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Marketing & Public Relations Manager
For Immediate Release
U.S. Global Investors Reports Improved Net Income on Bounce in Strategic Investments
SAN ANTONIO–May 9, 2019–U.S. Global Investors, Inc. (NASDAQ: GROW) (the “Company”), a boutique registered investment advisory firm with longstanding experience in global markets and specialized sectors, today reported net income of $779,000 ($0.05 per share) for the quarter ended March 31, 2019, compared to a loss of $1.1 million ($0.07 per share loss) a year earlier. This increase of approximately $1.8 million is primarily due to an increase in investment income resulting from unrealized gains and a positive change in income from equity method investments, which was partially offset by an increase in tax expense.
Total consolidated net income for the three months ended March 31, 2019, increased approximately $1.8 million compared with the same period in 2018. A significant amount of this increase is due to the Company adopting a new accounting pronouncement in July 2018, which changed how unrealized gains and losses of certain corporate investments are recorded. Starting in fiscal year 2019, changes in the fair value of the Company’s investments formerly classified as available-for-sale were no longer reported through other comprehensive income, but rather through earnings. This change in accounting has resulted in investment income being more volatile quarter-over-quarter. For the three months ended March 31, 2019, net unrealized gain on securities formerly classified as available-for-sale was approximately $2.1 million.
In addition to the increase in investment income, there was $3,000 in income from equity method investments for the three months ended March 31, 2019, compared to a $927,000 loss for the same period the previous year, a positive change of approximately $930,000. The Company has held three separate equity method investments during the past 12 months, all of which were concentrated in cryptocurrency mining stocks. Cryptocurrency markets and related stocks have been, and are expected to continue to be, volatile. Cryptocurrency mining is considered an early-stage, high-risk industry, and the nature of mining is expected to evolve.
“The mutual fund business is still in a prolonged bear market, with declining fund flows,” Frank Holmes, CEO and chief investment officer of U.S. Global Investors, comments. “Investor appetite for passively managed funds, including ETFs, continues to accelerate, making it increasingly challenging for active management to attract and retain assets. For the 12-month period through the end of March, passive funds saw as much as $454 billion in net inflows, whereas investors withdrew $305 billion from actively managed funds, according to Morningstar data.”
The following information was filed by U S Global Investors Inc (GROW) on Friday, May 10, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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