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U.S. Global Investors, Inc. Message Board

  • eriksen_t eriksen_t Nov 7, 2008 10:09 AM Flag

    GROW loses Endeavour

    See press release under symbol EDV.TO. GROW has lost Endeavour as a client, which will virtually eliminate incentive fee income in the future.

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    • Tim, I have expected this news earlier, have to admit. When I saw that Edv changed their operational model and restructured a year or so ago, I expected them to dump Holms. They spent huge percentage of profit to pay incentive fees and bonuses to GROW.
      More bad news is in front of GROW. Unless they lay off some stuff, I just do not see them to be profitable with AUM around 2.5B or less as it stands now.
      Book value is likely the bottom. But, now is the time for smart investors and companies to make acquisitions. Grow close to cash value at the end may be a target. We should not forget that their funds outperformed markets during good times. As we pointed so many times out, the problem was money outflow. Somehow, they hit the ceiling with 4-5BM AUM and failed to attract new money.

      • 1 Reply to deedstrader
      • Deeds, with all due respect, I think you’ve got lost in rhetoric… The growth of AUM for the GROW funds was a result of retail investors jumping on the gold/emerging market band wagon… as always LATE. Look at it as a “trailing indicator”. Combine it with constant pumping by Holms and that was the “big run” for GROW.
        No one is going to commit new money into GROW funds until they will start to outperform again and clearly I don’t see ANY possibilities for it to happened until we see the deflation reversal and the emerging world economies reignite their growth.
        Until that – down all the way to $2.

    • After reading the news item, I can't help thinking of a book I read a while ago: Confessions of an Economic Hitman.

      Is Homes and Grow a cover for U.S. Imperialism?

    • just to be clear...

      although we may not know how much AUM was affected in October or in the coming months for the next quarter, that still does not justify that Grow will hit $2 share price.

      Global Investors' funds have lots of stocks in their portfolios that their stock prices are much less than their book values. Once the deflation period is over, then all those stocks including Global Investor funds will go much higher.

      Time will show.

    • you are right. things are certainly different right now, that's why I said that we'll see what happens in 09.

    • "Excluding the one-time expenses related to the fund shareholder election, U.S. Global earned $510,537, or 3 cents per diluted share, in the quarter ended September 30, 2008."

      That proforma profitability was based on average assets under management of 4.47 billion for the quarter. They ended 9/30 with only 3.33 billion and the market has fallen nearly 20% since then and GROW's funds have fallen about 33%. So they may not be profitable currently.


      "Excluding the one-time expenses related to the fund shareholder election, U.S. Global earned $510,537, or 3 cents per diluted share, in the quarter ended September 30, 2008."
      excluding the one time expense, GROW is also profitable then. Unfortunately, the PPS is going down because of the general economic trend. We'll see what happens in 09 I guess.

    • while i am not defending the $2 figure, the comparison of Apple is not very good. Apple is clearly profitable, GROW may no longer be until AUM grows. Also book is irrelevant if it is mostly goodwill or other intangibles. In GROW's case they have cash and investments totaling $2 per share.

      IF the poster was implying book is a floor, it is much more complex than that. I would love to buy great companies like Coca Cola near book.

    • Earnings are so bad Q1. Q2 will be worse. It may start to recover in a year or two. It is up to the fund to decide whether it goes to $2 or stay at $6 for a while.

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