Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
DHIL > SEC Filings for DHIL > Form 10-Q on 2-Nov-2012All Recent SEC Filings

Show all filings for DIAMOND HILL INVESTMENT GROUP INC

Form 10-Q for DIAMOND HILL INVESTMENT GROUP INC


2-Nov-2012

Quarterly Report


ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

Throughout this quarterly report on Form 10-Q, the Company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to such matters as anticipated operating results, prospects for achieving the critical threshold of assets under management, technological developments, economic trends (including interest rates and market volatility), expected transactions and acquisitions and similar matters. The words "believe," "expect," "anticipate," "estimate," "should," "hope," "seek," "plan," "intend" and similar expressions identify forward-looking statements that speak only as of the date thereof. While the Company believes that the assumptions underlying its forward-looking statements are reasonable, investors are cautioned that any of the assumptions could prove to be inaccurate and accordingly, the actual results and experiences of the Company could differ materially from the anticipated results or other expectations expressed by the Company in its forward-looking statements. Factors that could cause such actual results or experiences to differ from results discussed in the forward-looking statements include, but are not limited to: the adverse effect from a decline in the securities markets; a decline in the performance of the Company's products; changes in interest rates; a general or prolonged downturn in the economy; changes in government policy and regulation, including monetary policy; changes in the Company's ability to attract or retain key employees; unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations; and other risks identified from time-to-time in the Company's public documents on file with the SEC.

General

The Company, an Ohio corporation organized in 1990, derives its consolidated revenue and net income from investment advisory and fund administration services provided by its subsidiaries Diamond Hill Capital Management, Inc. ("DHCM"), Beacon Hill Fund Services, Inc. ("BHFS"), and BHIL Distributors, Inc. ("BHIL"). BHFS and BHIL collectively operate as Beacon Hill. DHCM is a registered investment adviser under the Investment Advisers Act of 1940 providing investment advisory services to individuals and institutional investors through Diamond Hill Funds, separate accounts, and private investment funds (generally known as "hedge funds"). Beacon Hill was incorporated during the first quarter of 2008, and provides certain fund administration services and underwriting services to mutual fund companies, including Diamond Hill Funds.

In this section, the Company discusses and analyzes the consolidated results of operations for the three and nine month periods ended September 30, 2012 and 2011 and other factors that may affect future financial performance. The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with United States generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for a fair presentation of the financial statements have been included. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results which may be expected for the entire fiscal year.

The Company's revenue is derived primarily from investment advisory and fund administration fees. Investment advisory and fund administration fees paid to the Company are generally based on the value of the investment portfolios managed by the Company and fluctuate with changes in the total value of the assets under management ("AUM"). Such fees are recognized in the period that the Company manages these assets. The Company can also earn variable incentive fees which are based on investment results in client accounts and are achieved if those results exceed a specified hurdle. The Company's primary expense is employee compensation and benefits.


Table of Contents

Assets Under Management

As of September 30, 2012, AUM totaled $9.7 billion, a 25% increase in comparison to September 30, 2011. Revenues are highly dependent on both the value and composition of AUM. The following tables show AUM by product and investment objective for the dates indicated and a roll-forward of the change in AUM for the three and nine months ended September 30, 2012 and 2011:

                                     Assets Under Management by Product
                                             As of September 30,
             (in millions)           2012             2011         % Change
             Proprietary funds   $      5,203      $    3,869             34 %
             Sub-advised funds            964             873             10 %
             Separate accounts          3,514           2,977             18 %

             Total AUM           $      9,681      $    7,719             25 %


                                           Assets Under Management
                                           by Investment Objective
                                             As of September 30,
             (in millions)           2012             2011         % Change
             Small Cap           $        966      $      843             15 %
             Small-Mid Cap                319             256             25 %
             Large Cap                  5,536           4,218             31 %
             Select (All Cap)             260             338            -23 %
             Long-Short                 2,396           1,895             26 %
             Strategic Income             204             169             21 %

             Total AUM           $      9,681      $    7,719             25 %


Table of Contents
                                                       Change in Assets Under Management
                                                   For the Three Months Ended September 30,
(in millions)                                       2012                              2011
AUM at beginning of the period                $           9,164                 $           9,186
Net cash inflows (outflows)
proprietary funds                                           161                               (93 )
sub-advised funds                                           (42 )                             (37 )
separate accounts                                          (191 )                             (29 )

                                                            (72 )                            (159 )
Net market appreciation
(depreciation) and income                                   589                            (1,308 )

Increase (decrease) during the
period                                                      517                            (1,467 )

AUM at end of the period                      $           9,681                 $           7,719


                                                       Change in Assets Under Management
                                                    For the Nine Months Ended September 30,
(in millions)                                       2012                              2011
AUM at beginning of the period                $           8,671                 $           8,623
Net cash inflows (outflows)
proprietary funds                                           368                              (111 )
sub-advised funds                                          (117 )                              40
separate accounts                                          (171 )                               5

                                                             80                               (66 )
Net market appreciation
(depreciation) and income                                   930                              (838 )

Increase (decrease) during the
period                                                    1,010                              (904 )

AUM at end of the period                      $           9,681                 $           7,719


Table of Contents

  Add DHIL to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for DHIL - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.