Q2 2024 U.S. Global Investors Inc Earnings Call

Holly Schoenfeld: You have joined the meeting as an attendee and will be muted throughout the meeting. March 31st, 2023. As you can see on slide number two, the presenters for today's program are Frank Holmes, from the U.S. Global Investors CEO and Chief Investment Officer, Lisa Calicott, Chief Financial Officer, and myself, Holly Schoenfeld, Director of Marketing. Now, we move on to slide number three. During this webcast, we may make forward-looking statements about our relative business outlook. However, 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 10-2 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 accepts no obligation to update them in the future.

And we will be muted throughout the meeting 31st 2023.

As you can see on slide number two.

The presenters for today's program are Frank U S Global Investors', CEO, and Chief Investment Officer, Lisa Callicott, Chief Financial Officer, and myself, Holly Schoenfeldt director of marketing.

If we move onto slide number three.

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 forest.

Bonding 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 accepts no obligation to update them in the future.

Holly Schoenfeld: Moving on to the next slide. As always, we would love to offer anyone tuning in today one of our Jets, GoAU, or SEAHATS. All you need to do is send us an email with your physical mailing address to info at usfunds.com.

Moving on to the next slide.

As always we would love to offer anyone tuned in today one of our jet go AUR at all you need to do is send us an email with your physical mailing address two info at U S funds Dot com.

Holly Schoenfeld: And now on to the next slide, I will briefly review our company. U.S. Global Investors is an innovative investment manager with vast experience in global markets and specialized sectors. It was originally founded as an investment club, becoming a registered investment advisor in 1968. The company has a longstanding history of global investing and launching first-of-their-kind investment products, including the first no-load gold fund. We're also well-known for our expertise in gold and precious metals, natural resources, airlines, and luxury goods. Now, when we move to the next slide, slide number six, this is where I want to hand the presentation over to CEO Frank Holmes. Frank?

And now onto the next slide I will briefly review our company.

U S. Global investors is an innovative investment manager with vast experience in global markets and specialized sectors. It was originally founded as an investment club, becoming a registered investment adviser in 1968.

Company has a long standing history of global investing and launching first of their kind investment products, including the first no load Gold fund. We're also well known for our expertise in Golden precious metals natural resources Airlines and luxury goods now when we move to the next slide slide number six this is.

Where I want to hand, the presentation over to CEO, Frank Holmes Frank Thanks.

Frank Holmes: Thank you, Holly, and thank you, all the shareholders who are listening. This is one of the most important disclaimers I always like because it's colorful, but it's factual, and the world is the DNA of volatility. And what's important here is that every asset class has its own DNA of volatility, and it changes over time. They know well today that the DNA of the human body can change, and external forces, imbalances between macro forces of monetary fiscal policies can all of a sudden impact capital markets, and they can change the DNA of the volatility of an asset class. So let's take a look at the S&P 500. It basically says it's a non-event for it to go up or down 1%, almost 70% of the time. Over 10 days, it's 3%.

Holly.

And thank you all of our shareholders who are listening.

This is one of the most important disclaimer. So I was like because its colorful but its factual in the world.

Is the DNA of volatility and what's important here is that every asset class has its own DNA of volatility and it changes over time.

They know well today that the DNA of the human body can change.

And external forces imbalances between macro forces of monetary and fiscal policies can all of a sudden impact capital markets. I think can change the DNA of the volatility of an asset class. So let's take a look at the S&P 500. It basically says is a non event to go up or down 1% almost 70% of the time.

Over 10 days was 3% and you could see the gold bullion is the same as the S&P 500, and if we go back 10 years ago volume was was more volatile two to one to what the S&P was on the Dow Jones U S asset manager index.

Frank Holmes: And you can see that gold bullion is the same as the S&P 500. And if we go back 10 years ago, gold bullion was more volatile, 2 to 1 to what the S&P was. And the Dow Jones US Asset Manager Index has a daily volatility close to the S&P, but over 10 days, it doubles, basically to 5%. Roe definitely doubles over 10 days.

Dave Daily volatility closely S&P, but over 10 days it doubles basically the 5% growth definitely doubles over 10 days or so non event to go up or down 6% on a weekly basis.

Frank Holmes: It's a non-event to go up or down 6% on a weekly basis. Some of our funds are known especially for gold and GoAU. You can see that it's plus or minus 7% over a 10-day period. Those changes in the assets of the airlines or gold do have an impact on our funds, and this is how we earn fees. We earn fees on basis points on the total assets that we manage, and they can change on a monthly basis, a quarterly basis. And that's what changes basically.

Some of our funds are known especially for gold and <unk>.

And see that as plus or minus 7% over a 10 day period those changes in the assets of the airlines or gold they.

They do have an impact in our funds and this is how we earn fees we earn fees on basis points on the total assets that we manage and they can change over a monthly basis or quarterly basis and Thats. What changes basically is very simple business to calculate what our revenue is going to be.

Frank Holmes: It's a very simple business to calculate what our revenue is going to be. Next, Well, the ETF world continues to beat down on the mutual fund world. As you can see, the ETF world continues to enjoy more product access, and fund flow is going out of the mutual fund world. It's interesting that younger investors, the millennials and generations X, Y, and Z, are much more keen to go and trade and invest but predominantly trade an ETF to get exposure to a theme. Next, please.

Next.

While the ETF World continues to.

Beat down on the mutual fund World as you can see.

The ETF World continues to enjoy more product access.

And the fund flows going out of the mutual fund world.

It's interesting that the younger investors, the millennials and generation X Y Z are much more pain to go and trade.

And invest but predominately trade.

ETF to get exposure.

Two a theme.

Frank Holmes: I want to thank our institutional shareholders, Vanguard, Royce Investment Partners, Parrot Capital, KWM, and BlackRock. A couple of these other lineups are into index funds, but we still thank them all that we qualify and show up in their product lineup. Next, please.

Next please.

I want to thank our institutional shareholders Vanguard Royce investment partners parent capital.

Te Wm and Blackrock.

A couple of these other lineups are into index funds.

And but still we think the mall for that we qualify and sharpen their product lineup.

Yes.

So as you know on the CEO and Chief investment Officer, and I've been in the saddle for about 35 years.

Frank Holmes: So, as you know, I'm the CEO and Chief Investment Officer, and I've been in this saddle for about 35 years. It's interesting to watch how U.S. Global has been through different cycles of global booms and busts. But during that period, I've owned approximately 18% of the company and 99% of the voting control. That's a technical part of having 40 Act rules.

It's interesting to watch.

<unk> global has been through different cycles, a global booms and busts.

But during this period, you'll have own approximately 18% of the company and 99% of the body control. That's a technical part of having 40 Act rule.

Frank Holmes: But what's important is I am the largest shareholder. That's, So bond yields are important to look at, and then we track what happens with the two-year, five-year, and the 10-year. And to share with you, most currency movement is off a two-year yield, and that impacts gold.

Rules, but what's important is I am I am the largest shareholder.

Thanks.

So bond yields are important to look at and we track what happens with the two year five year and 10 year and to share with you is that most of the currency movement is off a two year yield and that impacts goal. So that's one reason why I follow the 50 day moves.

Frank Holmes: So that's one reason why I follow the 50-day moving average on yields. And the five-year is predominantly on dividend-paying stocks, and the 10-year is for infrastructure spending. If you're gonna build a new pipeline, the financing is usually on a 10-year government bond.

Average on the yields and the five year is predominantly on dividend paying stocks and the 10 year is for the infrastructure spending if youre going to build a new pipeline. The financing is usually off a 10 year government bond a new gold mine expansion of a gold mine. It's off a 10 year government bond. So it's important to be able to <unk>.

Frank Holmes: A new gold mine, an expansion of a gold mine, it's off a 10-year government bond. So it's important to be able to track what is happening over 10 weeks, which is 10 weeks of trading, which is a 50-day moving average, to get a feel for these swings in these short-term trades. And what you see here is the five-year yield; when it crosses above the 50-day, that is usually bearish. And you can see last year when the five-year yield went above 2% in May, that we started seeing small-cap stocks fall, micro-cap even more so, and we would be categorized, in fact, more of a micro-cap until October, when rates seemed to have peaked and the yields started declining, and as that was taking place, small-cap stocks started that rally.

Rock what is happening over 10 weeks, which is $50 10 weeks of trading which is a 50 day moving average to get a feel for these swings in the short term trades.

What you see here is the five year yield when it crosses above the 50 day that is usually bearish and you can see last year when the five year yield went above in may.

We started seeing small cap stocks fall Michael.

Microcap, even more so than we would be characterized in fact more of a micro cap until October that when rates seem to have peaked and the yields started declining and as that was taking place small cap stock startup that rally. So this is trying to highlight that there is a very strong inverse relationship with the <unk>.

Frank Holmes: So this is trying to highlight that there is a very strong inverse relationship between the five-year yield and the dividends that you're paying on your stock. And next, please, is to try to set this in motion here that shows you that the Russell 2000 looked like it had a breakout while rates were falling until this year, when all of a sudden the fear of rates rising, that small-cap stocks started selling off. So it's sort of an important part, and I think that we're pretty close to this cycle where rates are in a presidential election cycle in the fourth year. Going back almost 100 years of data, in the fourth year of a presidential election cycle, when you have a Democratic president and a Republican Congress, the market is usually up 8%. But when you have falling interest rates, not rising interest rates, going into this fourth year, odds are that it's 11, 12%.

Five year yield and the dividends that youre paying on your stock.

Next please.

This sets into the motion here that shows you that the Russell 2000 looked like it had a breakout.

While rates were falling and so this year that all of a sudden the fear of rates rising.

That the small cap stocks are selling off so.

It's sort of an important part and I think that we're pretty close to the cycle where rates are in a presidential election cycle in the fourth year going back almost a 100 years of data in the fourth year of our presidential election cycle. When you have a democratic President and a Republican Congress.

Market as is usually up 8%, but when you have falling interest rates not rising interest rates going into this fourth year odds are that it's 11%, 12%. So even with all the negative news the math suggests that the markets will be up this year.

Frank Holmes: So even with all the negative news, the math suggests that the markets will be up this year. This time last year, I forecasted that, based on the presidential election cycle, the markets would be up historically double-digits in the third year when you have this sort of balance of power. And it was, and it was volatile, but it ended up closing up for the year.

This time last year by forecasted based on the presidential election cycle, the markets would be up historically double digit the third year. When you have the sort of balance of power and it was and how it was volatile but it ended up closing up on the year. So I do like looking at data than I do from a macro point of view.

Frank Holmes: So I do like looking at data, and I do from a macro point of view and a micro point of view, from stock picking to macro, and that is called the quantamental approach to investing. And that has led us down the journey to create smart beta 2.0 ETFs. And so it doesn't matter if it's a macro factor or it's a micro factor; we do look at these factors. And I thought I'd highlight that when rates do start to tick down, be they in April or May, I think that we will see money flows into this category, which will impact companies like U.S. Global

Macro point of view from stock picking the macro and that is called continental approach to investing and that has led us down the journey to create smart beta two <unk> Etfs.

And so it doesn't matter if it's a macro factor or it's a micro <unk>.

We do look at these factors and I thought I'd highlight that when rates do start to tick down BD in April or May that I think that we will see money flows into this category, which does impact.

Companies like U S. Global next please.

Frank Holmes: Next, please. Our capital strategy, the allocation strategy. Well, one is the shareholder yield, and the shareholder yield is a model that looks like the cash dividends paid plus the net share repurchases and net reduction divided by the market cap. That's another way of looking at it.

Our capital strategy the allocation strategy well one is the shareholder yield and the shareholder yield is a model that looks like the cash dividends paid plus a net share repurchases and debt reduction divided by the market cap. That's another way of looking at it and.

Frank Holmes: And there's a fund manager, Mel Faber, that wrote a book on it, and he's picked stocks, and they seem to have a deep value approach to picking stocks, and they both perform. So we do follow that, and we do ask questions on a regular basis of where we're allocating capital. Two things we do manage expectations for new product launches. What's necessary?

Fund manager Mel favor that wrote a book on it.

Any pick stocks and they seem to have.

Deep value approach of picking those stocks and they both performed so we do follow that and we do ask questions on a regular basis of where we're allocating capital to as we manage the expectations for new product launches whats necessary.

Frank Holmes: How do we brand this asset class? And three, we manage to preserve cash for future growth opportunities and market corrections. We have been stockpiling cash. We have been buying back our stock, and fourth, we strategically buy back the stock. But using an algorithm on flattened down days and five, we discuss a review with the board on a regular basis and keep in touch with our board so they know what we're doing and why. Next.

How do we brand this asset class and three we managed to preserve cash for future growth opportunities or market corrections, we have been stockpiling cash we have been buying back our stock.

And fourth a strategically buyback the stock will using an algorithm and flattened down days and five we discussed and reviewed with the board on a regular basis and keep in touch with our board. So they know what we're doing and why.

<unk>.

Frank Holmes: So this is Mehbain Faber, and he came up with this famous book, and it really pounded the table across America on shareholder yield, a better approach to yield investing. And it's a bit of looking at Warren Buffett's model of looking at companies that if they're not paying dividends, but they're decreasing their yield, and they're increasing their cash flow, they're going to be bought. If they're buying back stock, Warren Buffett has always believed that it's been better than paying out dividends. But he has this unique model, which we look at and respect.

So this is <unk> Faber and he came up with the famous book and really part of the table across America on the shareholder yield a better approach to yield investing and there's a bit of looking at Warren Buffett model of looking at companies that if they're not paying dividends, but their decrease their yield.

They are increasing their cash flow, but it would be bought if they are buying back stock Warren Buffett has always believed that it's been a better than paying out dividends.

But he has this unique model, which we look at and respect next please.

Frank Holmes: This is the model. Shareholder yield is three parts: cash dividends plus net purchase of your shares back and net debt reduction divided by the market cap. Next, please.

This is the model shareholder yield is three parts.

Cash dividends plus net purchase of your shares back in net debt reduction divided by market cap.

Frank Holmes: So it grows dividends; the company has paid monthly dividends since June 2007, and it's interesting because that was the peak in gold and all the emerging markets really peaked, and we started that strategy of paying out dividends. But we've been able to do through down cycles and the 2008 crisis and still be able to maintain paying dividends because of how we manage our capital. But the yield right now is three point one seven percent. I'm going to show you that it's below the five-year, but that's OK because the buying back of stock just takes the yield higher. The board approves this, but they can at any time; they can always cut a dividend. They have that right.

Please.

So gross dividends the company has paid monthly dividends since June 2007.

And it's interesting because that was the pekin ingold and all of the emerging markets.

It really peaked and we started that.

Strategy of paying out dividends, but we've been able to do through down cycles in 2008 crisis still be able to maintain paying dividends of how we manage our capital.

But the yield right now is three 7%.

I'm going to show you that it is below the five year, but that's okay, because the buying back stock. This takes the yield higher.

The board approves this but they can at any time, they can always cut a dividend they have that right and if something comes up next please.

Frank Holmes: If something comes up next, please, the share gross total shareholder yield is approximately 7.9%. Next, please. And that is adding back the dollars we've spent buying back the stock plus paying out dividends. So you can see here that the growth dividend is below the five-year treasury yield. Now why do I show that?

Sure gross total shareholder yield is approximately seven 9% next plays that is adding back the dollars. We've spent buying back the stock plus paying out dividends. So you can see here that the growth dividend is below the five year Treasury yield now why do I show that is.

Frank Holmes: It's because lots of institutions make a decision that they will rather buy risk-free a five-year government bond than buy a stock with a dividend yield that's less than 5% unless the yield is less than the sorry five-year yield unless that dividend is increasing faster. So, therefore, it will catch up and surpass the five-year treasury yield over the next five years. So my first time as a money manager research analyst actually was in 1978. I'm aging myself, but it was on a dividend growth monitor, and you looked at stocks that had yields that were higher than the five-year government bond, and it's interesting that they did outperform. So you have to look at that model in the context of how much is being spent on buying back the stock along with the dividend yield. Next, please.

Because lots of institutions to make a decision that they would rather buy risk free a five year government bond then bias stock with a dividend yield is less than 5% unless the year listed or sorry, five year yield unless that.

Dividend is increasing.

Foster so therefore, it will catch up and surpass the five year treasury yield over the next five years. So it's my first time as a money manager research analysts actually was a 1978 I'm aging myself, but it was on a dividend growth monitor and you looked at <unk>.

Talks that had yields that were higher than the five year government and it's interesting that they did perform.

So you have to look at that model in the context of how much is being spent on buying back the stock along with a dividend yield next please.

So you saw earlier that our our total shareholder yield is twice with <unk>.

Frank Holmes: So you saw earlier that our total shareholder yield is twice what our dividend yield is, more than twice, and it's higher than the five-year government bond. So it is of great value, and it's another rational reason for buying the stock on down days.

Our dividend yield is more than twice and it's higher than the five year government bonds. So it is of great value in us.

And so another rational reason for buying the stock.

On down days.

This is an important comparative analysis, we quite often get calls from institutions and comparing us to a wisdom tree and to Invesco. The reason why I bring these two names up his wisdom tree is a 100% Etfs, 85% of our operating revenue as the Etfs and the best goes 40% because they have the biggest piece of them.

Frank Holmes: We quite often get calls from institutions comparing us to WisdomTree and to Invesco. The reason why I bring these two names up is that WisdomTree is 100% ETFs, 85% of our operating revenue is ETFs, and Invesco is 40% because they have the biggest piece of them, the QQQ ETF. What you can see is that the price to book value for WisdomTree is substantially higher, almost three times higher than what ours is. So it says that on a price to book relative valuation, we're undervalued relative to WisdomTree. Invesco looks a lot cheaper, but then there's other factors in that financial model. There's never just one singular factor.

The <unk> ETF.

You can see is that the price to book value for wisdom tree is substantially higher.

Almost four times higher.

Three times higher than what ours is and so it says that on a price to book relative valuation, we're undervalued relative to wisdom tree.

Industrial looks a lot cheaper, but then there's other factors in that financial model is number one singular factor the return on assets as you can see the return on assets by wasn't tree was greater.

Frank Holmes: The return on assets, as you can see, the return on assets by WisdomTree was greater than ours, but we're bigger, both of us, than Invesco. And that's one reason why Invesco trades at a lower price to book. And then pre-tax margins for WisdomTree are higher, that would afford a higher P.E. ratio.

Then ours, but were greater both of those they're in Invesco and Thats. One reason why industrial trades at a lower price to book and then pretax margins.

Your wisdom tree, they're higher, but we'll report a higher p/e ratio.

Frank Holmes: We are much higher than, say, Invesco. And then we look at dividend yield and compare. And as you can see, the lowest dividend yield is WisdomTree. And then we're in the middle between Invesco, and our price to cash flow is about the same. WisdomTree is higher than Invesco, but it appears that Invesco has other losses that they're wrestling with. And this is sort of the gambit.

We are much higher than say Invesco, and then we look at dividend yield and compare and as you can see that the lowest dividend yield as wisdom tree and then we're in the middle.

Queen Invesco and our price to cash flow is about the same of wisdom tree is.

His hire that invesco, but it appears that VESCO has other losses that they're wrestling with.

And this is sort of the gambit of these companies are bigger we'd be a micro cap was in <unk> mid cap and <unk> will be a big cap.

Frank Holmes: These companies are bigger. We'd be a micro-cap, WisdomTree would be a mid-cap, and Invesco would be a mid-cap going into the big-cap range. And I think it's just a helpful comparative analysis.

Probably mid cap going into a big cap range.

And I think it's just a helpful comparative analysis.

Frank Holmes: It is some basic, fundamental approach that analysts would take a look at it, picking one stock versus another. Next, please. So why do we buy back our shares? So one of our large institutional investors, I have a tremendous respect for, Bruce, always wants to know, articulating it.

It has some basic quanta mental approach the analysts would take a look at it picking one stock versus another next fleets.

So why are we buyback our shares so one of our large institutional investors I have a tremendous respect for Bruce is always once ago articulating it and I want to point out that the company believes the stock is undervalued. Therefore buys back shares a growth stock with our prices fluttered down by the previous trading day.

Frank Holmes: And I want to point out that the company believes the stock is undervalued and therefore buys back shares of growth stock when the price is flattered down from the previous trading day. And, as Warren Buffett highlights, the value proposition of buying back one stock at value accretive prices. Doing so, Buffett says, benefits all shareholders, not just the biggest holders. And we agree.

And as Warren Buffett highlights the value proposition of buying back one stock at value accretive prices doing so buffett says benefits all shareholders not just the biggest holders and we agree next please.

Frank Holmes: Next, please. So, the current shareholder repurchase program for the quarter ended December 31st, 2023. The company repurchased a total of 196,295 shares of Class A shares using cash of approximately $560,000.

So the current shareholder repurchase program for the quarter ended December 31, 2023, the company repurchased a total of 196295 shares class a shares using cash of approximately $560000. We bought back about 1% of the outstanding shares since September 2000.

Frank Holmes: We've bought back about 1% of the outstanding shares since September 2023, and this may be suspended or discontinued as deemed necessary by the board. I think what's important is that you can only buy back a certain amount of the volume. So if the volume picks up, then we can pick up more. There's always sort of regulatory borders in sports that call them and hockey a blue line or red line.

<unk> 23, and this may be suspended or discontinued as deemed necessary by the board I think what's important is that you can only buy back a certain amount of the volume so as the volume picks up then we can pick up more.

There is always sort of regulatory borders in sports they call them in hockey Blue line, a red line, so you're up to sort of manage within the boundaries.

Frank Holmes: So you have to sort of manage within the boundaries. I've been asked, well, why don't you buy back more? Because it's relative to this model of what the volume is.

Nashville, why don't you buy back more.

Because it's relative to this model of what the volume is next please.

Frank Holmes: Next, please. This is another illustration to show that we have increased our stock buying back. You can see in the year of 2023, substantially from 2021 and from 2022, from 21, just as COVID was ending. You can see that it's quite a big number. It's more like a 12 times increase.

This is another illustration to show that we have increased our stock buying back you can see in the year of 2023 substantially from 2021 and from 2022.

From 'twenty one.

Just as cobalt was ending you can see that it's quite a big number.

It's more like 12 times increase next please.

Frank Holmes: So let's look at the fiscal year 2024, the strengths, and the company remains profitable despite challenging macro market conditions. I'm going to highlight, unless you're in the Magnificent Seven, a few stocks that were champions of the overall market. The company continues to buy back stock on flattened down days and pays a monthly dividend. The company has a strong balance sheet, which includes both cash and other investments.

So let's look at our fiscal year 2024 of the strengths the company remains profitable despite challenging macro market conditions.

To highlight unless you are in the magnificent seven.

A few stocks were champions of overall market. The company continues to buyback stock on flattened down days and pays a monthly dividend. The company has a strong balance sheet, which includes both cash and other investments next list.

Frank Holmes: We're Nestle and Nasdaq. We have both 2 billion in assets and 2.8 million in quarterly operating revenue. Next, please, earnings per share. We saw a nice bump from the summer year end, quarter end of September. From September to December, the markets rallied as rates were coming off, and the assets and also certain write-downs in that past quarter, because we do have investments that go through a mark-to-market process of write-downs and write-ups, and so you can see that the increase in investment income was 1.9 billion. Next, please. By the way, for more granularity, Elisa can always answer any questions and go into greater detail. Operating income, as you can see, it went from $215,000 to $192,000. The decrease in operating revenue is due to a decrease in assets under management, partially offset by a decrease in operating expenses.

When this law does stock, we bought too big and in assets $2 8 million quarterly operating revenue next please.

Earnings per share we saw a nice bump from the summer.

And so at quarter end of September from separate chairman of December the market's rallied as rates were coming off.

Assets and also certain.

Downs in that past quarter, because we do have investments.

That go through our mark to market process of write downs or write ups.

And.

And so you can see that the increase in investment income was $1 9 billion.

Next please.

By the way on board granularity Alicia can always answer any questions and go into greater detail operating income.

As you can see.

It went from 215190 2000 and the decrease in operating revenue is due to a decrease in assets under management, partially offset by decrease in operating expenses next please.

Frank Holmes: Next, please. Smart Beta 2.0. Well, this whole idea of Smart Beta came to the realization that I love math and quant, and we're quant-focused in how we look at stocks. And quantamentals is a new word that just came out, and Investopedia covers it. But it's an investment strategy that combines both fundamental tools along with a quant approach to picking stocks and building a diversified portfolio. So our quantamental investment strategy combines both cutting-edge technology and robust data analysis to help optimize returns and manage risk effectively for our shareholders. We believe the use of Smart Beta 2.0 factors in our thematic fund lineup sets us apart from the competition. It's really important that there are some factors that are great for picking stocks. Other factors aren't, but they're good for screening stocks. And then there's a magic about what portion of the portfolio is going to have mean reversion and what portion of the portfolio is going to have momentum of growth and revenue or operating income. And they're both laws of physics.

Smart beta 2.0, well. This this whole idea of smart beta came to the realization that I love math of Quant and we're quite focused on how we look at stocks.

Quanta mental.

Quanta mental.

So new word that comes out and in Vista, PD recovers, but it's an investment strategy that combines both fundamental tool.

Tools, along with Quant approach to picking stocks and building a diversified portfolio. So our quanta mental investment strategy combines both cutting edge technology and robust data analysis to help optimize returns and manage risk effectively for our shareholders and we believe use of smart beta two point all factors.

Domestic fund lineup such as apart from the competition.

Important that there are some factors that are great for picking stocks other factors or not but the good prescreening stocks and then Theres a magic about what portion of the portfolio is going to have mean reversion and what portion of the proposed is going to have momentum of growth in revenue or operating income.

They are both laws of physics, so the portfolio construction.

Frank Holmes: So portfolio construction is just as critical as the factors for picking stocks. Next, please. So the thematic lineup of Smart Beta 2.0 ETFs, JETS was the first, it's done its thing, it's done what the trending that we went out to beat, the index, and QuantApproach has done a phenomenal job. It is deeply undervalued on a relative basis to trains and trucks. The Dow Jones Transport Index includes a much bigger weighting for trains and trucks. And if you just had a pure train and truck company, the PE ratios, the cashflow ratios, et cetera, for the airlines are a much more attractive value proposition. But the concerns of a recession, the negative news that's out there have impacted sentiment, in particular institutional investors out of Europe that we have been able to witness as insurance companies. But overall, retail and the family offices, and big RIAs in the U.S. are still actively involved in JETS. Go AU, it's done its best.

As critical as the factors for picking the stocks next please.

So the somatic lineup of smart beta two point all Etfs.

Jess was the first.

It's done its thing.

The bogey that we went out to beat the index.

In Quant approach has done a phenomenal job. It is deeply undervalued on a relative basis to trains and trucks. The Dow Jones Transport index includes a much bigger weighting in trains and trucks.

You just had a pure trains and trucks the p/e ratios the cash flow ratios et cetera for the airlines are much more attractive value proposition.

The concerns of a recession.

Negative news that's out there has impacted the sentiment in particular institutional investors out of Europe.

Europe.

That we have been able to witness as insurance companies, but overall, the retail and the family offices and big <unk> in the U S are still actively involved in jets go au.

It's done.

Frank Holmes: I'm so proud of it because it outperformed the GDXJ. It did what the model suggested it would do, both portfolio construction of 30% focused on gold royalties, and then stock factors for bottom-up stock picking and rebalancing each quarter. Our newest addition to the lineup is CSEA. It has to do with cargo shipping and is heavily weighted towards shipping with a small portion of the portfolio going into airline cargo only shipping. And I think what's interesting is that last year, due to all the drama that took place in Russia, it impacted our Eastern European fund. Even though we sold all of our Russian stocks before the war and before they became basically insolvent holdings, we were very fortunate for our shareholders that we went liquid very early. But it didn't matter.

I'm so proud of it because it's outperformed the Gtx Jay.

It's done with the model suggested it would do.

Both portfolio construction of 30% focused on gold royalties and then stock factors for bottom up stock picking a rebalancing each quarter. Our newest addition to the lineup as seed SCA. It has to do with cargo shipping.

Heavily weighted towards shipping.

With a small portion of the portfolio into airline cargo only shipping and I think what's interesting is that last year due to all the drama that's taken place in Russia.

It impacted our eastern European fund, even though we sold all of our Russian stocks before the war and before they became basically in Sullivan Holdings, we were very fortunate for our shareholders that we weren't liquid very early but it didn't matter people with sentiment people would rather speculate in technology stocks in America.

Frank Holmes: People would rather speculate in technology stocks in America than bet on the growth of Eastern Europe. And furthermore, same thing with the great concerns about China and its bullying tactics. It's impacted the China fund. And so we shut down those two funds, mutual funds, in the summer. And I think it's been a wise decision for the shareholders and for us. But how do we play this emerging market thesis, which is so important and relevant to the world of gold and luxury goods, et cetera? So one of the things in this journey of building jets and what we witness is that cargo is one of the best arteries to understand the whole economy, the global economy. And it has a strong correlation to PMI, and they trade at deep value. Relative cargo ships trade like jets do to trains and trucks on P.E.

The b and the growth of Eastern Europe, and further same thing with a great concerns out of China and its fully in tactics its impacted the China fund and so.

We shut down those two funds mutual funds in the summer and I think this is a wise decision for the shareholders and for us.

But how do we play this emerging market thesis, which has been so important relative to the world of gold and luxury goods et cetera. So one of the things that this journey of building Justin what we witnessed is that cargo is one of the best.

Arteries to understand the whole economy, the global economy, and it has a strong correlation to the PMI and.

And they trade a deep value relative cargo ships trade light jets too.

Trains and trucks on P/e ratios and capital and the dividend yields on the cargoes are much higher so I said, okay. How do we have a footprint for the global economy, what's the best tradeoff between any emerging country exporting products to our manufacturing hub and then selling them back.

Frank Holmes: ratios and cash flow. And the dividend yields on the cargoes were much higher. So I said, OK, how do we have a footprint in the global economy? What's the best tradeoff between any emerging country exporting products to a manufacturing hub and then selling them back?

Frank Holmes: It was cargo airlock and cargo shipping. And that's why we created C. Next, please. So the shipping industry is a leading indicator of the health of the global economy and one way to play emerging markets. And it's highly correlated to a great leading indicator, which is called the PMI, the Purchasing Manufacturers Index. And what we saw this last year was rates rising. The dollar is getting strong. A great contraction in PMI. That was a foreteller warning of a slowdown in the global economy. And I think that every time this happens, governments panic, and they start printing money. And this year, 40 percent of the world's population, over 70 countries, are going to go through an election. In addition to America, which has the biggest GDP in the world, it's going through its fourth year of a presidential election cycle. It's important to recognize that over 70 other countries are going through their own presidential election cycles.

It was cargo air cargo shipping and that's why we created C. Next please.

So the shipping industry is a leading indicator to the health of the global economy, and one way to play emerging markets next please.

It is highly correlated to a great leading indicator, which is called PMI purchasing manufacturers index and what did we see.

This last year was rates were rising the dollar is getting strong a great contraction in PMI that was a four teller warning of a slowdown in the global economy.

And I think that every time this happens governments panic and they start printing money in this year of 40% of the world's population over 70 countries are going to go through election. In addition to America, which is the biggest GDP in the world is going through its fourth year of our presidential election cycle, it's important to recognize that over 70 other country.

These are going through an election cycle and that usually is further economy to get the boats and drop interest rates. So I think an uptick in the PMI.

Frank Holmes: And that usually is for the economy to get the votes and drop interest rates. So I think an uptick in the PMI, it appears that it is at its bottom, a sustained run would be explosive for this category and bullish for the emerging market. So again, another thing to recognize that war or bottlenecks, whatever takes place in the Panama Canal or the Red Sea, it gives tremendous pricing power to the cargo shipping companies. And they put on a great spot here, a run in the past seven, no, probably about 14 weeks, a run with all the drama that's taken place in the Red Sea. So I think it's interesting to show you that with choke points on supply, the world continues to have to move blood through the arteries of the global economy. And these guys, all they do is have pricing power.

It appears that is bottom.

Our sustaining run would be explosive to this category.

For the.

The emerging markets.

Thing is to recognize that war.

Our bottlenecks whatever it takes place in Panama Canal or the Red Sea. It gives tremendous pricing power to the cargo shipping companies and they put on a great spot here a run in the past.

Seven no probably about 14 weeks.

<unk>.

With all the drama that's taking place in the Red Sea. So I think it's interesting to show you that choke points on supply the world contiguous has to move blood through the arteries of the global economy.

And these guys all they do is a pricing power next please.

Frank Holmes: Next, please. So this is an outline of JETS, the overall ETF. We saw assets decline and redeem, and the bulk of those seem to be institutions from out of the country that use JETS as a proxy. Next, please. Chinese stocks significantly underperformed Asian peers, as you can see here. Taiwan because the semiconductor business has done well in Japan and South Korea but not Hong Kong and China.

So this is outlined the jets.

Overall.

ETF, we saw assets decline redeem and the bulk of those seem to be institutions from out of the country that used jets as a proxy.

Please.

Chinese stocks significantly underperform Asia peers as you can see here.

One because of the semiconductor business has done well.

<unk>, South Korea, but not Hong Kong and China has had a very rough year.

Frank Holmes: It's had a very rough year, as China's policies have been very much more war-like rather than trade and economics, policies against the technology sector. Now they're wrestling with excessive debt as a percentage of GDP and real estate imploding around the leadership. So I think that shutting down the China fund last early summer was a wise decision from a macro theme point of view. Next, please. Tech stocks distort the performance of the S&P. The S&P is market cap weighted, but there's another S&P 500 index, and it's equally weighted. 500 names, each equally weighted.

As China's policies have been very much more more like rather than trade and economics.

<unk> against the technology sector, the other wrestling with excessive debt as a percentage of GDP.

Real estate imploding around the leadership, so I think that shutting down the China Fund lost US early summer was a wise decision.

From a macro theme point of view next please.

Tech stocks distort performance of the S&P.

S&P is market cap weighted but theres another S&P index equally weighted 500 names equally weighted.

Frank Holmes: And you can see it's far underperformed, market cap weighted. Next, please. And this is the magnificent seven.

Can see it far underperformed the market cap weighted next please.

And then this is the magnificent seven theyre up five four times as much as the equal weight at NASDAQ Index. Since January 2020, I mean, it's quite quite incredible to see what the especially the growth of our video when it's done and everyone else jumping into AI next fleets.

Frank Holmes: They're up 5.4 times as much as the equal weight of the NASDAQ index since January of 2020. I mean, it's quite, quite incredible to see the structure, the growth of NVIDIA, what it's done, and everyone else jumping into AI. Next, please.

Frank Holmes: So Grohe's investment in Hive Digital; Hive also has infrastructure built out in the AI business. It's been a very attractive investment, paying monthly principal down payments every quarter. The yield on it has been much higher than you would earn on a five-year or a 10-year government bond.

So growth investment in Hive digital high but also has infrastructure build out in the AI business.

It's been a very attractive investment.

Monthly principal down payments every quarter.

The yield on has been much.

Much higher than you would earn on a five year or 10 year government bond. So we've been very happy.

Lisa Calicott: So we've been very happy with that. Next, please. I'm going to turn it over to Lisa Calicotto, CFO, to give you more granularity in the numbers. Thank you, Frank. Good morning.

With that and.

Next please.

I'm going to turn it over to Lisa <unk>, our CFO to give you more granularity of the numbers.

Thank you Frank.

Lisa Calicott: First, I'll start with our financial highlights on the next slide. Average assets under management were $2 billion for the quarter ending December 31, 2023. Operating revenues were $2.8 million, and our quarterly net income was $1.2 million, which was an increase of 45 percent over the prior year's same quarter, and our earnings were $0.09 per share. The next slides will provide more detail on the results of operations for December 31. 2023.

First I'll start with our financial highlights on the next slide.

Average assets under management were to value, but we're in a quarter ending December 31, 2023 operating revenues were $2 8 million and quarterly net income was $1 2 million, which was an increase of 45%.

Higher year same quarter, and our earnings were <unk> <unk> per share.

Next slide will provide more detail on the results of operations for December 31st.

2023.

Lisa Calicott: So on slide 37, we see our total operating revenues at 2.8 million for the quarter, which was a decrease of 910,000, or 24%, from the 3.7 million from the same quarter last year. The decrease is primarily due to decreases in assets under management, especially in our JETS ETF, as Frank discussed. Operating expenses for the current quarter were $2.6 million, a decrease of $194,000 or 7%, primarily due to decreases in employee compensation and benefits of $168,000 or 15%, mainly due to decreases in bonuses.

So on slide 37, we see our total operating revenues of $2 8 million for the quarter, which was a decrease of 910000 or 24% from the $3 7 million from the same quarter last year. The decrease is primarily due to decreases in assets under management, especially in our jets ETF as Frank discussed.

Operating expenses for the current quarter were $2 6 million a decrease of 194000 or 7% primarily due to decreases in employee compensation and benefit of 168000 or 15% mainly due to decreases.

Yes.

Lisa Calicott: On the next slide, we see our operating income for the quarter ending December 31, 2023, which is $192,000, or a decrease of $716,000 compared to the same quarter in fiscal year 2023. You can also see that our other income increased $1.3 million compared to the prior year, and that was mainly due to unrealized gains on equity securities in the current quarter of $279,000 compared to unrealized losses in the prior year of $937 Net income after taxes for the quarter was $1.2 million, or $0.09 per share, which was an increase of $382,000 compared to the net income of $847,000, or $0.06 per share, for the same quarter last year.

On the next slide we see our operating income for the quarter ending December 31, 2023 is a 192000 or a decrease of 716000 compared to the same quarter for fiscal year 2023.

And you can also see that our other income.

One 3 million compared to the prior year and that was mainly due to unrealized gains on equity securities in the current.

Quarter, four 279000 compared to unrealized losses in the prior year at 937.

Net income after taxes for the quarter was $1 2 million or nine cents per share.

With an increase of 382000 compared to the net income of 847000 or six cents per share the same quarter last year.

Lisa Calicott: On the next slide, we see that we still have a strong balance sheet, which includes high levels of cash and security. And on the following page, we see that we still have no long-term debt.

On the next slide we see that we still have a strong balance sheet increased high levels of cash and security.

And on the following page.

We see that we still have no long term debt.

Lisa Calicott: We have a net working capital of $38.3 million, which is an increase of $840,000 or 2% since June 30, 2023, and our current ratio is 18.8 to 1. With that, I'll turn it over to Holly to discuss marketing and distribution initiatives. Thank you, Lisa. All right.

And we'd have a networking capital of $38 3 million, which is an increase of 840000 or 2%.

June 32023 and <unk>.

Current ratio was 18, 8% to one.

With that I'll turn it over to Jorge to discuss marketing and distribution initiatives.

Thank you Lisa.

Holly Schoenfeld: On the next slide, I want to briefly point out some of the upcoming events that U.S. Global will be attending or speaking at. The first is ETF Exchange, where our head trader will be headed next week in Miami, and then following that, the week after, Frank Holmes will be attending and speaking at the Oxford Club's Investment U Conference. There, he will be sharing his thought leadership on the various industries that we invest in and how to gain exposure to these industries via our funds. And then in March, Frank will head over to Zurich for the Swiss Mining Institute, where he will be speaking alongside other industry leaders in the gold and precious metals space.

Alright on the next slide I want to briefly point out.

Coming event that U S level will be attending are speaking at the first ETF exchange, where our head trader will be headed to next week in Miami and then following that we after Frank Holmes, who will be attending and speaking at the Oxford Club investment E Com brand.

Actually we'll be sharing it thought leadership on the various industries that we invest in and how to gain exposure to the industry.

Our fund and then March Frank we'll head over to Zurich, but with mining Institute, where he will be speaking alongside other industry leaders in the gold and precious metal space.

Holly Schoenfeld: Then on the next slide, I want to point out a quick stat about our website traffic. During the quarter ended December 31st, we had over half a million visitors from around the world visit usfunds.com. Many repeat visitors, but even more new visitors, many of whom came to read the award-winning FrankTalk blog or sign up for the Investor Alert newsletter, which we've seen tremendous growth in subscribers on for the last several months. Then, moving on to the next slide, don't forget that our educational content does not only come in the form of the FrankTalk blog or the Investor Alert newsletter. We love educating our shareholders through video content as well, so make sure you're subscribed to our YouTube page to get video updates on everything from gold to airlines to luxury goods.

On the next slide.

I pointed out and put that about our website traffic during the quarter ended December 30 bird, we've had over half a million visitors from around the world visit <unk> Dot com, many repeat visitors, but even more new visitors many of whom came to read the award winning Frank talk blog or sign up for the Investor Alert newsletter.

What we have seen tremendous growth in subscribers on four.

For the last several months.

Then moving onto the next slide.

It's that our educational content does not only comment in the form of the Frank talk blog or the Investor alert newsletter, we lend in educating our shareholders their video content as well to make sure you are subscribed to our pace to get video update on everything from God to airlines to luxury goods and then lastly, as we wrap up.

Holly Schoenfeld: And then lastly, as we wrap up today's presentation, I just want to remind everyone that we do share a majority of our new content as well as announcements about upcoming events across all of our social media platforms, which continue to grow across the board. Then, on the next slide, I just encourage you to follow us on all of these platforms so you stay up to date with what's going on with GROW, our funds, and our broader market insights. And then, just as a friendly reminder to our audience as we wrap up today, if you do have any questions, please email those to info at U.S. funds dot com, and we will gladly follow up with you to get anything clarified that you may need more information on. Thank you so much for tuning in today. Goodbye.

Today's presentation I, just want to remind everyone that we do see that majority of our new content and announcements about upcoming events across all of our media platform, which continued to grow across the board then on the next slide I. Just encourage you to follow up on all of these platform. So you stay up to date with what's.

On the grow our fund and our broader market insight and then.

Friendly reminder, to our audience as we wrap up today and you do have any questions. Please E mail them to info at <unk> Dot Com and we look lastly follow up with you to get anything clarified that you may need more information on.

Much for tuning in today.

Goodbye.