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Marketing & Public Relations Manager
For Immediate Release
U.S. Global Investors Reports Financial Results for the 2019 Fiscal Year
SAN ANTONIO–September 5, 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 $3.4 million, or $0.22 per share loss, for the fiscal year ended June 30, 2019. In comparison, for the previous fiscal year, the Company recorded net income of $647,000 ($0.04 per share), representing a decrease of approximately $4.0 million. The decrease is primarily attributable to unrealized losses on corporate investments along with a decrease in operating revenue, which was partially offset by a tax benefit.
Net unrealized losses on corporate investment recognized in fiscal year 2019 were approximately $1.8 million, just over half of the fiscal year’s loss. The Company adopted 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 in fiscal year 2019.
Assets under management (AUM) for fiscal year 2019 fell in comparison to the same period in 2018, leading to a decrease in operating revenue of $1.3 million. Average assets under management (AUM) was $564 million versus $729 million in fiscal year 2018, a decrease of 22.6 percent. The decrease was primarily due to shareholder redemptions and market depreciation.
Challenges in Mutual Fund Market Persist, but Gold Has Put Wind in Our Sails
“Investor appetite for passively managed funds, including ETFs, continues to accelerate, making it increasingly challenging for active management to attract and retain assets,” Frank Holmes, CEO and chief investment officer of U.S. Global Investors, comments. “In the month of June alone, passive funds had their best month of 2019, collecting $68.6 billion. Active funds, meanwhile, lost approximately $22.5 billion to outflows, according to Morningstar data.
“A big exception to this trend in fiscal year 2019 was our Gold and Precious Metals Fund (USERX), which had an approximate 4.6 percent increase due to net shareholder purchases for the twelve months ended June 30, 2019,” Mr. Holmes continues. “Gold, historically used as a portfolio diversifier in times of economic and geopolitical uncertainty, saw a healthy surge in investor demand in the first half of the year, with its price rising about 8.6 percent through June 30, from $1,312 an ounce to $1,425. I’m very proud to say that USERX had a five-star rating from Morningstar for the five-year period in the Equity Precious Metals category as of June 30, and a four-star rating for the three-year and 10-year period as well as overall.
“I’m greatly pleased with how well our U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) performed in the first half. GOAU rose 23.42 percent in the six months through June 30, beating the S&P 500 Index, which gained 18.54 percent. The ETF, which is rules-based and recalibrated every quarter, celebrated its two-year anniversary at the end of June, and it’s done exactly what we designed it do. We believe in the GOAU story, and we’ve recently upped our marketing efforts for the fund, having met with a number of institutional investors at the New York Stock Exchange in June to introduce—or, in some cases, reintroduce—them to the ETF.”
Diversified Across the Precious Metal and Cryptocurrency Mining Industries
U.S. Global Investors is diversified across the cutting edge precious metal and cryptocurrency mining industries. In fiscal year 2019, the Company purchased an investment in GoldSpot Discoveries Corp. (“GoldSpot”) that was valued at approximately $1.7 million as of June 30, 2019. GoldSpot is an innovative company headquartered and traded in Canada that applies artificial intelligence to resource exploration. The Company’s ownership of GoldSpot was approximately 7.5 percent as of June 30, 2019. Frank Holmes serves on the board of this company as independent chairman.
The following information was filed by U S Global Investors Inc (GROW) on Friday, September 6, 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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