Associated Capital Group, Inc. [AC] Filings

10-Q 1 ac20240930_10q.htm FORM 10-Q ac20240930_10q.htm

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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 September 30, 2024

☐ 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 Rule 12b-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 November 1, 2024
Class A Common Stock, .001 par value		2,286,564
Class B Common Stock, .001 par value		18,950,571

As of November 1, 2024, 2,286,564 shares of class A common stock and 18,950,571 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 29,866 and 176,758 shares of class A and class B common stock, respectively. In addition, there are 301,595 Phantom Restricted Stock Awards outstanding as of September 30, 2024.

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

INDEX

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements:
	Condensed Consolidated Statements of Financial Condition (Unaudited)	3
	Condensed Consolidated Statements of Income (Unaudited)	4
	Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited):
	1. Organization	8
	2. Revenue	9
	3. Investments in Securities	9
	4. Investment Partnerships and Other Entities	10
	5. Fair Value	13
	6. Income Taxes	15
	7. Earnings per Share	15
	8. Equity	15
	9. Goodwill	17
	10. Guarantees, Contingencies and Commitments	17
	11. Subsequent Events	17

Item 2.	Management’s Discussion and Analysis ("MD&A") of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION *

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 6.	Exhibits	26

	Signature	28

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

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	*September 30,*			*December 31,*
	*2024*			*2023*
ASSETS
Cash and cash equivalents (includes U.S. Treasury Bills with maturities of 3 months or less)	$	260,868		$	317,487
Investments in U.S. Treasury Bills with maturities greater than 3 months		115,829			89,155
Investments in equity securities (includes GAMCO stock with a fair value of $56.4 million and $45.6 million, respectively)		249,669			196,583
Investments in affiliated registered investment companies		140,355			126,751
Investments in partnerships		138,905			142,974
Receivable from brokers		26,985			16,005
Receivable from brokers (cash held for real estate purchase)		-			14,263
Investment advisory fees receivable		1,233			4,711
Receivable from affiliates		5,169			876
Income taxes receivable, including deferred tax assets, net		2,588			8,474
Goodwill		3,519			3,519
Other assets		32,033			22,999
Total assets	$	977,153		$	943,797

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Payable to brokers	$	7,865		$	4,459
Income taxes payable, including deferred tax liabilities, net		989			-
Compensation payable		17,488			15,169
Securities sold, not yet purchased		7,376			5,918
Accrued expenses and other liabilities		2,288			5,173
Dividend payable		42,494			-
Total liabilities		78,500			30,719

Redeemable noncontrolling interests		5,836			6,103

Commitments and contingencies (Note 10)

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; 6,641,601 shares issued; 2,296,995 and 2,587,036 shares outstanding, respectively		6			6
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued; 18,950,571 outstanding, respectively		19			19
Additional paid-in capital		999,047			999,047
Retained earnings		43,647			48,231
Treasury stock, at cost (4,344,606 and 4,054,565 shares, respectively)		(149,902	)		(140,328	)
Total equity		892,817			906,975
Total liabilities, redeemable noncontrolling interests and equity	$	977,153		$	943,797

As of September 30, 2024 and December 31, 2023, certain balances include amounts related to a consolidated variable interest entity (“VIE”) and voting interest entity (“VOE”). See Note 4.

See accompanying notes.

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(In thousands, except per share data)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2024*			*2023*			*2024*			*2023*
Revenues
Investment advisory and incentive fees	$	2,310		$	2,098		$	7,706		$	6,789
Other revenues		105			102			315			258
Total revenues		2,415			2,200			8,021			7,047
Expenses
Compensation		4,215			4,078			11,977			11,437
Management fee		3,312			(12	)		5,736			3,075
Other operating expenses		1,804			1,655			5,868			4,660
Total expenses		9,331			5,721			23,581			19,172
Operating loss		(6,916	)		(3,521	)		(15,560	)		(12,125	)
Other income/(expense)
Net gain/(loss) from investments		26,173			(2,173	)		42,808			21,635
Interest and dividend income		11,142			6,336			24,985			17,497
Interest expense		(76	)		(134	)		(228	)		(388	)
Shareholder-designated contribution		-			(235	)		(449	)		(1,604	)
Total other income, net		37,239			3,794			67,116			37,140
Income before income taxes		30,323			273			51,556			25,015
Income tax expense		6,933			166			11,415			3,586
Income before noncontrolling interests		23,390			107			40,141			21,429
Income attributable to noncontrolling interests		148			123			93			320
Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders	$	23,242		$	(16	)	$	40,048		$	21,109

Net income/(loss) per share attributable to Associated Capital Group, Inc.'s shareholders:
Basic	$	1.09		$	0.00		$	1.87		$	0.97
Diluted	$	1.09		$	0.00		$	1.87		$	0.97

Weighted average shares outstanding (in thousands):
Basic		21,275			21,672			21,389			21,836
Diluted		21,275			21,672			21,389			21,836

Actual shares outstanding (in thousands)		21,248			21,623			21,248			21,623

See accompanying notes.

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

UNAUDITED

(Dollars in thousands)

	*Three Months Ended September 30, 2024*
						*Additional*								*Redeemable*
	*Common*		*Retained*			*Paid-in*		*Treasury*			*Total*			*Noncontrolling*
	*Stock*		*Earnings*			*Capital*		*Stock*			*Equity*			*Interests*
Balance at June 30, 2024	$	25	$	62,899		$	999,047	$	(146,492	)	$	915,479		$	5,688
Net income/(loss)		-		23,242			-		-			23,242			148
Dividends declared ($2.00 per share)		-		(42,494	)		-		-			(42,494	)		-
Purchases of treasury stock		-		-			-		(3,410	)		(3,410	)		-
Balance at September 30, 2024	$	25	$	43,647		$	999,047	$	(149,902	)	$	892,817		$	5,836

	*Three Months Ended September 30, 2023*
						*Additional*								*Redeemable*
	*Common*		*Retained*			*Paid-in*		*Treasury*			*Total*			*Noncontrolling*
	*Stock*		*Earnings*			*Capital*		*Stock*			*Equity*			*Interests*
Balance at June 30, 2023	$	25	$	34,063		$	999,047	$	(133,568	)	$	899,567		$	7,086
Redemptions of noncontrolling interests		-		-			-		-			-			(76	)
Net income/(loss)		-		(16	)		-		-			(16	)		123
Purchases of treasury stock		-		-			-		(3,815	)		(3,815	)		-
Balance at September 30, 2023	$	25	$	34,047		$	999,047	$	(137,383	)	$	895,736		$	7,133

	*Nine Months Ended September 30, 2024*
						*Additional*								*Redeemable*
	*Common*		*Retained*			*Paid-in*		*Treasury*			*Total*			*Noncontrolling*
	*Stock*		*Earnings*			*Capital*		*Stock*			*Equity*			*Interests*
Balance at December 31, 2023	$	25	$	48,231		$	999,047	$	(140,328	)	$	906,975		$	6,103
Redemptions of noncontrolling interests		-		-			-		-			-			(360	)
Net income/(loss)		-		40,048			-		-			40,048			93
Dividends declared ($2.10 per share)		-		(44,632	)		-		-			(44,632	)		-
Purchases of treasury stock		-		-			-		(9,574	)		(9,574	)		-
Balance at September 30, 2024	$	25	$	43,647		$	999,047	$	(149,902	)	$	892,817		$	5,836

	*Nine Months Ended September 30, 2023*
						*Additional*								*Redeemable*
	*Common*		*Retained*			*Paid-in*		*Treasury*			*Total*			*Noncontrolling*
	*Stock*		*Earnings*			*Capital*		*Stock*			*Equity*			*Interests*
Balance at December 31, 2022	$	25	$	15,126		$	999,047	$	(124,002	)	$	890,196		$	10,193
Redemptions of noncontrolling interests		-		-			-		-			-			(3,380	)
Net income/(loss)		-		21,109			-		-			21,109			320
Dividends declared ($0.10 per share)		-		(2,188	)		-		-			(2,188	)		-
Purchases of treasury stock		-		-			-		(13,381	)		(13,381	)		-
Balance at September 30, 2023	$	25	$	34,047		$	999,047	$	(137,383	)	$	895,736		$	7,133

See accompanying notes.

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)

	*Nine Months Ended*
	*September 30,*
	*2024*			*2023*
Operating activities
Net income	$	40,141		$	21,429
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Equity in net (gains)/losses from partnerships		(8,624	)		848
Depreciation and amortization		272			270
Deferred income taxes		9,037			(246	)
Donated securities		1,346			1,107
Unrealized gains on securities		(31,381	)		(15,703	)
Realized gains on sales of securities		(4,792	)		(4,108	)
(Increase)/decrease in assets:
Investments in trading securities		(54,118	)		184,788
Investments in partnerships:
Contributions to partnerships		(9,700	)		(2,390	)
Distributions from partnerships		22,394			9,166
Receivable from affiliates		(4,293	)		2,172
Receivable from brokers		(976	)		(1,877	)
Investment advisory fees receivable		3,478			2,536
Income taxes receivable		(2,682	)		2,644
Other assets		(9,306	)		65
Increase/(decrease) in liabilities:
Payable to brokers		3,406			(2,166	)
Income taxes payable		520			43
Compensation payable		2,319			(3,021	)
Accrued expenses and other liabilities		(2,885	)		(742	)
Total adjustments		(85,985	)		173,386
Net cash (used in)/provided by operating activities		(45,844	)		194,815

Investing activities
Purchases of securities		(9,185	)		(1,162	)
Proceeds from sales of securities		5,023			2,245
Return of capital on securities		1,200			1,247
Net (used in)/provided by investing activities	$	(2,962	)	$	2,330

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(Dollars in thousands)

	*Nine Months Ended*
	*September 30,*
	*2024*			*2023*
Financing activities
Dividends paid	$	(2,138	)	$	(2,188	)
Purchases of treasury stock		(9,574	)		(13,381	)
Redemptions of redeemable noncontrolling interests		(360	)		(3,380	)
Net cash used in financing activities		(12,072	)		(18,949	)
Net (decrease)/increase in cash, cash equivalents and restricted cash		(60,878	)		178,196
Cash, cash equivalents and restricted cash at beginning of period		347,057			221,269
Cash, cash equivalents and restricted cash at end of period	$	286,179		$	399,465

Supplemental disclosures of cash flow information:
Cash paid for interest	$	228		$	134
Cash paid for taxes	$	4,509		$	849

Reconciliation of Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	260,868		$	381,253
Cash held for real estate purchase included in receivable from brokers		-			13,059
Cash included in receivable from brokers		12,443			-
Restricted cash included in receivable from brokers		12,868			5,153
Cash, cash equivalents and restricted cash	$	286,179		$	399,465

Supplemental disclosure of non-cash activity:

On September 19, 2024, the Board of Directors declared a special cash dividend of $2.00 per share, payable on November 4, 2024, to Class A and Class B shareholders of record on October 21, 2024. The aggregate payment will be $42,494 thousand based on the shares outstanding as of the record date. The liability for this dividend is recorded within Dividend payable on our condensed consolidated statements of financial condition as of September 30, 2024.

See accompanying notes.

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ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(UNAUDITED)

1. Organization

Unless we have indicated otherwise, or the context otherwise requires, references in this report to “Associated Capital Group, Inc.”, "Associated Capital", “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 from proprietary investments of cash and other assets in our operating business.

Gabelli & Company Investment Advisors, Inc. (“GCIA”), a wholly-owned subsidiary of AC, 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 across a range of risk and event arbitrage portfolios and in equity event-driven value strategies. 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.

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. 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. 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, 2023.

The interim condensed consolidated financial statements include the accounts of AC Group and its subsidiaries. All intercompany transactions and balances have been eliminated. The details on the impact of consolidating certain partnership entities on the condensed consolidated financial statements can be seen in Note 4. Investment Partnerships and Other Entities.

For the three and nine months ended September 30, 2024 and 2023, there were no items related to other comprehensive income.

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.

Recent Accounting Developments

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this guidance on the disclosures within our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure requirements. The new standard will require enhanced disclosures about a public company’s significant segment expenses and more timely and detailed segment information reporting throughout the fiscal period, including for companies with a single reportable segment. The standard is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating the impact of this guidance on the disclosures within our consolidated financial statements.

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2. Revenue

The Company’s major revenue sources are as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2024*		*2023*		*2024*		*2023*
Investment advisory and incentive fees
Asset-based advisory fees	$	1,175	$	1,265	$	3,619	$	3,871
Performance-based advisory fees		48		1		49		2
Sub-advisory fees		1,087		832		4,038		2,916
Total investment advisory and incentive fees		2,310		2,098		7,706		6,789

Other		105		102		315		258

Total revenues	$	2,415	$	2,200	$	8,021	$	7,047

3. Investments in Securities

Investments in securities at September 30, 2024 and December 31, 2023, consisted of the following (in thousands):

	*September 30, 2024*				*December 31, 2023*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
Debt - Trading Securities:
U.S. Treasury Bills	$	114,578	$	115,829	$	88,300	$	89,155
Equity Securities:
Common stocks		229,350		244,874		198,269		191,346
Mutual funds		651		1,450		566		1,186
Other investments		4,164		3,345		5,166		4,051
Total investments in equity securities		234,165		249,669		204,001		196,583
Total investments in securities	$	348,743	$	365,498	$	292,301	$	285,738

In September 2024, GAMCO Investors, Inc. declared a special cash dividend of $2 per share on their class A common stock and class B common stock. As of September 30, 2024, Receivable from affiliates on the condensed consolidated statements of financial condition included $4.6 million for dividends receivable based on the 2.3 million shares of GAMCO class A stock that we held on the declaration date.

Securities sold, not yet purchased at September 30, 2024 and December 31, 2023, consisted of the following (in thousands):

	*September 30, 2024*				*December 31, 2023*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*

Common stocks	$	6,604	$	6,838	$	5,227	$	5,035
Other investments		114		538		631		883
Total securities sold, not yet purchased	$	6,718	$	7,376	$	5,858	$	5,918

Investments in affiliated registered investment companies at September 30, 2024 and December 31, 2023, consisted of the following (in thousands):

	*September 30, 2024*				*December 31, 2023*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*

Closed-end funds	$	39,924	$	57,898	$	39,680	$	53,048
Mutual funds		54,898		82,457		50,136		73,703
Total investments in affiliated registered investment companies	$	94,822	$	140,355	$	89,816	$	126,751

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4. Investment Partnerships and Other Entities

The Company is a general partner or co-general partner of various affiliated entities whose underlying assets consist primarily of marketable securities (“Affiliated Entities”). The Company had investments in Affiliated Entities totaling $99.1 million and $107.4 million at September 30, 2024 and December 31, 2023, respectively. The Company also had investments in unaffiliated partnerships, offshore funds and other entities of $39.8 million and $35.6 million at September 30, 2024, and December 31, 2023, 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. The Company reflects the equity in earnings of these Affiliated Entities and Unaffiliated Entities in 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 material outstanding capital commitments to any Affiliated or Unaffiliated Entity.

Consolidated Entities

The following table reflects the net impact of the consolidated investment partnerships (“Consolidated Entities”) on the condensed consolidated statements of financial condition (in thousands):

	*September 30, 2024*
	*Prior to*		*Consolidated*
Assets	*Consolidation*		*Entities*			*As Reported*
Cash and cash equivalents	$	258,195	$	2,673		$	260,868
Investments in U.S. Treasury Bills		113,338		2,491			115,829
Investments in equity securities		183,191		66,478			249,669
Investments in affiliated registered investment companies		195,119		(54,764	)		140,355
Investments in partnerships		159,717		(20,812	)		138,905
Receivable from brokers		17,556		9,429			26,985
Investment advisory fees receivable		1,240		(7	)		1,233
Other assets⁽¹⁾		40,645		2,664			43,309
Total assets	$	969,001	$	8,152		$	977,153
Liabilities, redeemable noncontrolling interests and equity
Securities sold, not yet purchased	$	6,903	$	473		$	7,376
Payable to brokers and other liabilities⁽¹⁾		26,787		1,843			28,630
Dividends payable		42,494		-			42,494
Redeemable noncontrolling interests		-		5,836			5,836
Total equity		892,817		-			892,817
Total liabilities, redeemable noncontrolling interests and equity	$	969,001	$	8,152		$	977,153

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	*December 31, 2023*
	*Prior to*		*Consolidated*
Assets	*Consolidation*		*Entities*			*As Reported*
Cash and cash equivalents	$	299,508	$	17,979		$	317,487
Investments in U.S. Treasury Bills		79,714		9,441			89,155
Investments in equity securities		149,154		47,429			196,583
Investments in affiliated registered investment companies		181,641		(54,890	)		126,751
Investments in partnerships		163,226		(20,252	)		142,974
Receivable from brokers⁽¹⁾		25,026		5,242			30,268
Investment advisory fees receivable		4,714		(3	)		4,711
Other assets⁽¹⁾		33,444		2,424			35,868
Total assets	$	936,427	$	7,370		$	943,797
Liabilities, redeemable noncontrolling interests and equity
Securities sold, not yet purchased	$	5,639	$	279		$	5,918
Payable to brokers and other liabilities⁽¹⁾		23,813		988			24,801
Redeemable noncontrolling interests		-		6,103			6,103
Total equity		906,975		-			906,975
Total liabilities, redeemable noncontrolling interests and equity	$	936,427	$	7,370		$	943,797

(1) Represents the summation of multiple assets and liabilities from the condensed consolidated statements of financial condition.

The following table reflects the net impact of the Consolidated Entities on the condensed consolidated statements of income (in thousands):

	*Three Months Ended September 30, 2024*
	*Prior to*			*Consolidated*
	*Consolidation*			*Entities*			*As Reported*
Total revenues	$	2,527		$	(112	)	$	2,415
Operating loss		(6,545	)		(371	)		(6,916	)
Total other income, net		36,353			886			37,239
Income before noncontrolling interests		23,242			148			23,390
Income attributable to noncontrolling interests		-			148			148
Net income/(loss)	$	23,242		$	-		$	23,242

	*Three Months Ended September 30, 2023*
	*Prior to*			*Consolidated*
	*Consolidation*			*Entities*			*As Reported*
Total revenues	$	2,310		$	(110	)	$	2,200
Operating loss		(3,156	)		(365	)		(3,521	)
Total other income, net		3,044			750			3,794
Income/(loss) before noncontrolling interests		(16	)		123			107
Income attributable to noncontrolling interests		-			123			123
Net income/(loss)	$	(16	)	$	-		$	(16	)

	*Nine Months Ended September 30, 2024*
	*Prior to*			*Consolidated*
	*Consolidation*			*Entities*			*As Reported*
Total revenues	$	8,349		$	(328	)	$	8,021
Operating loss		(14,423	)		(1,137	)		(15,560	)
Total other income, net		66,050			1,066			67,116
Income before noncontrolling interests		40,048			93			40,141
Income attributable to noncontrolling interests		-			93			93
Net income/(loss)	$	40,048		$	-		$	40,048

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	*Nine Months Ended September 30, 2023*
	*Prior to*			*Consolidated*
	*Consolidation*			*Entities*			*As Reported*
Total revenues	$	7,378		$	(331	)	$	7,047
Operating loss		(10,998	)		(1,127	)		(12,125	)
Total other income/(loss), net		38,670			(1,530	)		37,140
Income before noncontrolling interests		21,109			320			21,429
Income attributable to noncontrolling interests		-			320			320
Net income/(loss)	$	21,109		$	-		$	21,109

Variable Interest Entity

We have one investment partnership that is consolidated as a VIE as of September 30, 2024 and December 31, 2023 because AC is the primary beneficiary of the entity. With respect to the consolidated VIE, its assets may only be used to satisfy its obligations. The investors and creditors of the consolidated VIE have no recourse to the Company’s general assets. In addition, the Company neither benefits from such VIE’s assets nor bears the related risk beyond its beneficial interest in the VIE.

The following table presents the balances related to the VIE that is consolidated and included on the condensed consolidated statements of financial condition as well as the Company’s net interest in that VIE (in thousands):

	*September 30, 2024*			*December 31, 2023*
Cash and cash equivalents	$	285		$	302
Investments in equity securities		10,458			9,695
Receivable from brokers		22			166
Accrued expenses and other liabilities		(35	)		(46	)
Redeemable noncontrolling interests		(472	)		(451	)
AC Group's net interest in consolidated VIE	$	10,258		$	9,666

Voting Interest Entity

We have one investment partnership that is consolidated as a VOE as of September 30, 2024 and December 31, 2023 because AC has a controlling interest in the entity. This resulted in the consolidation of $73.0 million of assets, $2.5 million of liabilities, and $5.4 million of redeemable noncontrolling interests at September 30, 2024 and $72.4 million of assets, $1.4 million of liabilities, and $5.6 million of redeemable noncontrolling interests at December 31, 2023. AC’s net interest in the consolidated VOE at September 30, 2024 and December 31, 2023 was $65.1 million and $65.4 million, respectively.

Equity Method Investments

The Company’s equity method investments include investments in domestic partnerships and offshore funds. The Company evaluates each of its equity method investments to determine if any are significant as defined in the regulations applicable to smaller reporting companies promulgated by the SEC. As of and for the three and nine months ended September 30, 2024, no individual equity method investment held by the Company met the significance criteria. As such, the Company is not required to present summarized income statement information for any of its equity method investments.

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5. Fair Value

Accounting Standards Codification Topic 820, Fair Value Measurement (ASC 820) specifies a hierarchy of valuation classifications based on whether the inputs to the valuation techniques used in each valuation classification are observable or unobservable. These classifications are summarized in the three broad levels listed below:

•

Level 1 - Unadjusted quoted prices for identical instruments in active markets.

•

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable.

•

Level 3 - Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.

Inputs used to measure fair value might fall in different levels of the fair value hierarchy, in which case the Company defaults to the lowest level input that is significant to the fair value measurement in its entirety. These levels are not necessarily an indication of the risk or liquidity associated with the investments.

The following tables present assets and liabilities measured at fair value on a recurring basis, unless otherwise noted, as of the dates specified (in thousands):

	*September 30, 2024*
Assets	*Level 1*		*Level 2*		*Level 3*		*Total*
Cash equivalents	$	259,247	$	-	$	-	$	259,247
Investments in securities (including GAMCO stock):
Trading - U.S. Treasury Bills		115,829		-		-		115,829
Common stocks		242,017		822		2,035		244,874
Mutual funds		1,450		-		-		1,450
Other		2,571		648		126		3,345
Total investments in securities		361,867		1,470		2,161		365,498
Investments in affiliated registered investment companies:
Closed-end funds - equity securities		48,042		-		-		48,042
Preferred securities issued by Closed-end funds ^(a)		-		-		9,856		9,856
Mutual funds		82,457		-		-		82,457
Total investments in affiliated registered investment companies		130,499		-		9,856		140,355
Total investments held at fair value		492,366		1,470		12,017		505,853
Total assets at fair value	$	751,613	$	1,470	$	12,017	$	765,100
Liabilities
Common stocks	$	6,838	$	-	$	-	$	6,838
Other		35		503		-		538
Securities sold, not yet purchased		6,873		503		-		7,376
Total liabilities at fair value	$	6,873	$	503	$	-	$	7,376

(a) These securities represent privately issued, puttable and callable preferred securities issued by affiliated closed-end funds.

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	*December 31, 2023*
Assets	*Level 1*		*Level 2*		*Level 3*		*Total*
Cash equivalents	$	315,017	$	-	$	-	$	315,017
Investments in securities (including GAMCO stock):
Trading - U.S. Treasury Bills		89,155		-		-		89,155
Common stocks		187,963		1,348		2,035		191,346
Mutual funds		1,186		-		-		1,186
Other		3,347		485		219		4,051
Total investments in securities		281,651		1,833		2,254		285,738
Investments in affiliated registered investment companies:
Closed-end funds - equity securities		44,692		-		-		44,692
Preferred securities issued by Closed-end funds^(a)		-		-		8,356		8,356
Mutual funds		73,703		-		-		73,703
Total investments in affiliated registered investment companies		118,395		-		8,356		126,751
Total investments held at fair value		400,046		1,833		10,610		412,489
Total assets at fair value	$	715,063	$	1,833	$	10,610	$	727,506
Liabilities
Common stocks	$	5,035	$	-	$	-	$	5,035
Other		579		304		-		883
Securities sold, not yet purchased		5,614		304		-		5,918
Total liabilities at fair value	$	5,614	$	304	$	-	$	5,918

(a) These securities represent privately issued, puttable and callable preferred securities issued by affiliated closed-end funds.

The following table presents additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

Three Months Ended