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Rating:A 10-Fund Firm Rebuffs a Buyout Offer Not Rated 5.0 Email Routing List Email & Route  Print Print
Tuesday, July 05, 2022

A 10-Fund Firm Rebuffs a Buyout Offer

Reported by Neil Anderson, Managing Editor

A 10-fund, $4.1-billion-AUM (as of March 31) firm's leadership has publicly rebuffed a recent takeover offer.

Frank Edward Holmes
U.S. Global Investors, Inc.
CEO, Chief Investment Officer
On Friday, the U.S. Global Investors [profile] team wrote that "the company does not believe the proposal provides the company's shareholders with appropriate value for their securities and therefore is not interested in pursuing the proposal based on the terms submitted." That note came four days after a pair of hedge funds offered to buy the San Antonio-based asset manager.

"While the company would normally not view a proposal of this nature as warranting a reply, the fact that it was publicized requires that the comapny provide a timely public response," the U.S. Global Investors team wrote.

U.S. Global Investors' shares (GROW on the Nasdaq) closed at $4.46 on Friday. That's up one percent week-over-week but still almost 16 percent below the $5.30 per share that the two hedge funds, Deerhaven Capital and Echo Lake Capital, offered to pay. (GROW's market cap is currently $66.836 million, compared with the $79-million pricing of the offer.)

Meanwhile, in the same Friday note, the U.S. Global Investors team revealed that they are substantially ramping up their share buyback program (boosting the annual limit to $5 million, nearly double the prior limit of $2.75 million, and nearly tripling their June buybacks year-over-year). And their chief also revealed that they're stockpiling cash.

"In a recession, cash is king," states Frank Holmes, CEO and chief investment officer of U.S. Global Investors. "We have raised the limit to our share buyback program and increased our dividend twice, and now we are building up our cash position, which we believe is wise and prudent to weather this bear market and what could be a challenging recession." 

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