U.S. Global Investors, Inc. (GROW)

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U.S. Global Investors, Inc. (GROW)

F2Q 2014 Results Earnings Call

February 10, 2014 8:30 AM ET


Susan Filyk - Investor Relations

Frank Holmes - Chief Executive Officer and CIO

Susan McGee - President and General Counsel

Lisa Callicotte - Chief Financial Officer




Welcome to U.S. Global Investors Webcast, U.S. Global Investors Earnings Announcement for Second Quarter 2014. If you have any questions during the webcast, simply enter your question in the dialogue box at the bottom of the screen and click submit. Also, you may download a PDF of today’s slides by clicking on the Resources tab in the top center area of your screen. You can also download some of U.S. Global Investors’ latest research on the Resources tab, to switch back to the presentation just click the slide tab.

We would like to begin by introducing Ms. Susan Filyk, Investor Relations at U.S. Global Investors. Ms. Filyk.

Susan Filyk

Thank you. Welcome to our webcast announcing results for the second quarter ended December 31, 2013. The presenters for today’s program are Frank Holmes, U.S. Global Investors’ CEO and Chief Investment Officer; Susan McGee, President and General Counsel; and Lisa Callicotte, Chief Financial Officer.

During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don’t pertain to historical facts are subject to risks and uncertainties that may materially affect actual results.

Please refer to our press release and corresponding Form 10-Q filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today and U.S. Global Investors accepts no obligation to update them in the future.

If you have a question for us, you can submit it at anytime during the webcast. Simply type your question in the dialogue box at the bottom of the screen and click submit. If we aren’t able to answer your question during the live presentation, we will follow-up with you individually.

Now, let’s go to Frank Holmes, CEO and CIO for an overview of the quarter. Frank?

Frank Holmes

Thank you. U.S. Global -- GROW, a boutique investment advisors specializing gold and natural resources in emerging markets and domestic equities and munis and something we’ve repositions to also focus on our fundamental models in particular for the Holmes Macro Fund which I will talk about little later and to addition to the resources in emerging markets.

The strength of GROW were go-to-start for exposure to emerging markets and resources. Remind all investors, we are debt free, we have a strong balance sheet with reflects of cost structure, which Lisa Callicotte will address the monthly dividend return on equity discipline.

Our top institutional shareholders for their interest to review and take a look at, slide #7, with six years of paying dividend which we are happy, demonstrate that consistency. And on page eight, the Board’s approved to repurchase of up to 2.7 million of outstanding common stock on the over market through counter year 2014 and during the second fiscal quarter of 2014 the company repurchased 28,227 Class A shares using cash of $72,528.

During the fiscal year-to-date the company has repurchased as from July to December has purchased 41,446 Class A share. We are spending a $109,737. We does an algorithm with the buyback shares in down days and according with all applicable rules and regulations that restrict amounts and times of repurchases and this practice may be suspended or discontinued anytime.

Going on the next visual, I think its important is the strategic accomplishment in the second fiscal quarter. We shifted out of costly money market business. We provided shareholders with the new Ultra-Short Bond Fund.

We close and emerge and reorganized small funds for more focus product line-up where margins are bigger and better, successfully transition client accounts to a new transfer agency, while retaining service relationships with key client accounts. We streamline the company with staff less than 15 employees, fewer distractions allowed U.S. Global to focus on its core competencies.

The next visual to show you on 10, why we shifted out of money market business? Look at the U.S. fed funds rate, even though last year, in May we saw mortgage rates in 10-year govern notes rise dramatically, nothing happened to fed funds and fee waivers for the industry rose to a record high $5.8 billion. So this is decision we have been supporting, has been costing us millions of dollars since 2008 to support and it is best to remove ourselves from that line-up business.

Next visual is when we took our Government Securities Savings Fund and for investors looking for safety, securities, in particular government securities and not being too worried about rising interest rates, the best way to get the higher yield and not take the risk of having five or 10-year, 30-year bonds is to go Ultra-Short where the yields are higher and as you can see, when the interest rates has spiked, we have converted the Government Fund into an Ultra-Short Bond Fund. We are applying our proprietary statistical model of when we shrink or extend the length of the maturity for those basic for government agencies.

Next visual showing the new line-up of the funds, its simple, its cleaner and so we are happy with that and you can please visit the website, usfunds.com and read more regarding what we are doing with the marketing position of each of those products.

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