Stonegate Capital Partners Initiates Coverage on U.S. Global Investors, Inc. (NASDAQ: GROW)

DALLAS, TX -- November 2nd, 2022 -- U.S. Global Investors, Inc. (NASDAQ: GROW): Stonegate Capital Partners initiates their coverage on U.S. Global Investors, Inc. The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/GROW_Q3FY22.pdf

COMPANY DESCRIPTION

U.S. Global Investors is an innovative investment manager, specializing in thematic, specialized, and niche sectors. The firm was founded in 1968 and is based out of San Antonio, Texas. The Company has a long history of global investing and launching first-of-their-kind investment products including the first no-load gold fund. It is well known for its expertise in gold and precious metals, natural resources, airlines, emerging markets and cryptos. Frank Holmes is the CEO and CIO of U.S. Global Investors.

COMPANY SUMMARY

• Well Positioned to Grow AUM: U.S. Global Investors offers 8 innovative and thematic no-load mutual funds and 4 specialized ETFs to the retail investment community. The Company is well positioned to benefit from the growing demand of the retail public. As of June 2022, the current total AUM was $2.9 billion.
• GROW has Long History of Developing Innovative Products: For over 50 years, GROW has offered specialized investment products, including The U.S. Global Jets ETF (JETS). JETS is the only Airline ETF available to investors, providing them the opportunity to invest in the global airline industry, including airline operators and manufacturers. The Company’s newest ETF, the U.S. Global Sea to Sky Cargo ETF (SEA), invests in cargo ships and jets. SEA beat the S&P 500 Index and Nasdaq-100 Index from inception to August 2022.
• Scalable Business Model: The Company has a relatively fixed expense structure. As AUM grow’s, incremental revenues flow to the bottom line other than increased salaries and compensation. A small and experienced team combined with operating margins of 45%, presents GROW the ability to significantly scale the business and improve EPS.
• Returning Capital to Shareholders: The Company has a history of increasing dividends and share repurchases. During the years 2022 and 2021, the Company has repurchased 105,713 and 53,151, respectively, of its class A shares on the open market using cash of $499,000 and $314,000 respectively.
• A Strong Balance Sheet with Cash Available for Opportunities: The Company has high cash reserves of approximately $23 million and no debt as of June 2022 allowing it to invest in lucrative opportunities available in the market. In addition, the Company owns their own office building, currently valued on the balance sheet at $4.61 million, but recent appraisals indicate a higher valuation.
• Investment in HIVE Blockchain: The Company has an investment of warrants and convertible debentures valued at $14.1 million in HIVE Blockchain Technologies Ltd. (NasdaqCM: HIVE), the first ever publicly traded cryptocurrency miner. HIVE uses 100% green energy to mine Bitcoin, realizing industry leading gross margins.
• CEO/CIO Vested Interest: CEO/CIO Frank Holmes, well-known in the gold industry, owns approximately 18% of the Company. Under his leadership, the Company has grown to an average AUM of $3.9 billion.
• Valuation –We are using an EV/EBITDA multiple to value the Company. Using an EV/EBITDA multiple range of 4x to 6x, with a midpoint of 5x results in a valuation range of $5.38 to $8.07 respectively, with a midpoint of $6.72.