10-Q 1 brhc10037099_10q.htm 10-Q
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 March 31, 2022
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 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 April 28, 2022
  
Class A Common Stock, .001 par value
 
3,080,965
Class B Common Stock, .001 par value
  
18,962,754

As of April 28, 2022, 3,080,965 shares of class A common stock and 18,962,754 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 36,758 shares of class A and class B common stock, respectively. In addition, there are 221,960 Phantom Restricted Stock Awards outstanding as of March 31, 2022.

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

INDEX

PART I.
FINANCIAL INFORMATION
Page
     
Item 1.
Unaudited Condensed Consolidated Financial Statements:
  
 
3
 
4
 
5
 
6
 
7
   
 
9
 
10
 
11
  12
 
14
 
16
 
17
 
17
 
18
 
19
 
19
     
Item 2.
20
     
Item 3.
26
     
Item 4.
26
     
PART II.
OTHER INFORMATION *
  
     
Item 1.
28
     
Item 2.
28
     
Item 6.
29
     
 
31

*
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)

   
March 31,
2022
    
December 31,
2021
  
ASSETS
            
             
Cash and cash equivalents (includes U.S. Treasury Bills with maturities of less than 3 months)
  
$
348,629
    
$
319,048
  
Investments in U.S. Treasury Bills with greater than 3 month maturities
    
-
      
60,996
  
Investments in equity securities (Including GBL stock with a value of $53.5 million and $60.4 million, respectively)
    
266,178
      
273,087
  
Investments in affiliated registered investment companies
    
133,253
      
134,548
  
Investments in partnerships
    
154,443
      
154,460
  
Receivable from brokers
    
176,898
      
42,478
  
Investment advisory fees receivable
    
1,308
      
8,315
  
Receivable and investment in note receivable from affiliates
    
5,308
      
10,094
  
Goodwill
    
3,519
      
3,519
  
Other assets
    
19,505
      
21,682
  
Investments in marketable securities held in trust
    
175,151
      
175,109
  
Total assets
  
$
1,284,192
    
$
1,203,336
  
                 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
                
                 
Payable to brokers
  
$
133,867
    
$
9,339
  
Income taxes payable, including deferred tax liabilities, net
    
3,703
      
8,575
  
Compensation payable
    
6,638
      
19,730
  
Securities sold, not yet purchased
    
5,812
      
12,905
  
Accrued expenses and other liabilities
    
2,394
      
3,580
  
Deferred underwriting fee payable
    
6,125
      
6,125
  
PMV warrant liability
     2,145
       5,280  
Total liabilities
    
160,684
      
65,534
  
                 
Redeemable noncontrolling interests
    
205,320
      
202,456
  
                 
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; 3,087,797 and 3,095,169 shares outstanding, respectively
    
6
      
6
  
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued; 18,962,754 and 18,962,918 outstanding, respectively
    
19
      
19
  
Additional paid-in capital
    
989,485
      
990,069
  
Retained earnings
    
52,249
      
68,435
  
Treasury stock, at cost (3,541,621 and 3,534,085 shares, respectively)
    
(121,720
)
    
(121,427
)
Total Associated Capital Group, Inc. equity
    
920,039
      
937,102
  
Noncontrolling interests
    
(1,851
)
    
(1,756
)
Total equity
    
918,188
      
935,346
  
Total liabilities and equity
  
$
1,284,192
    
$
1,203,336
  

As of March 31, 2022 and December 31, 2021, certain balances include amounts related to consolidated variable interest entities (“VIEs”) and voting interest entities (“VOEs”).  See Footnote D.

See accompanying notes.

3
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands, except per share data)

   
Three Months Ended
March 31,
  
   
2022
    
2021
  
Revenues
            
Investment advisory and incentive fees
  
$
2,486
    
$
2,225
  
Other
    
96
      
100
  
Total revenues
    
2,582
      
2,325
  
Expenses
                
Compensation
    
3,933
      
3,868
  
Management fee
    
-
      
2,663
  
Other operating expenses
    
1,955
      
2,159
  
Total expenses
    
5,888
      
8,690
  
                 
Operating loss
    
(3,306
)
    
(6,365
)
Other income (expense)
                
Net gain/(loss) from investments
    
(15,610
)
    
31,321
  
Interest and dividend income
    
804
      
1,189
  
Interest expense
    
(33
)
    
(91
)
Shareholder-designated contribution
    
(208
)
    
(1,737
)
Total other income (expense), net
    
(15,047
)
    
30,682
  
Income/(loss) before income taxes
    
(18,353
)
    
24,317
  
Income tax expense/(benefit)
    
(4,848
)
    
5,590
  
Income/(loss) before noncontrolling interests
    
(13,505
)
    
18,727
  
Income/(loss) attributable to noncontrolling interests
    
2,681
      
172
  
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
  
$
(16,186
)
  
$
18,555
  
                 
Net income/(loss) per share attributable to Associated Capital Group, Inc.’s shareholders:
                
Basic
  
$
(0.73
)
  
$
0.83
  
Diluted
  
$
(0.73
)
  
$
0.83
  
                 
Weighted average shares outstanding:
                
Basic
    
22,054
      
22,222
  
Diluted
    
22,054
      
22,222
  
                 
Actual shares outstanding:
    
22,051
      
22,155
  

See accompanying notes.

4
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
(Dollars in thousands)
 
   
Three Months Ended
March 31,
  
   
2022
    
2021
  
             
Net income/(loss) before noncontrolling interests
  
$
(13,505
)
  
$
18,727
  
Less: Comprehensive income/(loss) attributable to noncontrolling interests
    
2,681
      
172
  
                 
Comprehensive income/(loss) attributable to Associated Capital Group, Inc.
  
$
(16,186
)
  
$
18,555
  

See accompanying notes.

5
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(Dollars in thousands)

For the Three Months Ended March 31, 2022

   
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, 2021
  
$
25
    
$
68,435
    
$
990,069
    
$
(121,427
)
  
$
937,102
    
$
(1,756
)
  
$
935,346
    
$
202,456
  
Redemptions of noncontrolling interests
    
-
      
-
      
-
      
-
      
-
      
-
       -      
(486
)
Net income/(loss)
     -      
(16,186
)
    
-
      
-
      
(16,186
)
    
197
      
(15,989
)
    
2,484
  
Purchase of treasury stock
    
-
      
-
      
-
      
(293
)
    
(293
)
    
-
      
(293
)
    
-
  
Accretion of redeemable noncontrolling interests
     -       -       (584 )     -       (584 )     (292 )     (876 )     876  
Other changes to redeemable noncontrolling interests
     -       -       -       -       -       -       -       (10 )
Balance at March 31, 2022
  
$
25
    
$
52,249
    
$
989,485
    
$
(121,720
)
  
$
920,039
    
$
(1,851
)
  
$
918,188
    
$
205,320
  

See accompanying notes.

For the Three Months Ended March 31, 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
  

See accompanying notes.

6
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
 (Dollars in thousands)

    
Three Months Ended
March 31,
  
   
2022
    
2021
  
Operating activities
            
Net income/(loss)
  
$
(13,505
)
  
$
18,727
  
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
                
Equity in net (gains) losses from partnerships
    
1,202
      
(6,935
)
Depreciation and amortization
    
90
      
12
  
Deferred income taxes
    
(4,954
)
    
2,714
  
Donated securities
    
127
      
1,648
  
Unrealized (gains)/losses on securities
    
21,166
      
(18,548
)
Realized gains on sales of securities
    
(6,753
)
    
(538
)
(Increase)/decrease in assets:
                
Investments in trading securities
    
46,153
      
250,884
  
Investments in partnerships:
                
Contributions to partnerships
    
(2,702
)
    
(1,061
)
Distributions from partnerships
    
1,563
      
1,663
  
Receivable from affiliates
    
4,786
      
3,875
  
Receivable from brokers
    
(137,995
)
    
(8,578
)
Investment advisory fees receivable
    
6,961
      
6,209
  
Income taxes receivable
    
-
      
(507
)
Other assets
     2,087      
(808
)
Increase/(decrease) in liabilities:
                
Payable to affiliates
    
-
      
(1,946
)
Payable to brokers
    
124,528
   
3,991
  
Income taxes payable
    
82
      
3,435
  
Compensation payable
    
(13,092
)
    
(9,041
)
Accrued expenses and other liabilities
    
(1,186
)
    
(1,628
)
Total adjustments
    
42,063
      
224,841
  
Net cash provided by operating activities
    
28,558
      
243,568
  
                 
Investing activities
                
Maturities of marketable securities held in trust
     -
       175,074
  
Purchases of marketable securities held in trust
     -       (175,074 )
Purchases of securities
    
(2,601
)
    
(250
)
Proceeds from sales of securities
    
-
      
805
  
Return of capital on securities
    
828
      
155
  
Net cash provided by/(used in) investing activities
  
$
(1,773
)
  
$
710
  

7
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED (continued)
(Dollars in thousands)
 
    
Three Months Ended
March 31,
  
   
2022
    
2021
  
Financing activities
            
Purchase of treasury stock
    
(293
)
    
(4,198
)
Contributions from redeemable noncontrolling interests
    
-
      
136
  
Redemptions of redeemable noncontrolling interests     (486 )     -  
Net cash provided by (used in) financing activities
    
(779
)
    
(4,062
)
Net increase in cash, cash equivalents and restricted cash
    
26,006
      
240,216
  
Cash, cash equivalents and restricted cash at beginning of period
    
328,594
      
39,509
  
Cash, cash equivalents and restricted cash at end of period
  
$
354,600
    
$
279,725
  
                 
Supplemental disclosures of cash flow information:
                
Cash paid for interest
  
$
33
    
$
91
  
Cash paid/(received) for taxes
  
$
23
    
$
-
  

Reconciliation to cash, cash equivalents and restricted cash
Cash and cash equivalents
    
348,629
      
279,725
  
Restricted cash included in receivable from brokers
    
5,971
      
-
  
Cash, cash equivalents and restricted cash at end of period
  
$
354,600
    
$
279,725
  

See accompanying notes

8
ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2022
 (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 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 (the “Advisers Act”).

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 because AC has a controlling financial interest in these entities. This resulted in the consolidation of $162.6 million of assets, $8.3 million of liabilities, $165.0 million of redeemable noncontrolling interests, $(1.9) million of noncontrolling interests relating to PMV and the Sponsor as of March 31, 2022.

See Note D for a further discussion of PMV Consumer Acquisition Corp. as well as its registration statement, Annual Reports, and Quarterly Reports, which are all 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 2,417,500 shares as of March 31, 2022.

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.

The interim condensed consolidated financial statements include the accounts of AC Group and its subsidiaries. All material intercompany transactions and balances have been eliminated. In addition to PMV, 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.

9
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, 2021.

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 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.

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, 2021 for the Company’s revenue recognition policy.

The Company’s major revenue sources are as follows for the three months ended March 31, 2022 and 2021 (in thousands):

   
Three Months Ended March 31,
  
   
2022
    
2021
  
Investment advisory and incentive fees
            
Asset-based advisory fees
  
$
1,304
    
$
1,183
  
Performance-based advisory fees
    
44
      
9
  
Sub-advisory fees
    
1,138
      
1,033
  
Sub-total
    
2,486
      
2,225
  
 
                
Other
                
Miscellaneous
    
96
      
100
  
 
                
Total
  
$
2,582
    
$
2,325
  

10
C.  Investments in Securities
 

Investments in securities at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):
 
   
March 31, 2022
    
December 31, 2021
  
   
Cost
    
Fair Value
    
Cost
    
Fair Value
  
Debt - Trading Securities:
                        
U.S. Treasury Bills
  
$
-
    
$
-
    
$
60,992
    
$
60,996
  
Equity Securities:
                                
Common stocks
    
254,946
      
259,420
      
239,383
      
265,156
  
Mutual funds
    
542
      
1,213
      
524
      
1,351
  
Other investments
    
5,907
      
5,545
      
6,253
      
6,580
  
Total investments in equity securities
  
$
261,395
    
$
266,178
    
$
246,160
    
$
273,087
  
                                 
Investments in marketable securities held in trust(1)   $ 175,151
     $ 175,151
     $ 175,109
     $ 175,109
  


(1) At March 31, 2022 and December 31, 2021, marketable securities held in the trust account through PMV were comprised of 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.

Our held to maturity investments at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):


   
March 31, 2022
  
   
Amortized Cost
    
Gross Unrealized
Holding Gains
    
Gross Unrealized
Holding Losses
    
Estimated
Fair Value
  
Held to maturity:
                        
Investment in note receivable from affiliate(2)
   $ 5,145     $ -     $ -     $ 5,145  


   
December 31, 2023
  
   
Amortized Cost
    
Gross Unrealized
Holding Gains
    
Gross Unrealized
Holding Losses
    
Estimated
Fair Value
  
Held to maturity:
                        
Investment in note receivable from affiliate(2)
   $ 5,066     $ -     $ -     $ 5,066  

(2) 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 recorded at amortized cost.


Securities sold, not yet purchased at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):
 
   
March 31, 2022
    
December 31, 2021
  
   
Cost
    
Fair Value
    
Cost
    
Fair Value
  
Equity securities:
                        
Common stocks
  
$
3,373
    
$
3,282
    
$
9,021
    
$
9,838
  
Other investments
    
2,189
      
2,530
      
2,767
      
3,067
  
Total securities sold, not yet purchased
  
$
5,562
    
$
5,812
    
$
11,788
    
$
12,905
  


Investments in affiliated registered investment companies at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):
 
   
March 31, 2022
    
December 31, 2021
  
   
Cost
    
Fair Value
    
Cost
    
Fair Value
  
Equity securities:
                        
Closed-end funds
  
$
44,071
    
$
63,613
    
$
42,484
    
$
64,381
  
Mutual funds
    
49,547
      
69,640
      
49,362
      
70,167
  

                               
Total investments in affiliated registered investment companies
  
$
93,618
    
$
133,253
    
$
91,846
    
$
134,548
  

11
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 $39.1 million and $41.9 million at March 31, 2022, and December 31, 2021, 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 had investments in Affiliated Entities totaling $115.3 million and $112.6 million at March 31, 2022 and December 31, 2021, 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 consolidates the assets, liabilities and the results of operations of both PMV and Sponsor. The Company invested $4.0 million, or approximately 62% of the $6.48 million total Sponsor partnership commitment. The Sponsor is managed primarily 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. In addition, the Company has determined that PMV is a VIE due to the lack of equity at risk and therefore is consolidated by the Sponsor, who is deemed to be the primary beneficiary. Neither AC nor PMV have a right to the benefits from nor does it bear the risks associated with the U.S Treasury Bills 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 shares in PMV and the Sponsor invested $6.15 million in Private Warrants, both of which eliminate in the consolidation of PMV.

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 are generally invested in U.S. Treasury Bills.

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 we fail to complete a business combination within the required time period, subject to the terms of the underwriting agreement.
12
The following table reflects the net impact of the consolidated investment partnerships and other entities (“Consolidated Entities”) on the condensed consolidated statements of financial condition (in thousands):
 

 
March 31, 2022
  
   
Prior to
Consolidation
    
Consolidated
Entities
    
As Reported
  
Total assets
  
$
1,074,188
    
$
210,004
    
$
1,284,192
  
Liabilities and equity
                        
Total liabilities
    
144,587
      
16,097
      
160,684
  
Redeemable noncontrolling interests
    
-
      
205,320
      
205,320
  
Total equity(1)
    
929,601
      
(11,413
)
    
918,188
  
Total liabilities and equity
  
$
1,074,188
    
$
210,004
    
$
1,284,192
  

   
December 31, 2021
  

 
Prior to
Consolidation
    
Consolidated
Entities
    
As Reported
  
Total assets
  
$
991,104
    
$
212,232
    
$
1,203,336
  
Liabilities and equity
                        
Total liabilities
    
45,024
      
20,510
      
65,534
  
Redeemable noncontrolling interests
    
-
      
202,456
      
202,456
  
Total equity(1)
    
946,080
      
(10,734
)
    
935,346
  
Total liabilities and equity
  
$
991,104
    
$
212,232
    
$
1,203,336
  

(1) Debit adjustments to Total equity reflect the amortization of the discount related to the issuance of PMV SPAC’s redeemable noncontrolling interest. The discount is amortized through an adjustment to additional paid-in capital and noncontrolling interest (proportionate to ownership interest in PMV Sponsor) and is also adjusted periodically for income/loss allocated to redeemable noncontrolling interest.

The following table reflects the net impact of the consolidated entities on the condensed consolidated statements of income (in thousands):
 
   
Three Months Ended March 31, 2022
  
    
Prior to
Consolidation
    
Consolidated
Entities
    
As Reported
  
Total revenues
  
$
2,772
    
$
(190
)
  
$
2,582
  
Operating loss
    
(2,641
)
    
(665
)
    
(3,306
)
Total other income/(expense), net
    
(18,393
)
    
3,346
      
(15,047
)
Income/(loss) before noncontrolling interests, net of taxes
    
(16,186
)
    
2,681
      
(13,505
)
Income attributable to noncontrolling interests
    
-
      
2,681
      
2,681
  
Net income/(loss)
  
$
(16,186
)
  
$
-
    
$
(16,186
)

   
Three Months Ended March 31, 2021
  
    
Prior to
Consolidation
    
Consolidated
Entities
    
As Reported
  
Total revenues
  
$
2,140
    
$
185
    
$
2,325
  
Operating loss
    
(5,852
)
    
(513
)
    
(6,365
)
Total other income, net
    
30,056
      
626
      
30,682
  
Income before noncontrolling interests, net of taxes
    
18,614
      
113
      
18,727
  
Income attributable to noncontrolling interests
    
-
      
172
      
172
  
Net income/(loss)
  
$
18,614
    
$
(59
)
  
$
18,555
  


Variable Interest Entities
 
With respect to each consolidated VIE, its assets may only be used to satisfy its obligations. The investors and creditors of any 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.

13
The following table presents the balances related to VIEs that are consolidated and included on the condensed consolidated statements of financial condition as well as the Company’s net interest in these VIEs (in thousands):
 
   
March 31,
2022
    
December 31,
2021
  
             
Cash and cash equivalents
  
$
1,686
    
$
1,911
  
Investments in securities
   
10,868
      
11,227
  
Receivable from brokers
    
1,033
      
1,106
  
Investments in partnerships and affiliates
    
-
      
-
  
Investments in marketable securities held in trust
     175,151       175,109  
Other assets
    
68
      
103
  
Accrued expenses and other liabilities(1)
    
(7,076
)
    
(7,074
)
PMV warrant liability
     (2,145 )     (5,280 )
Redeemable noncontrolling interests
    
(165,527
)
    
(162,314
)
Nonredeemable noncontrolling interests
    
1,851
      
1,757
  
AC Group’s net interests in consolidated VIEs
  
$
15,909
    
$
16,545
  

(1) Represents the summation of multiple captions from the condensed consolidated statements of financial condition.

Voting Interest Entities

We have an investment partnership that is consolidated as a VOE for both 2022 and 2021 because AC has a controlling interest in the entity. This resulted in the consolidation of $107.2 million of assets, $7.2 million of liabilities, and $39.8 million of redeemable noncontrolling interests at March 31, 2022 and $109.3 million of assets, $8.4 million of liabilities, and $40.1 million of redeemable noncontrolling interests at December 31, 2021. AC’s net interest in the consolidated VOE for 2022 and 2021 was $60.2 million and $60.8 million, respectively.

Equity Method Investments
 
The Company’s equity method investments include investments in partnerships and offshore funds. These equity method investments are not consolidated but on an aggregate basis exceed 10% of the Company’s consolidated total assets or income.

E.  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.

14
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):
 
   
March 31, 2022
  
  
Assets
  
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
    
Significant
Other
Observable
Inputs (Level 2)
    
Significant
Unobservable
Inputs (Level 3)
    
Total
  
Cash equivalents
  
$
346,891
    
$
-
    
$
-
    
$
346,891
  
Investments in securities (including GBL stock):
                                
Trading - U.S. Treasury Bills
    
-
      
-
      
-
      
-
  
Common stocks
    
255,076
      
2,271
      
2,073
      
259,420
  
Mutual funds
    
1,213
      
-
      
-
      
1,213
  
Other
    
4,515
      
783
      
247
      
5,545
  
Total investments in securities
    
260,804
      
3,054
      
2,320
      
266,178
  
Investments in affiliated registered investment companies:
                                
Closed-end funds