Note 2 - Investments

9 Months Ended

Jan. 31, 2022

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 2 - Investments:

Investments held by the Company and its subsidiaries are classified as  equity securities and available-for-sale fixed income securities in accordance with FASB's ASC 321, Investments - Equity Securities and with FASB's ASC 320, Investments - Debt Securities.  All of the Company's securities were readily marketable or had a maturity of twelve months or less and are classified as current assets  on the Consolidated Condensed Balance Sheets.

Equity Securities:

Equity securities on the Consolidated Condensed Balance Sheets, consist of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions.  

As of January 31, 2022 and April 30, 2021, the aggregate cost of the equity securities, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), Invesco Financial Preferred ETF (PGF), ProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL), iShares Preferred & Income Securities ETF (PFF), and other Exchange Traded Funds and common stock equity securities was a combined total $22,746,000 and $19,105,000, respectively, and the fair value was $27,316,000 and $23,582,000, respectively.  

Proceeds from sales of equity securities during the nine months ended January 31, 2022 and January 31, 2021, were $1,202,000 and $7,684,000, respectively.     

The carrying value and fair value of equity securities at January 31, 2022 were as follows:

($ in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
ETFs - equities	$	22,746	$	4,724	$	(154	)	$	27,316

The carrying value and fair value of equity securities at April 30, 2021 were as follows:

($ in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
ETFs - equities	$	19,105	$	4,532	$	(55	)	$	23,582

Government Debt Securities (Fixed Income Securities):

Fixed income securities consist of securities issued by federal, state and local governments within the United States.  

Proceeds from maturities and sales of government debt securities classified as available-for-sale during the nine months ended January 31, 2022 and January 31, 2021, were $2,496,000 and $11,431,000, respectively.  As of January 31, 2022, Accumulated Other Comprehensive Income included unrealized  losses of $1,000, net of deferred tax benefit of $278.  As of April 30, 2021, Accumulated Other Comprehensive Income included unrealized  gains of $4,000, net of deferred taxes of $1,000. 

The aggregate cost and fair value at January 31, 2022 of fixed income securities classified as available-for-sale were as follows:

($ in thousands)	Amortized Historical Cost		Gross Unrealized Holding Losses			Fair Value
Maturity
Due within 1 year	$	598	$	(1	)	$	597
Total investment in government debt securities	$	598	$	(1	)	$	597

The increase in gross unrealized  losses of $5,000 on fixed income securities classified as available-for-sale net of deferred tax benefit of $1,000, was included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet as of January 31, 2022.  

The aggregate cost and fair value at April 30, 2021 of fixed income securities classified as available-for-sale were as follows:

($ in thousands)	Amortized Historical Cost		Gross Unrealized Holding Gains		Fair Value
Maturity
Due within 1 year	$	2,596	$	4	$	2,600
Total investment in government debt securities	$	2,596	$	4	$	2,600

The decrease in gross unrealized  gains of $173,000 on fixed income securities classified as available-for-sale net of deferred income taxes of $45,000, was included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet as of April 30, 2021.  

The average yield on the Government debt securities classified as available-for-sale at January 31, 2022 and April 30, 2021 was 0.22% and 1.4%, respectively.

Investment Gains/(Losses):

Investment gains/(losses) were comprised of the following:

	Three Months Ended January 31,					Nine Months Ended January 31,
($ in thousands)	2022			2021		2022			2021
Dividend income	$	234		$	155	$	640		$	413
Interest income		(2	)		31		(1	)		131
Investment gains/(losses) recognized on sales of equity securities during the period	$	(19	)	$	141		28			585
Unrealized gains/(losses) recognized on equity securities held at the end of the period	$	(215	)	$	1,456		94			1,964
Other		(1	)		2		(2	)		-
Total investment gains/(losses)	$	(3	)	$	1,785	$	759		$	3,093

Taxable realized gains on equity securities sold during fiscal years 2022 and 2021, which are generally the difference between the proceeds from sales and our original cost, were gains of $30,000 in fiscal 2022 and gains of $1,162,000 in fiscal 2021.  

Investment in Unconsolidated Entities:

Equity Method Investment:

As of January 31, 2022 and April 30, 2021, the Company's investment in EAM Trust on the Consolidated Condensed Balance Sheets was $60,882,000 and $60,977,000, respectively.

The value of VLI’s investment in EAM at January 31, 2022 and April 30, 2021 reflects the fair value of contributed capital of $55,805,000 at inception which included $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI's share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Condensed Balance Sheets.

It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding. 

The Company monitors its Investment in EAM Trust for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment.  Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements.  EAM did not record any impairment losses for its assets during the fiscal years 2022 or 2021.

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

	Three Months Ended January 31,					Nine Months Ended January 31,
($ in thousands) (unaudited)	2022			2021		2022		2021
Investment management fees earned from the Value Line Funds, net of waivers shown below	$	7,627		$	7,827	$	23,306	$	21,318
12b-1 fees and other fees, net of waivers shown below	$	2,362		$	2,439	$	7,303	$	7,194
Other income/(loss)	$	(70	)	$	119	$	49	$	234
Investment management fee waivers and reimbursements	$	184		$	88	$	402	$	207
12b-1 fee waivers	$	151		$	168	$	493	$	490
Value Line’s non-voting revenues interest	$	4,120		$	4,104	$	12,532	$	11,113
EAM's net income (1)	$	1,070		$	1,260	$	3,640	$	2,958

(1) Represents EAM's net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

	January 31,			April 30,
($ in thousands)	2022			2021
	(unaudited)
EAM's total assets	$	65,144		$	64,197
EAM's total liabilities (1)		(7,910	)		(6,870	)
EAM's total equity	$	57,234		$	57,327

(1) At January 31, 2022 and April 30, 2021, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues interest and non-voting profits interest of $4,600,000 and $4,664,000, respectively.