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Friday, August 29, 2014 After '14 Loss, Holmes Plans to GROW U.S. Global After another year of losses, Frank Holmes, chief executive of U.S. Global Investors is mounting a counter-attack. His firm, best known for investing in gold and other natural resources as well as emerging markets, reported a net loss of $970,000, or six-cents per share, on revenues of $11.4 million for the fiscal year ended June 30, 2014. The firm had reported a net loss of $194,000 or one-cent per share, on operating revenues of $17.3 million, for fiscal year 2013. Meanwhile, for the fourth quarter of fiscal year 2014, the company reported net income of $260,000, or two-cents per share, on operating revenues of $2.9 million. During a conference call with analysts on the latest earnings results, Holmes outlined a number of strategies in response to the losses. A transcript of the call was made available by SeekingAlpha. These moves have included, or will include: 1. Exiting from the Money Market Biz 2. Expanding ETF Operations 3. Aggressive Cost-Cutting 4. Judicious Share Repurchases 5. Increasing Stake in Gallileo More details on these can be found below: 1. Exiting from the Money Market Biz In December 2013, U.S. Global Investors exited the money market fund business by closing its Treasury money market fund and converting its government money market fund to a higher yielding, ultra-short government bond fund. Holmes had this to say on the subject:
2. Expanding ETF Operations U.S. Global Investors was recently granted exemptive relief by the Securities and Exchange Commission, allowing the company to begin the process of bringing ETF products to market. Holmes had this to say at various points during the conference:
3. Aggressive Cost-Cutting Holmes said last years operating costs were $14.8 million, which "is a decrease of $2.7 million or 15% and this is related to employee compensation and benefits decreasing $1.5 million or 18% and this is because we have fewer employees and lower performance based bonuses. Platform fees decreased $760,000 or 29% as a result of lower assets held through broker/dealer platform. We also reduced advertising $247,000 or 29% as we decreased sales and marketing cost. General and administrative expenses decreased $110,000 or 2% but also included in G&A are some one-time costs that Frank talked about, related to our strategic fund changes. We had approximately $525,000 that we paid in the second quarter of last year related to legal proxy filing and solicitation cost." 4. Judicious Share Repurchases Holmes described the program in this way:
5. Increasing Stake in Galileo U.S. Global Investors, which already owned 50 percent of Toronto-based Galileo Global Equity Advisors, bought another 15 percent in June to gain a controlling interest in the company. Holmes had this to say on the subject at various points during the conference call:
Read more on the subject from the SeekingAlpha transcript. Printed from: MFWire.com/story.asp?s=49554 Copyright 2014, InvestmentWires, Inc. All Rights Reserved |