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Marketing & Public Relations Manager
For Immediate Release
U.S. Global Investors Reports Financial Results for the Second Quarter of 2019 Fiscal Year
SAN ANTONIO–February 12, 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 a net loss of $3.2 million ($0.21 per share) for the quarter ended December 31, 2018, compared to earnings of $749,000 ($0.05 per share) a year earlier. As was the case in the September quarter, the loss is primarily due to unrealized investment losses related to decreases in valuation of corporate investments.
“Shares of GROW, which have traditionally been correlated with the price of gold, took on additional short-term volatility with our investment in HIVE Blockchain Technologies in September 2017,” explains Frank Holmes, Company CEO and chief investment officer. “Because HIVE mines bitcoin, some investors trade GROW as a proxy for the digital currency, whose price has been and is expected to remain volatile.”
For the three months ended December 31, the Company saw an investment loss of $3.4 million, compared to investment income of $243,000 in the same quarter the previous year. As of July 1, 2018, the Company adopted a new accounting pronouncement that 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 can result in investment income and losses being more volatile quarter-to-quarter.
The Company had a net loss of $48,000 from equity method investments for the December quarter, compared to $1.2 million income for the same three months in 2017. The underlying investments in the equity method investments are concentrated in cryptocurrency mining stocks, which are expected to continue to be volatile. There is potential for continued significant volatility in the valuation of the equity method investment currently held.
Total operating revenues for the December quarter decreased $194,000, or 9.7 percent, compared to the same period a year earlier. This decrease was primarily attributable to lower advisory and administrative services fees, as investors continue to rotate out of actively managed mutual funds in favor of passively managed index funds such as exchange-traded funds (ETFs). The decrease in revenue due to the decrease in assets under management (AUM) was somewhat offset by an increase in performance fees received by Galileo Global Equity Advisors Inc. (Galileo). The Company has a 65% percent interest in Galileo. The receipt of performance fees in the future is uncertain as fees are dependent upon many factors, including market conditions.
The following information was filed by U S Global Investors Inc (GROW) on Thursday, February 14, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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