Diamond Hill Investment Group Inc. (DHIL, Financial) filed Quarterly Report for the period ended 2011-03-31.
Diamond Hill Investment Group Inc. has a market cap of $233.5 million; its shares were traded at around $80.45 with a P/E ratio of 18 and P/S ratio of 4.1. Diamond Hill Investment Group Inc. had an annual average earning growth of 32.4% over the past 5 years.
Investment Advisory Fees. Investment advisory fees increased by $3.0 million, or 26%, from the quarter ended March 31, 2010 to the quarter ended March 31, 2011. Investment advisory fees are calculated as a percent of average net AUM at various levels depending on the investment product. The Companys average advisory fee rate for the three months ended March 31, 2011 was 0.64% compared to 0.71% for the three months ended March 31, 2010. The decrease in the average advisory fee rate is due to an overall change in the composition of AUM where long-short strategies, which pay a higher advisory fee, made up 24% of total AUM as of March 31, 2011 compared to 35% of total AUM as of March 31, 2010 while long only strategies, which have a lower advisory fee, made up 59% of total AUM as of March 31, 2011 compared to only 50% of total AUM as of March 31, 2010. The Companys average AUM during the quarter ended March 31, 2011 was $9.0 billion compared to $6.5 billion for the quarter ended March 31, 2010. Despite the 0.07% decrease in average advisory fee rate during first quarter 2011 compared to first quarter 2010, the fee rate was being charged on a greater asset base as the average AUM increased 39% from first quarter 2010 to first quarter 2011 resulting in an increase in the overall fees earned during the period. The Company anticipates the average advisory fee rate to continue to decrease throughout 2011 based upon the continued change in asset composition due to asset growth in lower fee strategies.
Mutual Fund Administration Fees. Mutual fund administration fees increased $102 thousand, or 5%, from the quarter ended March 31, 2010 to the quarter ended March 31, 2011. Mutual fund administration fees include administration fees received from Diamond Hill Funds, which are calculated as a percent of average mutual fund AUM, and all Beacon Hill fee revenue. The increase in the mutual fund administration fee is due to a 19% increase in average mutual fund AUM from $3.6 billion as of March 31, 2010 to $4.3 billion as of March 31, 2011 offset by a decrease in the overall blended net administration fee rate from 0.18% for the quarter ended March 31, 2010 to 0.15% for the quarter ended March 31, 2011.
Compensation and Related Costs. Employee compensation and benefits increased $1.4 million, or 18%, during the three months ended March 31, 2011 compared to the same period a year ago, primarily due to a $1.4 million increase in incentive compensation during the period consistent with an increase in AUM and the associated increase in operating income offset by $20 thousand in timing differences of non-incentive based compensation.
As of March 31, 2011, the Company had working capital of approximately $17.0 million compared to $4.9 million at December 31, 2010. Working capital includes cash, securities owned and accounts receivable, net of all liabilities. The Company has no debt and its available working capital is expected to be sufficient to cover current expenses. The Company does not expect any material capital expenditures during 2011.
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Diamond Hill Investment Group Inc. has a market cap of $233.5 million; its shares were traded at around $80.45 with a P/E ratio of 18 and P/S ratio of 4.1. Diamond Hill Investment Group Inc. had an annual average earning growth of 32.4% over the past 5 years.
Highlight of Business Operations:
The Company generated net income of $3,631,734 ($1.28 per diluted share) for the three months ended March 31, 2011, compared with net income of $2,670,320 ($0.98 per diluted share) for the three months ended March 31, 2010. While net income experienced an increase of $960 thousand, revenue for the period increased $3.1 million offset by a $1.5 million increase in operating expenses and a $680 thousand increase in the income tax provision. Operating profit margin increased to 33% for first quarter 2011 from 29% for first quarter 2010. The Company expects that its operating margin will fluctuate from period to period based on various factors including revenues; investment results; employee performance; staffing levels; development of investment strategies, products, or channels; and industry comparisons.Investment Advisory Fees. Investment advisory fees increased by $3.0 million, or 26%, from the quarter ended March 31, 2010 to the quarter ended March 31, 2011. Investment advisory fees are calculated as a percent of average net AUM at various levels depending on the investment product. The Companys average advisory fee rate for the three months ended March 31, 2011 was 0.64% compared to 0.71% for the three months ended March 31, 2010. The decrease in the average advisory fee rate is due to an overall change in the composition of AUM where long-short strategies, which pay a higher advisory fee, made up 24% of total AUM as of March 31, 2011 compared to 35% of total AUM as of March 31, 2010 while long only strategies, which have a lower advisory fee, made up 59% of total AUM as of March 31, 2011 compared to only 50% of total AUM as of March 31, 2010. The Companys average AUM during the quarter ended March 31, 2011 was $9.0 billion compared to $6.5 billion for the quarter ended March 31, 2010. Despite the 0.07% decrease in average advisory fee rate during first quarter 2011 compared to first quarter 2010, the fee rate was being charged on a greater asset base as the average AUM increased 39% from first quarter 2010 to first quarter 2011 resulting in an increase in the overall fees earned during the period. The Company anticipates the average advisory fee rate to continue to decrease throughout 2011 based upon the continued change in asset composition due to asset growth in lower fee strategies.
Mutual Fund Administration Fees. Mutual fund administration fees increased $102 thousand, or 5%, from the quarter ended March 31, 2010 to the quarter ended March 31, 2011. Mutual fund administration fees include administration fees received from Diamond Hill Funds, which are calculated as a percent of average mutual fund AUM, and all Beacon Hill fee revenue. The increase in the mutual fund administration fee is due to a 19% increase in average mutual fund AUM from $3.6 billion as of March 31, 2010 to $4.3 billion as of March 31, 2011 offset by a decrease in the overall blended net administration fee rate from 0.18% for the quarter ended March 31, 2010 to 0.15% for the quarter ended March 31, 2011.
Compensation and Related Costs. Employee compensation and benefits increased $1.4 million, or 18%, during the three months ended March 31, 2011 compared to the same period a year ago, primarily due to a $1.4 million increase in incentive compensation during the period consistent with an increase in AUM and the associated increase in operating income offset by $20 thousand in timing differences of non-incentive based compensation.
As of March 31, 2011, the Company had working capital of approximately $17.0 million compared to $4.9 million at December 31, 2010. Working capital includes cash, securities owned and accounts receivable, net of all liabilities. The Company has no debt and its available working capital is expected to be sufficient to cover current expenses. The Company does not expect any material capital expenditures during 2011.
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