• Airlines Fund Volatility: Non-event for assets to fluctuate 6% over a 10-day period.
• Gold Fund Volatility: Assets fluctuate plus or minus 6% over a 10-day period.
• Growth in Government Agency Fund: Increased from nearly nothing to $1 billion in assets.
• Gold Assets Correlation: Stock performance highly correlated with gold fund flows.
• Bitcoin and Hive Investment: Initial investment in Hive in 2017, significant volatility around Bitcoin.

• Warning! GuruFocus has detected 4 Warning Sign with GROW.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• US Global Investors Inc (NASDAQ:GROW) has a strong balance sheet with significant cash reserves, allowing for stock buybacks and dividend payments.
• The company's gold-focused funds have shown modest growth year over year, benefiting from gold reaching all-time highs.
• US Global Investors Inc (NASDAQ:GROW) has a longstanding history of innovation, being the first to launch a no-load gold fund and creating thematic investment products.
• The company has successfully created sustainable thematic products using a Smart Beta 2.0 strategy, which involves extensive backtesting and quarterly recalibration.
• US Global Investors Inc (NASDAQ:GROW) has a global footprint with a significant presence in emerging markets, particularly in the gold mining sector in Africa and Latin America.

Negative Points

• Microcap stocks, including US Global Investors Inc (NASDAQ:GROW), have struggled to keep pace with large-cap stocks, impacting overall performance.
• The company's stock price has been affected by negative sentiment towards the airline industry, despite increased travel post-COVID.
• There is a lack of significant fund flows into gold and gold stocks, despite the asset class's strong performance.
• US Global Investors Inc (NASDAQ:GROW) faces challenges in the mutual fund industry, with a shift towards ETFs and outdated valuation metrics for mutual funds.
• The company's thematic products, while innovative, are subject to cyclical market trends, which can lead to periods of volatility and underperformance.

Q & A Highlights

Q: Can you elaborate on the company's strategy regarding gold investments and its performance? A: Frank Holmes, CEO, explained that US Global Investors has a strong focus on gold, with funds modestly growing year over year. The company believes in the potential of gold as a diversified asset, especially given global economic conditions and monetary policies. Holmes highlighted the historical success of gold and gold-related investments, noting that gold has outperformed the S&P 500 over the century.

Q: How does US Global Investors view its current stock valuation and what actions are being taken? A: Frank Holmes stated that the company believes its stock is deeply undervalued. To enhance shareholder value, US Global Investors is actively buying back shares, maintaining a strong shareholder yield of 9.34%, which combines stock buybacks and dividends. The company is committed to returning value to shareholders, especially in the current economic climate.

Q: What is the company's approach to managing volatility in its investments? A: Frank Holmes emphasized the importance of understanding the "DNA of volatility" for different asset classes. The company regularly updates its analysis to manage expectations and adapt to changes in government policies. This approach helps in maintaining a balanced portfolio and mitigating risks associated with volatile markets.

Q: Can you discuss the performance and strategy of the Jets ETF? A: Frank Holmes highlighted the success of the Jets ETF, which saw significant growth during the COVID-19 pandemic. Despite recent profit-taking, the ETF remains a key product, with a focus on the airline industry. The company has expanded its reach by launching the ETF in Colombia and merging it with another group to create a broader tourism-focused product.

Q: What are the future growth opportunities for US Global Investors? A: Frank Holmes mentioned that the company is focused on creating sustainable thematic products using a smart beta 2.0 strategy. US Global Investors is also exploring M&A opportunities and continuously analyzing its products to introduce new and exciting offerings. The company aims to leverage its cash reserves for future growth and market corrections.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.