actual shares outstanding:
   
22,101
     
22,363
      22,101       22,363  

See accompanying notes.

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
(Dollars in thousands)
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2021
   
2020
    2021     2020
 
                         
Net income/(loss)
 
$
29,184
   
$
37,673
    $ 47,911     $ (39,627 )
Less: Comprehensive income/(loss) attributable to noncontrolling interests
   
(532
)
   
2,436
      (360 )     (1,509 )
                                 
Comprehensive income/(loss) attributable to Associated Capital Group, Inc.
 
$
29,716
   
$
35,237
    $ 48,271     $ (38,118 )

See accompanying notes.

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(Dollars in thousands)

For the three months ended March 31, 2021 and three months ended June 30, 2021

   
Associated Capital Group, Inc. shareholders
       
   
Common
Stock
   
Retained
Earnings
   
Additional
Paid-in
Capital
   
Treasury
Stock
   
Total
   
Noncontrolling
Interests
   
Total
Equity
   
Redeemable
Noncontrolling
Interests
 
Balance at December 31, 2020
 
$
25
   
$
13,649
   
$
999,047
   
$
(113,783
)
 
$
898,938
   
$
2,451
   
$
901,389
   
$
206,828
 
Contributions from redeemable noncontrolling interests
                                                            136
 
Redemptions of noncontrolling interests
   
-
     
-
     
-
     
-
     
-
     
-
      -      
(12,066
)
Net income
    -      
18,555
     
-
     
-
     
18,555
     
-
     
18,555
     
172
 
Purchase of treasury stock
   
-
     
-
     
-
     
(4,198
)
   
(4,198
)
   
-
     
(4,198
)
   
-
 
Balance at March 31, 2021
 
$
25
   
$
32,204
   
$
999,047
   
$
(117,981
)
 
$
913,295
   
$
2,451
   
$
915,746
   
$
195,070
 
Contributions from redeemable noncontrolling interests
                                                            665  
Net income     -
      29,716
      -
      -
      29,716
      -       29,716       (532 )
Dividends declared ($0.10 per share)
    -
      (2,211 )     -
      -
      (2,211 )     -
      (2,211 )     -
 
Purchase of treasury stock     -
      -
      -
      (1,893 )     (1,893 )     -
      (1,893 )     -
 
Accretion of redeemable noncontrolling interests to redemption value
    -       -       (6,001 )     -       (6,001 )     (2,892 )     (8,893 )     8,893  
Other changes to redeemable noncontrolling interests
    -       -       -       -       -       -       -       (7,527 )
Balance at June 30, 2021   $ 25     $ 59,709     $ 993,046     $ (119,874 )   $ 932,906     $ (441 )   $ 932,465     $ 196,569  

See accompanying notes.
 
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(Dollars in thousands)
For the three months ended March 31, 2020 and three months ended June 30, 2020

   
Associated Capital Group, Inc. shareholders
                   
      
Common
Stock
   
Accumulated
Deficit
   
Additional
Paid-in
Capital
   
Treasury
Stock
   
Total
   
Noncontrolling
Interests
   
Total
Equity
   
Redeemable
Noncontrolling
Interests
 
Balance at December 31, 2019
 
$
25
   
$
(701
)
 
$
1,003,450
   
$
(106,342
)
 
$
896,432
   
$
1,003
   
$
897,435
   
$
50,385
 
Redemptions of noncontrolling interests
   
-
     
-
     
-
     
-
     
-
     
-
      -      
(531
)
Net loss
   
-
     
(73,355
)
   
-
     
-
     
(73,355
)
   
(52
)
   
(73,407
)
   
(3,945
)
Purchase of treasury stock
   
-
     
-
     
-
     
(3,225
)
   
(3,225
)
   
-
     
(3,225
)
   
-
 
Balance at March 31, 2020
 
$
25
   
$
(74,056
)
 
$
1,003,450
   
$
(109,567
)
 
$
819,852
   
$
951
   
$
820,803
   
$
45,909
 
Net income     -       35,237       -       -       35,237       (48 )     35,189       (1,167 )
Dividends declared ($0.10 per share)
    -       (2,237 )     -       -       (2,237 )     -       (2,237 )     2,436  
Purchase of treasury stock     -       -       -       (1,068 )     (1,068 )     -       (1,068 )     -  
Balance at June 30, 2020   $ 25     $ (41,056 )   $ 1,003,450     $ (110,635 )   $ 851,784     $ 903     $ 852,687     $ 47,178  

See accompanying notes.

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
 (Dollars in thousands)

    
For the Six Months Ended
June 30,
 
   
2021
   
2020
 
Operating activities
           
Net income/(loss)
 
$
47,911
   
$
(39,627
)
Less: (Loss) from discontinued operations, net of taxes
   
-
     
(493
)
Income/(loss) from continuing operations
   
47,911
     
(39,134
)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
               
Equity in net (gains) losses from partnerships
   
(14,718
)
   
928
 
Depreciation and amortization
   
200
     
22
 
Deferred income taxes
   
9,673
     
(8,703
)
Donated securities
   
1,848
     
441
 
Unrealized (gains)/losses on securities
   
(51,865
)
   
39,034
 
Dividends received as securities     (5,066 )     -  
Realized gains on sales of securities
   
(66
)
   
426
 
(Increase)/decrease in assets:
               
Investments in trading securities
   
252,364
     
(245,733
)
Investments in partnerships:
               
Contributions to partnerships
   
(5,261
)
   
(4,229
)
Distributions from partnerships
   
4,183
     
8,110
 
Receivable from affiliates
   
854
     
3,851
 
Receivable from brokers
   
(15,475
)
   
5,645
 
Investment advisory fees receivable
   
6,098
     
8,415
 
Income taxes receivable
   
(507
)
   
(135
)
Other assets
    2,260    
4,326
 
Increase/(decrease) in liabilities:
               
Payable to affiliates
   
(2,188
)
   
1,080
 
Payable to brokers
   
5,738
     
(7,590
)
Income taxes payable
   
(2,335)
     
(3,674
)
Compensation payable
   
(1,549
)
   
(13,477
)
Accrued expenses and other liabilities
   
(438
)
   
(2,649
)
Total adjustments
   
183,750
     
(213,912
)
Net cash provided by operating activities
   
231,661
     
(253,046
)
                 
Investing activities
               
Maturities of U.S. Treasury Bills held in trust
    175,076
      -
 
Purchases of money market funds held in trust
    (175,076 )     -
 
Purchases of securities
   
(1,017
)
   
(226
)
Proceeds from sales of securities
   
6,377
     
429
 
Return of capital on securities
   
242
     
865
 
Purchase of building
   
-
     
(11,084
)
Net cash provided by/(used in) investing activities
 
$
5,602
   
$
(10,016
)

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED (continued)
(Dollars in thousands)
 
    
Six Months Ended
June 30,
 
   
2021
   
2020
 
Financing activities
           
Dividends paid
   
(2,211
)
   
(4,486
)
Purchase of treasury stock
   
(6,091
)
   
(4,293
)
Net contributions/(redemptions) from/(of) redeemable noncontrolling interests
   
801
     
(421)
 
Net cash provided by (used in) financing activities
   
(7,501
)
   
(9,200
)
Net increase in cash and cash equivalents
   
229,762
     
(272,262
)
Cash and cash equivalents at beginning of period
   
39,509
     
342,001
 
Cash and cash equivalents at end of period
 
$
269,271
   
$
69,739
 
                 
Supplemental disclosures of cash flow information:
               
Cash paid for interest
 
$
155
   
$
114
 
Cash paid/(received) for taxes
 
$
7,848
   
$
-
 

See accompanying notes

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021
 (UNAUDITED)

A.   Organization

Unless we have indicated otherwise, or the context otherwise requires, references in this report to “Associated Capital Group, Inc.,” “AC Group,” “the Company,” “AC,” “we,” “us” and “our” or similar terms are to Associated Capital Group, Inc., its predecessors and its subsidiaries.

We are a Delaware corporation that provides alternative investment management, and we derive investment income/(loss) from proprietary investment of cash and other assets in our operating business.
 
Gabelli & Company Investment Advisors, Inc. (“GCIA”) and its wholly-owned subsidiary, Gabelli & Partners, LLC (“Gabelli & Partners”), collectively serve as general partners or investment managers to investment funds including limited partnerships and offshore companies (collectively, “Investment Partnerships”), and separate accounts. We primarily manage assets in equity event-driven value strategies, across a range of risk and event arbitrage portfolios. The businesses earn management and incentive fees from their advisory activities. Management fees are largely based on a percentage of assets under management. Incentive fees are based on the percentage of the investment returns of certain clients’ portfolios. GCIA is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).

In April 2018, the Company sponsored a €110 million initial public offering of its first special purpose acquisition corporation, the Gabelli Value for Italy S.p.a., an Italian company listed on the London Stock Exchange’s Borsa Italiana AIM segment under the symbol “VALU”. VALU was created to acquire a small-to medium-sized Italian franchise business with the potential for international expansion, particularly in the United States. Gabelli Value for Italy S.p.a was subsequently liquidated on July 8, 2020 at the apex of the pandemic in Italy.
 
PMV Consumer Acquisition Corp.
 
On September 22, 2020, Associated Capital announced the $175 million initial public offering of its special purpose acquisition corporation, PMV Consumer Acquisition Corp. (NYSE:PMVC).

PMV Consumer Acquisition Corp. (“PMV”) was created to pursue an initial business combination following the consumer globally with companies having an enterprise valuation in the range of $200 million to $3.5 billion. PMV Consumer Acquisition Holding Company, LLC (“Sponsor”) was created to assist PMV in sourcing, analyzing and consummating acquisition opportunities for that initial business combination.

The Sponsor and PMV have been consolidated in the financial statements of AC beginning in September 2020 because AC has a controlling financial interest in these entities. This resulted in the consolidation $177.2 million of assets, $13.8 million of liabilities, $155.7 million of redeemable noncontrolling interests, $(0.4) million of noncontrolling interests relating to PMV and the Sponsor as of June 30, 2021. In addition, there are several other entities that are consolidated within the financial statements. The details on the impact of consolidating these entities on the condensed consolidated financial statements can be seen in Note D. Investment Partnerships and Other Entities.

See Note D for a further discussion of PMV Consumer Acquisition Corp. as well as its registration statement and Form 10K as of December 31, 2020 both located on the U.S. Securities and Exchange Commission website https://www.sec.gov under the symbol PMVC.

AC Spin-off
 
On November 30, 2015, GAMCO Investors, Inc. (“GAMCO” or “GBL”) distributed all the outstanding shares of each class of AC common stock on a pro rata one-for-one basis to the holders of each class of GAMCO’s common stock (the “Spin-off”).

As part of the Spin-off, AC received 4,393,055 shares of GAMCO Class A common stock for $150 million. The Company currently holds 2,516,275 shares as of June 30, 2021.
 
Morgan Group Spin-off
 
On October 31, 2019, the Company closed on a transaction whereby Morgan Group Holding Co., (“Morgan Group”) a company that trades in the over-the-counter market under the symbol “MGHL” and under common control of AC’s majority shareholder, acquired all of the Company’s interest in G.research LLC, the Company’s former institutional research business, for 50,000,000 shares of Morgan Group common stock.  In addition, immediately prior to the closing, 5.15 million Morgan Group shares were issued under a private placement for $515,000. Subsequent to the transaction and private placement, the Company had an 83.3% ownership interest in Morgan Group. The transaction was accounted for pursuant to ASC 805-50, Transactions Between Entities Under Common Control. For transactions between entities under common control, there is no change in basis in the net assets received and therefore they are recorded at their historical cost.
 
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On March 16, 2020, the Company announced that its Board of Directors approved the spin-off of Morgan Group to AC’s shareholders in which AC would distribute to its shareholders on a pro rata basis the 50,000,000 shares of Morgan Group that it owns.
 
On May 5, 2020, the Morgan Group board approved a reverse stock split of the issued and outstanding shares of their common stock, par value $0.01 per share, in a ratio of 1‑for‑100 that was effective on June 10, 2020.

Associated Capital held 83.3% of the outstanding shares of Morgan Group through August 5, 2020.

On August 5, 2020, Morgan Group shares held by the Company were distributed to the Company’s shareholders of record as of July 30, 2020.  Based on the distribution ratio, AC stockholders of record received approximately 0.022356 shares of Morgan Group common stock for each share of AC common stock held.
 
The historical financial results of Morgan Group have been reflected in the Company’s condensed consolidated financial statements as discontinued operations for all periods presented through the date of the spin-off.

Basis of Presentation
 
The unaudited interim condensed consolidated financial statements of AC Group included herein have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP in the United States for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of the Company for the interim periods presented and are not necessarily indicative of a full year’s results.
 
The interim condensed consolidated financial statements include the accounts of AC Group and its subsidiaries. All material intercompany transactions and balances have been eliminated.
 
These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
 
Use of Estimates
 
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported on the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
 
Investment in Marketable Securities held in trust account
 
Marketable securities of our consolidated SPAC, PMV, are held in short-term investments such as money market funds that invest primarily in U.S. Treasury Bills or directly in U.S. Treasury Bills.  At December 31, 2020 such investments were accounted for as held to maturity. During the six-month period ended June 30, 2021, those held to maturity investments matured and were invested in money market funds recorded at fair value, which approximates their carrying values due to their short maturity profiles.

Recent Accounting Developments
 
In June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Currently, U.S. GAAP requires an “incurred loss” methodology that delays recognition until it is probable a loss has been incurred. Under ASU 2016-13, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The condensed consolidated statements of income will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. In November 2019, the FASB issued ASU 2019-10, which deferred the effective date of this guidance for smaller reporting companies for three years. This guidance is effective for the Company on January 1, 2023 and requires a modified retrospective transition method, which will result in a cumulative-effect adjustment in retained earnings upon adoption. Early adoption is permitted. The Company is currently assessing the potential impact of this new guidance on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, to simplify the process used to test for impairment of goodwill. Under the new standard, an impairment loss must be recognized in an amount equal to the excess of the carrying amount of a reporting unit over its fair value, limited to the total amount of goodwill allocated to that reporting unit. As a smaller reporting company pursuant to ASU 2019-10, the ASU is effective for the Company on January 1, 2023. This guidance will be effective for the Company on January 1, 2023 using a prospective transition method and early adoption is permitted.  The Company is currently evaluating the potential effect of this new guidance on the Company’s consolidated financial statements.
 
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B.  Revenue
     
Refer to the Company’s audited consolidated financial statements included in our Annual Report on Form 10K for the year ended December 31, 2020 for the Company’s revenue recognition policy.
    
The Company’s major revenue sources are as follows for the three and six months ended June 30, 2021 and 2020 (in thousands):
   
   
Three months ended June 30,
   
Six months ended June 30,
 
   
2021
   
2020
    2021
    2020
 
Investment advisory and incentive fees
                       
Asset-based advisory fees
 
$
1,249
   
$
1,303
    $ 2,432     $ 3,123  
Performance-based advisory fees
   
47
     
-
      56       -  
Sub-advisory fees
   
1,092
     
555
      2,125       1,435  
     
2,388
     
1,858
      4,613       4,558  
                                 
Other
                               
Miscellaneous
   
101
     
209
      201       471  
     
101
     
209
      201       471  
                                 
Total
 
$
2,489
   
$
2,067
    $ 4,814     $ 5,029  
   
C.  Investments in Securities
 

Investments in securities at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):
 
   
June 30, 2021
   
December 31, 2020
 
   
Cost
   
Fair Value
   
Cost
   
Fair Value
 
Debt - Trading Securities:
                       
U.S. Treasury Bills
 
$
74,997
   
$
74,993
   
$
344,367
   
$
344,453
 
Equity Securities:
                               
Common stocks
   
248,838
     
272,440
     
239,240
     
237,377
 
Mutual funds
   
507
     
1,356
     
546
     
1,294
 
Other investments
   
9,042
     
11,120
     
8,806
     
11,216
 
Total investments in securities
 
$
333,384
   
$
359,909
   
$
592,959
   
$
594,340
 
                                 
Investments in note receivable from affiliate
  $
5,066
    $
5,066     $
-     $
-  
                                 
Investments in marketable securities held in trust
  $ 175,076     $ 175,076     $ 175,040     $ 175,040  


At June 30, 2021 and December 31, 2020, marketable securities held in the trust account through PMV were comprised of a money market fund that invests in primarily in U.S. Treasury Bills and directly in U.S Treasury Bills which mature in less than one year with an amortized cost and fair value of approximately $175 million, respectively. Such investments are categorized as Level 1.



Investment in note receivable from affiliate relates to 2-Year Puttable and Callable Subordinated Notes due 2023 issued as part of a 2021 special dividend on GAMCO’s Class A Common Stock and Class B Common Stock. The Company has the intent to hold these investments until maturity, and as such they were recoded at amortized cost.


Securities sold, not yet purchased at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):
 
   
June 30, 2021
   
December 31, 2020
 
   
Cost
   
Fair Value
   
Cost
   
Fair Value
 
Equity securities:
                       
Common stocks
 
$
12,121
   
$
13,107
   
$
14,369
   
$
16,090
 
Other investments
   
2,581
     
3,359
     
1,209
     
1,481
 
Total securities sold, not yet purchased
 
$
14,702
   
$
16,466
   
$
15,578
   
$
17,571
 

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Investments in affiliated registered investment companies at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):
 
   
June 30, 2021
   
December 31, 2020
 
   
Cost
   
Fair Value
   
Cost
   
Fair Value
 
Equity securities:
                       
Closed-end funds
 
$
76,523
   
$
121,635
   
$
76,462
   
$
106,719
 
Mutual funds
   
48,972
     
69,086
     
48,395
     
63,886
 

                               
Total investments in affiliated registered investment companies
 
$
125,495
   
$
190,721
   
$
124,857
   
$
170,605
 

D.  Investment Partnerships and Other Entities
 
The Company is general partner or co-general partner of various affiliated entities whose underlying assets consist primarily of marketable securities (“Affiliated Entities”). We also had investments in unaffiliated partnerships, offshore funds and other entities of $30.9 million and $24.9 million at June 30, 2021, and December 31, 2020, respectively (“Unaffiliated Entities”). We evaluate each entity to determine its appropriate accounting treatment and disclosure. Certain of the Affiliated Entities, and none of the Unaffiliated Entities, are consolidated.
 
Investments in partnerships that are not required to be consolidated are accounted for using the equity method and are included in investments in partnerships on the condensed consolidated statements of financial condition. This caption includes investments in Affiliated Entities and Unaffiliated Entities which the Company accounts for under the equity method of accounting. The Company had investments in Affiliated Entities totaling $112.1 million and $99.1 million at June 30, 2021 and December 31, 2020, respectively. The Company reflects the equity in earnings of these Affiliated Entities and Unaffiliated Entities as net gain/(loss) from investments on the condensed consolidated statements of income.
 
Capital may generally be redeemed from Affiliated Entities on a monthly basis upon adequate notice as determined in the sole discretion of each entity’s investment manager. Capital invested in Unaffiliated Entities may generally be redeemed at various intervals ranging from monthly to annually upon notice of 30 to 95 days. Certain Unaffiliated Entities and Affiliated Entities may require a minimum investment period before capital can be voluntarily redeemed (a “Lockup Period”). No investment in any Investment Partnership has an unexpired Lockup Period. The Company has no outstanding capital commitments to any Affiliated or Unaffiliated Entity.
 
PMV Consumer Acquisition Corp.

The Company has determined that PMV is a voting interest entity (VOE) and since the Sponsor has substantive control of PMV due to its ability to control the board of directors of PMV, the Sponsor consolidates the assets and liabilities of PMV and the results of its operations.  The Company invested $4.0 million, or approximately 62% of the $6.48 million total Sponsor partnership commitment.  The Sponsor is managed by Company executives. The Company has determined that the Sponsor is a variable interest entity (VIE) and that the Company is the primary beneficiary and therefore consolidates the assets and liabilities and results of operations of the Sponsor which includes PMV.  However, neither AC nor PMV has a right to the benefits from nor do they bear the risks associated with the marketable securities held in trust assets held by PMV. Further, if the Company were to liquidate, the marketable securities held in trust assets would not be available to its general creditors, and as a result, the Company does not consider these assets available for the benefit of its investors.

The registration statement for the PMV initial public offering was declared effective on September 21, 2020. On September 24, 2020, PMV consummated the initial public offering of 17,500,000 units (the “Units” and, with respect to the shares of common stock included in the Units Sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $175,000,000. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“PMV Public Warrant”). Each whole PMV Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment.


Simultaneously with the closing of the initial public offering, PMV consummated the sale of 6,150,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to the Sponsor, generating gross proceeds of $6,150,000.

AC invested $10 million in the Class A units in PMV and the Sponsor invested $6.15 million in Private Warrants.

Following the closing of the initial public offering on September 24, 2020, an amount of $175,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the initial public offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) located in the United States, which will only be invested in U.S. Treasury Bills or funds that invest primarily in them.

PMV will have until September 24, 2022 to complete a business combination. If PMV is unable to complete a business combination by September 24, 2022, PMV will cease all operations except for the purpose of winding up, and as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account. The deferred fee will be forfeited by the underwriters solely in the event that PMV fails to complete a business combination within the required time period, subject to the terms of the underwriting agreement.
 
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The accretion of the redeemable noncontrolling interest discount is being amortized over a period of 18 months through an adjustment to additional paid-in capital and noncontrolling interest.

The following table reflects the net impact of the consolidated entities on the condensed consolidated statements of financial condition (in thousands):
 
   
June 30, 2021
 
   
Prior to
Consolidation
   
Consolidated
Entities
   
As Reported
 
Total assets