Horizon Kinetics Holding

Good afternoon. Thank you for joining us on this call. My name is Mark Herndon, CFO of Horizon Kinetics. We are pleased to have you here to join us for this call that will cover the results for our quarter and year ended December 31st, 2024. But first, a reminder that today's presentation may include forward-looking statements. Alliance on forward-looking statements involve certain risks and uncertainties, including but not limited to uncertainty about the future security evaluations or our performance. During the course of today's call, words such as expect, anticipate, believe, and intend may be used in our discussion of our goals and events in the future. Management cannot provide any assurance that future results will be as described in our forward-looking statements. Furthermore, the statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment fund. The opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of a consumer's It should be assumed that any of the security transactions referenced today have been or will prove to be profitable or that future investment decisions will be profitable or will equal or exceed past performance of the investments. We encourage you to read our filings with the SEC on our Form 10-K as well as our other filings, which describe the risks and uncertainties associated with managing our business. The company does not assume any obligation to update any forward-looking statements made today. These filings can also be found at the OTC Markets website, and our press releases or other information is at our corporate website at www.hkholdingco.com. Today's discussion will be led by Murray Stahl, Horizon Kinetics Chairman and CEO. I will also be available to answer applicable questions and will moderate the questions. If you would like to ask a question, you will need to be logged into the GoToMeeting platform. Those of you that are on a telephone connection will be in listen-only mode. Again, for those of you who are on the GoToMeeting platform, you can submit the question via the chat function. Please direct those questions to the presenters, where I will summarize and relay as best I can so that we can address as many questions as possible. And with that, I will turn it over to Murray for a few opening remarks.

Okay. Thanks, Mark. Thanks, everybody, for joining us today. So normally when I do these sorts of calls, I start with general remarks, and I'm going to have general remarks, but this time, because it's our first time presenting Horizon to the public really in our year-end results, I'm going to be a little bit less general in the beginning than I normally am. Let's start with Horizon's earnings for 2024 were a record for anything we've done in 30-year history of Horizon. That's great. And the balance sheet figures were all sort of record. So that's great. And now we're going to go to a few things that are less general. We'll come back to the general. So in order to understand what's going on on the horizon, the first thing you need to understand is we now have consolidated investment statements. What does that mean? That means that our earnings are consolidated with some of the funds we managed. So the balance sheet amounts are greater in consolidation mode than the way we would look at it in terms of just the assets that pertain to horizon qua horizon. That's the first thing to understand. Let me give you an example or two, if I might. So the way the earnings are presented in the Form 10-K, this would be the income statement that you might see on page 26 the revenue number is a little over 57 million dollars we wouldn't look at it that way and in point of fact if you were to go to page 38 i apologize for doing it to the outset by the way because it's not the way i normally like to work but i think it's necessary for understanding purposes so if you did it if you had this Document in front of you, which I guess you could have we go in the SEC website and look at you'll see on page 30 on page 38 you will see The revenue presented the way we would look at it internally that revenue number is over 113 million dollars so what's the difference difference is the performance fees and So performance fees, which obviously were over half our revenues, very, very substantial. And we need to pay our own marketing staff commissions on those fees. So you look at our income statement, what you'll see is you'll see a certain revenue number. Then you'll see all of our expenses. And then the 60 odd million dollars performance fees, where is it? It's embedded in the investment gains. So you can't really understand how profitable a business horizon really is unless you understand the accounting treatment. When Mark Hurden gets a chance to speak, he'll explain to you why it's done that way. And I mean, the short answer is, of course, it's those are the rules. We have to do it. But there it has a logic. And he'll explain that. So it's not so easy. to read the financial statements the way they're presented here. Anyway, a lot of our, the highest margin revenue that we have, which is our performance fees, actually appears, and this is the salient point, it appears below the operating income line, not above the operating income line. So operating margin is actually extraordinarily high, even by the standards of investment management. Another interesting thing about the performance fees, they were so large. To be honest about it, we ourselves, during the course of the year, we didn't plan performance fees that were this large. They were higher than even we had anticipated. That's a nice problem to have, but as a publicly traded company, we need to pay the taxes to our government prior to actually collecting the fees. So the fees we would actually receive in January, because we don't know the precise amount until December 31st, but taxes are due on December 15th. So interestingly enough, they were so large, they almost exhausted all our cash reserves, which is kind of interesting. We didn't think that could ever happen. Now we never had a liquidity problem. We have plenty of assets, we could get plenty of liquidity. It was never an issue. But we really don't want to sell assets that we're delighted to hold and pay even more taxes just for the privilege of paying the taxes in cash. That situation didn't require selling, but for a couple of days there, we did wonder. So we almost didn't have the money to pay our own taxes. It's hard to imagine such a circumstance, but it almost happened. So that we'll have to do better in thinking that through in the future. Another interesting thing, which was a nice issue. So as a publicly traded company now, you have more detail about this later, our taxes, state and local taxes, are not going to be computed on the old basis. The old basis was the taxes are due to the authority in the jurisdiction where the service or prop was produced. And since we're in New York City and New York State, of course, we're in the highest of tax brackets. In the future, our taxes are going to be computed based on where the service or product is consumed. Because a lot of our clients are not residents of the state of New York, a lot of Manhattan residents in states where there are no income taxes, or if there are income taxes, state income taxes, local income taxes, they're actually very low, they're in the future, which is 2025, the year we're in now, we'll actually get some, in my opinion, decent tax deductions, or tax advantages, I should say, not deductions. So that's kind of nice. So what else should I tell you? The first thing is, I would certainly advise on pages 37 and 38, you pay very close attention to the consolidate and the deconsolidate statements. And make sure you familiarize yourselves with both sets of financials, because they're both important. So it's not, you can't content yourself with just looking at her income statement and balance sheet that's presented. And that brings us to some now back to general points that I'd like to expound on a little bit. Now, I'll turn it over to Mark. I'll give you more detailed accounting information. So the first thing is, had we achieved record earnings when we really weren't raising tremendous amounts of assets? And the answer, of course, is our goal wasn't to raise a lot of money. Our goal was to make a lot of money. Those are two entirely different things. So let me explain. Number one, had we raised egregious amounts of money, there's a number beyond which, if we go that way through raising money, we're going to basically outrun our own capacity, meaning the best investment ideas we have will become smaller positions. We'll have to fill in the balance very large liquid companies. There's nothing wrong with very large liquid companies, except that they're not likely to have the returns you can get in special situations. So it's very, very important to be mindful of that. Another important thing to be mindful of, and this relates to the tax question, it relates to it both in the client's sense and our own capital sense. So look at our balance sheet and look at our deferred tax liability. Can you imagine if we had high turnover as opposed to low turnover, but we would have paid those taxes. And the only way we can pay those taxes is by selling off assets. And we sold off assets they wouldn't have appreciated. So I didn't do it, but it's possible to calculate if we had the standard 100% plus turnover rate of the average manager, I think it's fair to say, well, I didn't calculate number of specificity. Our capital position would be much, much lower than what it is. And therefore, if you accept that proposition, by extension, because we're doing exactly what the clients do, or you could say phrased alternatively, the clients are getting what we're getting, meaning we're eating our own cooking, clients would be in the same position. So how are they going to pay their taxes? Well, they would have to withdraw funds from us. would have less money and further reduced by the fact that they have to withdraw money from the various investment products to pay the taxes if you were to look at um horizon mechanics in that dimension as a capital accumulation vehicle you'd see in that scenario a great diminution of return so when we talk about the earnings We record earnings. We didn't do ourselves justice because we're talking about the earnings as operating earnings and they're very high. There are records, but there's also return from our own capital or the accumulation of capital by just leaving it alone, letting it grow. So they're really big earnings. And if we, if it kept, if, um, going on this rate, it could be very substantial and not, um, very prolonged period of time. So that's something I want to leave you with. And I have one other thought, and then I'll turn it over to my colleague. We have some digital assets which have done reasonably well in this fund. Later in Q&A, I'm sure people will have questions about Bitcoin and digital assets in general. There is this sister company that we're trying to bring public called Consensus Mining that is important to us from the point of view of what we intend to do in cryptocurrency. So it's on the verge, I'm told, of being a listed company. And assuming we make it, and I'm pretty sure we're going to make it, but there can be no guarantees. In the future, I'll make more reference to it. So the mining business in crypto is a great business. Done properly. Done properly means you have to be mindful to create a very low cost environment. That's been done. And you have to be a little creative in the way you go about mining. So in the world of cryptocurrency mining, the shortest distance between two points is not necessarily a straight line. And hopefully next time we do this call, I'll be able to enlighten you much more about what we're doing there. I just want to let you know that that's an interesting part of our strategy, and we're on the verge of doing something really unique, which is coming public. And a lot of things are going to follow from that. So I'm just giving you a highlight for the future. No guarantee it's going to be successful, but it's looking good at the moment. And with that, those are the highlights. I'll turn it over to Mark Herndon. He can give you more detailed information on the accounting and how we got to where we got. If you'd like to take it away, Mark.

Okay, sure. I'll do that. And some of the points that I'll go over will reiterate some of the points that you've made. And I just, you know, Again, I think it's important that for those of you on the phone, you hear it a couple of different ways so that we can just hammer on the point and the differences between the past and where we're at now in terms of our reporting. And we've provided a lot of information since our last call. So as a short recap, we recently obviously released the form 10K. So that's the annual results. Prior to that, we released a press release that has those annual results as well as a comparison to our prior presentation as supplementary information. And then we also filed a 10QA, which reflects what we had previously reported for the third quarter of 2024 and reflects it under the current basis so that you'll have that trend line to look at. Now, importantly, our historical presentation was based on what I'll use the term advisor-only financial statements, so that's kind of the legacy Horizon Kinetics. So during our year-end process, you know, this first year-end as a public company, we concluded that due to our role and ownership level in certain of these proprietary funds, that they should be consolidated into our financial statement presentation and then all of our applicable filings with SEC. And consistent with what we reported in February, you may remember we found an 8K in February, you know, notifying shareholders of this circumstance. It is a presentational change, and that change did not impact the company's earnings that are available to HKHC shareholders or the shareholders' equity to HKHC shareholders. What it did change was that we included the assets from those funds, proprietary funds, that we consolidated on our balance sheet into a new line item. So you'll see a line item or several line items applicable specific to the funds on our balance sheet, assets and liabilities. And then we also have a new line item called redeemable non-controlling interest. So it's a bit of a technical term, but what that essentially represents is our client's account balances that are, of course, supported by those assets in those funds. The other notable change you'll see, and Maria alluded to this earlier as well, is that the management fees charged to those consolidated investment products under GAAP, those revenues are eliminated for consolidation. So since that fund is presented within the context of that set of financial statements, it's akin to an intercompany transaction, which are normally eliminated. But, however, the economic benefit related to those fees to the HKAC shareholders remains in our financial statements. That economic benefit is reflected through a smaller allocation of the investment returns of those consolidated investment products to the redeemable non-patrol and interest. It's smaller than what they would have otherwise received. And that's an important point and distinction. Outside of that complexity, the results for the quarter were, you know, we believe, as we indicated, favorable. We had revenues of $19 million for the quarter and $57 million for the annual period under the consolidation model. And as you can see in the supplementary schedules, under the advisory-only model, that is without the consolidation of the investment products adjustments, we had the annual revenues of $113 million. You may also notice the results of our consolidated entity were favorably impacted by the addition of the funds, which had approximately $860 million of investment returns. And of that $860 million of investment returns, about $702 million was allocated to our clients through that redeemable non-control and interest line. And so to reiterate the point again, the difference between those two values represents really two events here. that's important to an HKHC shareholder. One is the incentive fees that are charged on those investment returns, and the second is around economic interest in those funds. And there's a table deep within the MD&A portion of the 10-K that will also outline that circumstance. large event for the year, and Murray touched on this as well, and it's an additional complexity in our financial statements relates to income taxes. And we disclosed this in our last call, where the financial statements reflected a cumulative adjustment for converting from a pass-through entity to a C-Corp in 2024, resulting in that approximately $60 million deferred tax liability at the time, as well as an expense at that time. This amount would only be realized upon selling of the underlying securities, which is the tax efficiency point that Marie was talking about. Moving forward, you will see that deferred tax line item increase or decrease in an offsetting manner as those securities increase or decrease over time. But again, that's not a cash impact. That's an accounting convention to recognize that as potential taxes. The company only paid approximately $11 million in taxes in 2024 as compared to that $104 million of income tax expense, and that's due largely to this deferred income tax relationship. And then, you know, and that's it. I'll turn it back over to you to see if I created any confusion there or if there was other points you'd like to address before we turn to Q&A.

No, I don't think there's any confusion here. So just to summarize it, then we'll go to Q&A in a minute or two. So basically what you have in Horizon, you have our record operating earnings. You just have to, if you want to see them, you have to look at pages 37 and 38. And then apart from the operating earnings, you would say there are certain non-operating earnings, which comes from return on capital. which are even more substantial than earnings. So when you think of how much our net worth actually increased during the year, it's a very, very big number. So when you go back historically, and I like to do that, and you have no way of knowing this, but in 1994, when we started Horizon, we went back to November of 1994, so we're about 30 years old. We started Horizon, our total capital, everything, including furniture and computers and everything, was about $500,000. So now if you think of our own capital, which were well in excess of $300 million, and think about all the, you know, you wouldn't have any way of knowing this, but we paid ourselves many dividends over the years. So if you want to look at it this way, in round numbers, roughly $500,000, ignoring dividends, turned into well in excess of We're $300 million. We like to, perhaps we flatter ourselves, we like to say that we must be doing something right in the field of long-term investing. So hopefully we're not merely flattering ourselves. There's some substance to our analysis. But with that point, I think now's a good time to go over questions and answers, which we'd be delighted to provide you.

And I'll reiterate to those on the GoToMeeting platform that you should be able to submit that in the questions tab that you see in front of you. One of the questions, and we get this frequently that's come in already, is addressing, and you mentioned this point earlier a little bit about raising money, but what are the Horizons plans to grow assets under management other than market appreciation? Can you discuss recent product launches or expected launches over the next year?

Yeah, of course. So we have a number of things. We have a number of exchange trade funds. So in exchange trade funds, which didn't exist a couple of years ago, you can go to the exchange trade fund portion of the website and you will observe over $1.1 billion there. I don't remember the exact number, but you can add it up, and you can see that. We are now in the process. We're launching yet one more ETF. It should be available in about a month or two, and that will be a Japan ETF. Just a word about why we're doing an ETF in Japan. We actually have some Japanese analysts who have done a really good job over the years with us. In Japan, you could say, is maybe... the last of the Graham and Dodd markets that exist in the world. So if you're looking for a company in classical Graham and Dodd fashion that's trading for a discount to net current assets, the place to go is Japan to find it. Apart from that, there's some very interesting companies in Japan that have certain product offerings that don't exist anywhere else in the world. So that makes Japan intriguing as well. So hopefully in a month or so, that product will be up and running. The consensus mining, as I talked about, you might recall some years back, for those who were long-term followers of Horizon, we were first mining cryptocurrencies for ourselves. Then we created some limited partnerships called Horizon Mechanics Cryptocurrency Mining LLC. I think they were called one and two. Then we rolled those up into a corporation. We raised some money and we called it consensus mining. And I think in the public realm, there are roughly a dozen publicly traded cryptocurrency mining companies. And I suppose I'm very prejudiced to ours, but I'm very, very interested in seeing the reaction of the public when ours gets listed. Incidentally, we're not raising any capital. We're just going to do a direct listing. because I don't think we need any capital. But the shareholders will judge, and that'll expand our cryptocurrency product offerings. The centerpiece of our business is really high net worth individuals, taxable investors, and that can be through mutual funds, that can be through individual accounts, that can be through partnerships we just spent some time talking about. of late, that's getting a reasonably robust flow. So that's good. And those will be our primary offerings. We don't want to have too many products because too many products, we will basically dissipate our marketing efforts and we'll end up helping no one. And we're finding some really interesting things to buy. and you will see them reflected in those funds. We also have a private equity division and can't talk about a name, but we recently raised some money on the order of roughly 25-ish million dollars to invest in what some people call artificial intelligence and I would call high order computation. I'm the only person who uses that term, by the way, including internal to Horizon. I personally think that's gonna be a splendid investment. The other private investments we have are in exchanges. We have a variety of products to do that. We think we've developed an expertise in exchanges over the years. So I think that rounds out what the product offering is. As I said, we're not going to make a tremendous effort in the biggest capitalization stocks. We're going to find our areas of expertise. We're going to stick to our areas of expertise and going to raise monies appropriate to what can be absorbed within those areas of expertise. So I hope that addresses the question.

Yep, okay. Another point similar, and I don't think we've talked much about the dividend yet today, but we did release recently just announced that dividend with respect to the fourth quarter that's now been paid. We've gotten some feedback that the fourth quarter dividend was smaller than some people would have guessed. And given the amount of operating income for the quarter, particularly around the incentive fees, can you just shed some light on or reiterate, I should say, the dividend policy and how you compare the dividend versus other investment opportunities for that capital?

Yes. Well, I alluded to this earlier. So we got a performance fee that was so big, we almost didn't have the money to pay the taxes. I just talked a minute ago about some of our private investments. It is within the realm of possibility that not the distant future, some of our private investments might be monetized in one way or another. Can't promise that. If indeed they were monetized at the price that I personally surmise they might be monetized at, we would have a very substantial tax bill to pay because we have money in those instrumentalities. The problem is the investment would be monetized, but we might not be in a position to be able to now there would be securities instead of private investments, we might not be in a position to be able to sell them because our shares might not be registered. So it's a wonderful scenario to contemplate, but contemplate the following scenario. That's why I alluded to earlier about we have to think through this question of the taxes. So the wonderful event has happened. and the private asset is monetized, which case we have earned an enormously substantial, possibly even egregiously substantial performance fee or well and good. And we now owe a very large amount of taxes. And we could be theoretically in a position that we can't pay the taxes because our securities are not registered. So we have to put ourselves in position to be able to pay those taxes if that eventuality would arise. So even though you might see that the dividend is not proportionate historically to what we've done in past quarters, that's the reason for it. So we're preparing for a worst case scenario in a splendid circumstance. Nice problem to have, but we'd be irresponsible if we didn't prepare for that circumstance. So what you'll see is the next quarter, which is the quarter we just completed, you will see a dividend declared and it will reflect our historical proportion of what our dividend is in relation to the income that we report. Hopefully everything will work out splendidly. but we have to prepare for all sorts of eventualities. So I apologize dividend isn't bigger, but that's the reason.

Okay. The next question we had relates to the operating leverage in the business model, and should we expect costs such as employee compensation to rise assuming the AUM and revenue also rises, or can we expect some other kind of operating leverage in the model?

Okay. So the operating, basically, Our biggest expense is employee commissions. And our highest margin business, of course, are the businesses that have the performance fees. If we collect the performance fees, we're obligated to pay commissions to people. So that's the relationship. It's pretty much fixed, except that the performance fee is big enough when two things happen. So we're only paying the performance fee on the client assets. There's our assets. We're paying no fees on that. So there's two aspects to leverage. There's the fees minus, of course, the commissions we pay, the operating expenses, daily rent, electricity, those sorts of things. They're more or less unchanged, whatever the asset level is. So the variability is the expenses. The biggest variance has to do with the performance fees. The second biggest variance has to do with the market value of the assets. So if they go down, our employee expenses are going to go down as well. And then we have a really great year. We like to pay bonuses to people. So I think they're entitled to it because they've done a good job. But apart from that, there is the other end of operating leverage, which is the return on capital, which one should not ignore. I realize no one puts a multiple on it. But as you can see from our shareholders' equity, it's quite a substantial number. In addition to which, it plays its role, not directly, but of course indirectly, in the money-raising function. Because the first question one is asked when one tries to raise money is, how much money do you have in the product? And if it's a new product, how much money are you prepared to invest? Now we have a lot of capital, and we're prepared to invest. It makes a lot of things possible in terms of ordinary operating earnings that would not be possible were it not for the capital. So I hope that is a sufficiently expansive answer.

We had a similar question along the concept of cost structure. Somebody has asked just to compare the cost structure to similarly sized asset managers? Not specified which asset manager, but do you feel like we have a competitive cost structure compared to other asset management firms?

Do we have a competitive structure? I think it's more than competitive. So I'll set a couple reasons, but I'll let you be a judge. First reason, there's a senior management, of which I guess I am the example. So the first thing is competitive cost structure. see my salary and compare it to any other investment advisory firm that's publicly traded, which you can obtain information. I think I've got, speaking personally, I think I've got the lowest cost structure because I think I make less money than any of them. That's number one. Then my senior executives compare their salaries to their comparable competitors and other firms. I think you'll reach the same conclusion. So the variation is, of course, the commissions, which you only get in success mode. So my philosophy is I'd rather pay less money on a normalized basis and more money in success mode. So this way our expense structure can decline. If we're not in success mode, it would decline naturally. It has more fluidity and flexibility than other cost structures. But at the end of the day, for any investment management company, the cost structure is people costs. And the biggest cost, of course, is the senior people. So I'll let you be the judge of what you think we merit. In my personal case, I'm more than content to make the bulk of my return such as is through the shares.

Okay. I'm going to switch gears just a little bit. I have two questions that have come around our, I'll call it the ownership structure or affiliated organizations that are nearby Horizon. Sometimes I'll use the term Horizon Universe. But specifically, the question is, what is the relationship between FRMO and Horizon HKHC? And then as a follow-up to that, You know, there's references to Winland, ConsenSys, FRMO, RCG. And just, you know, is there the relationship between all of those companies and HKHC? And is there some opportunity to simplify structure and consolidate?

Okay. So let's just explain the various relationships. There's one you didn't mention, which I'll lead off with, which is roughly 44%. of the shares of the Horizon Connects we're talking about now is owned by a private company called Horizon Common. So it does similar things to Horizon. As a matter of fact, it has its own capital account, which if you look at it, it's similar. It's not exactly the same, but it's very similar to Horizon's capital account. And it happens to own roughly 44% of the shares of Horizon. So you can think of that thing as a controlling company. And then there's FRMO. FRMO, when we got to a certain point after six or seven years of existence, we wanted to do some non-investment management-related activities. So to the extent that FRMO had some money, we created this company. We put our own personal money into it. And to the extent we didn't have an idea for non-investment management related activity, we just bought Horizon's products. So, FMO owns, and you can see it on their financial statement, they own a variety of Horizon products. You'll see it disclosed, I think, in pretty detailed fashion in the footnotes, and it's had basically the same investment experience as Horizons. There's a lot of capital there, as you can see from their financial statements. We made the decision a number of years ago, what we want FRMO to focus on is cryptocurrency. So we did that before there was a consensus mining. So we bought a controlling interest in a publicly traded company, a very small company, a microcap company called Windland Electronics. And basically, Windland Electronics makes sensors. It makes sensors for moisture. It makes sensors for humidity. It's not a very big business. It's not a very technologically complex business. It's efficiently simple, and not that many people want to do it. And therefore, it has its own little niche, and it makes a little money. We didn't want to disturb that. but we began doing some cryptocurrency activities in that. And if you follow FRMO, you would realize that FRMO has been increasing its investment in Winland. So right now, FRMO owns 40-ish percent of Winland. And if you look very closely, you'll see FMO is usually buying Winland shares in the open market through a 10b5 program. And at the moment, we're in a cooling off period. So you can't do a 10b5 forever. You have to have a terminus date and you can renew it. But if you renew it, there's got to be a cooling off period. And standard cooling off period is 30 days. In practice, it's a few more days. Why is it a few more days than 30? because you need to fill out the documents and they're a little more complicated than meets the eye. So I think our cooling off period is 35 or 36 days. But in any event, I believe I may be off by a day. So forgive me, but I believe April 12th, our 10b5, it's on file with the SEC. So I'm not telling you anything secret. Our 10b5 resumes and we'll be buying more of Winland. So Winland is a cryptocurrency mining company. We're doing some pretty creative things there. And FMO intends to develop itself into an operating company. On what basis do I say that? Again, I've said this many times in public. When we get to over 50% of Winland, if we ever get there, we would have to consolidate Winland and FMO, and that would make FMO an operating company. That's Winland, that's FMO. So FMO is going in the cryptocurrency direction. So I've covered Horizon Common. I've covered FMO. I've covered Winlan. Now we have to cover consensus mining. So as I said earlier, consensus mining was really two partnerships. Horizon Connect's cryptocurrency mining one, cryptocurrency mining two. The difference was in one case, we held on to the cryptocurrency, kept it for their appreciation. In other cases, people just wanted the cash. and we just sold it and distributed the cash. And the idea was we're going to roll it up into a corporation and raise some money, which we did in a private stock transaction, and basically bring it public. So that's on the verge of happening. So the route we went is, rather than do another IPO, which we could have done, basically We want to have direct listing through FINRA, and that requires a tremendous amount of documentation. I believe we've filed everything, and now they're reliably informed. There are nothing other than minor questions. It's an enormous electronic file, so it's not surprising. There are minor points that have been noted, and in very, very short measure, hopefully it's extremely short measure, maybe even in days. Consensus will be a publicly traded company. From the point of view of Horizon, Horizon Kinetics, this company we're talking about, is managing the cryptocurrency business of Consensus. So you might wish to think of that as a new dimension of asset management. So I wish I could tell you more, but it's not public yet. so i have to use some degree of discretion but you see where this thing is going so ultimately imagine the cryptocurrency is a dimension of cryptocurrency mining a lot of interesting things that can be done with cryptocurrency i like to think we're ahead of the crowd and looking at the publicly traded i don't know if we want to call them competitors but the publicly traded alternatives Of course, I'm biased and prejudiced, but I like what we're doing greatly, and I think it's going to open up a whole new return vector for Horizon Connect shareholders. I think I've covered all the related companies with the sole exception of the REN Fund. The REN Fund is a closed-end fund, and you might observe I've been buying a lot of shares of the REN Fund. It's a small closed-end fund. I think I and funds that are affiliated with me personally own something like 11% of the shares. I think it's over 11% of the shares. We buy every day. You'll see SEC filings to that degree if you care to look. And a lot of things you can do with a closed-end fund. You can raise capital via rights offerings. We've done that a couple of times. It's still a closed-end fund. You could merge it with other funds, and it's another thing we might explore. So it may in the future have a more central role in what's happening in Horizon Chemex. You might say, why didn't you do it already? Well, my answer to you would be the last 12 months, look what we've been doing. There's the Scottsdale Gold Deal and Horizon. There's Consensus Mining. There's some ETFs that we got started. We only have so much bandwidth. So we have to prioritize certain activities. So I apologize that we didn't do things with Renfund that we might otherwise have done. But I think that covers everything. So I hope it's a thorough answer for you.

I'll vouch for it being a busy year as well. But looking forward to the next one. I think we had our hands full. I think we had our hands full. Absolutely. All right. So no call would be complete without a question about TPL. This person's question is asking about the share count. Is it reasonable to assume that HKAC owns slightly more TPL than what's specified on the balance sheet? And I guess I would expand on this question and say we own probably a great deal more, right? I mean, it's something to the magnitude of 58,000 shares at the HKHC level. But do you want to expand on, I mean, it's obviously held at a variety of other places that the company touches and manages.

Yes, of course. So I own some personally. There are various funds that own some. They're controlled by us, meaning I personally have money and other Horizon partners have money in the various funds. FMO has money in the funds. Horizon Common has money in the funds. So I believe there's an SEC filing that would show us, that would show us on a look-through basis everything we own. I don't remember the number. There's also my personal SEC filings, if you're curious about that. They're out there, and I usually remember a number. I'm reluctant to quote it because I'll be off by five shares, and I don't want to give any incorrect information. So you can look at my Form 4 filings, and they're usually up to date, you know, 24 hours behind. So you can see. If you want to know the total number of shares we control, the documents to look at for Horizon would be the Form 13F. And if you're interested in me personally, so the most expansive number you're going to get is from the 13F. I should say that. And if you're interested in me personally, there's a form for, and it's on the SEC website. I apologize for not quoting the number, but it's right there. You can see it. You can see how many shares I've got. And I think you'll agree it's a big number.

For sure. For certain. And then along that lines, and I'm sure you've addressed this in other forums before, but Would you want to remind our group about the ongoing investment thesis of TPL? And I guess I'll add to that land bridge or any other major position that kind of comes to mind there.

Sure.

So basically there are a couple investment theses. So first of all, they get royalty income from the Permian Basin, which is I think the greatest geological structure united states and the point of view of hydrocarbons maybe even the greatest geological structure in the world although geologists debate that but it's up there and another benefit unlike but you might say well if you like oil so much why don't you buy an oil company a couple answers that first of all you have a lot of land we'll come back to that in a second there's 900 000 acres of land another thing is there's water don't forget those properties sit on top of the el capitan reef In the modern world, 99% of drilling is fracked. You need water to frack. You need land to dispose of the water, what's called the produced water, that comes up out of the ground when you do frack. One of the advantages of owning a royalty as opposed to just buying an oil company is you don't have any capital expenditures. You just get income. And you can dividend out the income, you can buy back shares, you can leave it in the bank, you can do all sorts of things with it. So I feel that's a better business just to illustrate the principle. Why does TPL trade at a higher P ratio than XYZ Oil Company? Well, truthfully, if you adjust properly, it doesn't. So I'm going to compare TPL now to a hypothetical oil company. It's just a composite of your typical oil company. You look at the PE and the earnings or whatever they are, and you will conclude, oh, the other oil companies are cheap. Why doesn't this character just buy these other cheaper companies? Well, the reason is that in a typical oil company, 70% of your earnings, although you own them, you just don't get them. They have to be reinvested in the business to keep the oil flowing. So what you really should do is if you took the P ratio of typical oil company as a 30% dividend payout ratio and 70% is going back into the business, if you took the P, let's say the P were 12, and 30% of the earnings are actually being received by the shareholders, either through share buyback or a dividend. Take that P. Let's make believe it's 12. Divide by 0.3. That's your real P ratio. And I think you'd see that, give or take a minor point, your TPL earnings with one very, very salient difference. Don't go into another difference. The first salient difference is TPL is all this land. It has a value. So you can't value it zero. Now, people can debate what the market value of land is, but it's not zero. So that land appreciates in the fullness of time. It is not the American Accounting Convention to mark land to market. So I'm just making up a number for lustrous purposes, but if they had a billion dollars worth of land and the land appreciated by 10% in a given year, that's at $100 million earnings, which, by the way, is not taxable. got to add that to the earnings. So if you believed the plans were $2 billion and the appreciation was 20%, or you can make a table and you can see what you want to do, you will see it's not a very expensive stock at all, suitably adjusted in the manner I just described. And then also very, very importantly, we're making a huge effort in this country and around the world in a field that everybody calls artificial intelligence, and I by myself call high-order computation. In order to do that, you need lots of data centers. So if you're going to build lots of data centers and big data centers, you need electric power. And people will debate, well, are we going to have natural gas power, or are we going to have... Nuclear, modular nuclear reactors, or some people might even say we're going to have coal, and there's solar, and there's wind. So let me just simplify the whole thing. You'll understand how important this is. The data center has to run 24-7, and the sun doesn't shine 24-7, obviously, and the wind doesn't blow 24-7, although solar and wind can be constituent elements of it. you need something that works 24-7. That gives you three choices that people debate. Natural gas, nuclear, and coal. I think most people would put coal out, and it's between nuclear and natural gas. Well, you can debate it all you want, but nuclear and natural gas, although you might think they're very different, have one thing in common what is the thing they have in common they are both thermal power what does that mean thermal power it means the end of the day where it's nuclear or natural gas or even coal for that matter you're boiling water you're boiling water convert to steam the steam is is funneled through a turbine as the blades of that turbine spin that creates electric power so The common denominator of all forms of thermal power is water. We need water. So the amount of electric power we're gonna need to accomplish what we wanna do in data centers is just, it's unbelievable. It's mind-blowing. It's just mind-blowing. So it's not because we want a computer that's gonna think like a human being, and it's certainly not because ChatGPT is going to do a lot of queries, even though they will do a lot of queries. That's not the reason. So what do you need high-order computation for? Well, very simply, two facts that no one's going to argue with, and then I'll explain. First fact is, I'm sure you're aware of this, 93% of all drugs, just an example to illustrate why we need high-order computation. This is one of 100 examples I can give you. 93% of all drugs that go before the FDA never make it. They fail. Why did they fail? Now, you know how much money it costs to bring a drug to the FDA, billions of dollars, and 93% fail. Not a great business model. Why did they fail? Because it's designed to treat an ailment, obviously, and in one person, they might actually do so successfully, and another person might have a reaction, and the reaction might even do more harm than good. So why does it happen? Because the disease, or at least many of them, they're actually expressed at the molecular level So in order to understand them, we need to understand them at the molecular level. So we now know enough about disease that why do people have certain horrific diseases? Because proteins are being improperly folded when they come in contact with amino acids or polypeptide chains. So we have to understand these reactions at the molecular level. We're talking about unbelievably huge numbers of molecules. just for one human being, because everybody has different body chemistry. If you want to understand a human being at a molecular level, imagine how much data you have to load into a computer. And because these things are happening, what's called computationally irreducible sequences. I'm going to explain what that means in a minute. Just remember, computationally irreducible. I'll get back to it in one second. You have to do trillions upon trillions upon trillions upon trillions of calculations in a microsecond the microsecond is or maybe two microseconds microsecond is a millionth of a second why do you have to do it because there's trillions and trillions and trillions and trillions of molecules that are reacting with each other every microsecond so what's computationally irreducible mean it means that you can't model it in a way that's faster then it's actually happening. So in other words, if I want to send a spacecraft to Mars, it would obviously take years to get there. But I can devise a mathematical model. I can simulate it on a computer. And the computer, in the course of less than a minute, could show me the trajectory. In other words, I can reduce computationally the time it takes for the spacecraft to make its journey to Mars. I reduce it computationally to a time that I can understand. But if the thing is happening in a microsecond or two, I as a human being, I can't even comprehend. And nobody else can either. A microsecond. And it's not one reaction, one molecular reaction in a microsecond. It's trillions upon trillions upon trillions of reactions happening. molecular reactions within a microsecond or two so we can't reduce it in any meaningful way we just have to compute it so i could coming back to the mars spacecraft example i could i know the thrust of the of the engines i know kepler's laws i know newton's gravitational constant i know the weight of the spacecraft i know the inertia i know the mass i could give you a pretty good estimate of what trajectory is going to be and how long it's going to take to get there. I know the motion of Mars, and I know the gravitational attraction of the sun to Mars. I can plot its position at a certain time in the year. I can do all that stuff. You can do all that stuff with molecules, too. You just have to have just some unbelievable number of transactions. You need a lot of data. You need a lot of powerful computation. Not powerful in the sense that you're doing something uniquely complex, just powerful in the sense that you've got to do a lot of it. You need enormous amounts of electric power. We're now back to our friends, Lambridge et al. You need a lot of water for that. So the basic rule of thumb is in natural gas fired plant, you need 5,000 gallons of water per megawatt hour. Now, if you want to make it barrels, you can take 5,000 divided by 42. Let's just make it easy because we're on the phone. Let's say you really should divide it by 42. Let's say 5,000 divided by 50. So make it even worse, 100 barrels per megawatt hour. Okay, so what's a barrel? 50 cents a barrel. So that's $50 a megawatt hour. How many hours in a day? 24. So now we're what? $1,200 a day. But we're going to have per megawatt hour, we're going to have gigawatts. So there's one gigawatt. That's a thousand times what I just told you, $1,200. Now we're a million two for one gigawatt a day times 365 days. You see how big that number is. But if you're going to have a three, let's say gigawatt data center, you need two and a half to three times the power because the power plants are going to be down for part of the time and the data center can never be down. Now start multiplying by those coefficients and just one data center campus. Now we're talking about the power plants, not the data center itself. They're going to need water too. It's like some unbelievable number. You ever get one of these things on your property? Matter of fact, let's go a step further. You don't even need it on your property. If it was just in the neighborhood of your property, matter of fact, It never, ever, ever is going to be on your property. It doesn't really matter because all it needs is the water. It doesn't need your land. You could put in your land, you'll make more money. We haven't even talked about a grand lease. We haven't talked about how much natural gas the thing is going to need. Do you see what a big deal this is? That's the investment thesis.

And to follow along with that, could you address... Bitcoin, there's a follow-on to that, as well as in relation to other crypto or digital assets. Sort of the same concepts of investment thesis.

Yeah, sure. So the investment thesis of Bitcoin. So the first thing to understand is Bitcoin is a commodity, but it's a commodity created by human beings. So the first thing we have to understand is How is Bitcoin different from a commodity created by human beings? Some compare it to gold or soybeans or wheat, just to give you an idea. In principle, if I had enough land, I can make more soybeans. I can make more wheat. If the price of gold were high enough, gold's $3,100 an ounce plus, What if gold were $5,000 an ounce? Well, at $5,000 an ounce, gold's there. It's just not economically extractable at $3,100 and change, but it's very profitable at $5,000 an ounce. So at $5,000 an ounce, if it got there, there'd be more gold. So the first distinction with Bitcoin, you have to understand, is there's over 19.8 million units existing today. In the year 2000, 140... There's going to be 21 million units. And that's it. There's not ever going to be any more. This is a scarcity factor in Bitcoin that you don't have in a normal commodity. You might say, so what? Why can't they make 10 different versions of Bitcoin? Why can't they make 100 different coins? It's like a pet rock. What difference does it make? Well, it actually makes a lot of difference. So I can tell you of the tens of thousands, there are literally tens of thousands of cryptocurrencies. Obviously, I haven't read all their working papers, but I've read quite a few. And I can tell you right now that I've read some that are truly spectacularly brilliant. And as spectacularly brilliant as they are, they can be improved upon. And a lot of them are a lot better than Bitcoin. So it's the average person Who would read that? They'd say, well, it's kind of like Google. Google is really great. Until somebody comes out with something that's better than Google. Maybe ChatGPT is better than Google. And we use that. But you'd be missing the point. The point is Bitcoin is not merely software. It is open source software. What does that mean? That means that you right now, if you had a mind to, you can read every line of code in the Bitcoin protocol if you wanted to. And now you read it. If you had a better idea and you wanted to change it, you could change it and make it better. So the reason people trust Bitcoin is everything is out there. It's open source. It can't be controlled by anybody because the great fear is that somebody is going to be able to control the money supply. So you wanted to create something that nobody could control. The only way to create that nobody would control it, take away the incentive for somebody to control it, it has to be open source. So if somebody came out with something better, which many people already have, they would have to make theirs open source. And nobody seems to want to be able to do that. They could do it. They just don't want to. And you can see why they don't want to. Because they work very hard on their work of genius. And indeed, it is a work of genius. But they don't want to give it away to the world for free. That's quite understandable. If you don't want to give it away to the world for free, you're not beating Bitcoin. So you might say, okay, what if you found somebody who is sufficiently generous and they didn't want to give it away for free? Let's say they did. It's still not going to be Bitcoin. Why not going to be Bitcoin? Because Bitcoin users now having seen this for free, whatever features it had, it was improving the Bitcoin. They can add it to the Bitcoin protocol and we go on as before. So without understanding open source code, You can't understand the decentralized nature of it. There's one other little piece that I have to add to this. I left out a lot of stuff that I could have put in. Actually, I'm going to put in two little pieces. I could put a lot of other stuff in, but I didn't do it. First thing is you have to have people who validate your transactions. So in Bitcoin, whatever coins are issued, it belongs to the people in the future who are going to validate the transactions. So naturally, the people who make a cryptocurrency, on the day they make it, the coins are theirs because they don't really want to give away the coins to the great unknown mass of validators, which in Bitcoin they call miners, but they're really validators. They want to keep it for themselves. Quite understandable, quite reasonable, quite human, actually. But that's not going to get you anywhere in the world of crypto because Why should anybody validate your system if you're going to keep the rewards? They need the rewards. So you have to properly incentivize them, which means it cuts you out. So that's the first thing. And then one other thing you have to understand, sorry for throwing all this detail at you, and I could do a lot more, but you did ask, and I want to give a thorough answer. There's something called the halving. So what does that mean? That's H-A-L-D-I-N-G, meaning to cut in half. So every four years, the reward you get for valuing transactions, which in Bitcoin they call mining, is cut in half. That's why they call it the halving. So think of it this way. Think of the coins that are mined. Think of those who are wheat. They were a harvest. And let's say a given acre of land could produce a thousand bushels of wheat. And then, but after four years, land would be partially exhausted. And that was the only piece of land in the entire planet that could grow wheat. And we want wheat. So at the end of four years, it can only grow 500 bushels of wheat. And in four years after that, it can only grow 250 bushels of wheat. And at the end of that, it can only grow 125 bushels of wheat, and so on and so forth. What would be happening to the price of wheat? Well, the yield per acre, one acre you have, is going down. So the price would go up. If that were engineered to happen, you would say that Bitcoin has been engineered to appreciate. And that's the way it was engineered. It's just weak. You could never engineer it. But with currency, you could engineer it. And it was engineered to appreciate. And that rate of return was designed that way to make it sufficiently robust such that it would be a unique asset. It would have a much higher rate of return. and a typical asset would have. And in the fullness of time, people come to realize it. And that's what would build the user community of Bitcoin. Now, bear in mind, you don't need the whole world to adopt Bitcoin. All you need is enough people. It could be a very small portion of the world. And they're making a very robust rate of return. They don't need the mass of the population. The mass of the population, as far as Bitcoin users are concerned, they can go on using... They're fiat currencies. And that's fine. But what's happening, if they realize it, people think of Bitcoin as if it were a security. They say, how much is Bitcoin up today? How much should it appreciate? And it's the wrong question. Because Bitcoin has not appreciated. Bitcoin has never appreciated. And Bitcoin will not appreciate. What's actually happening, the dollar is falling in relation to Bitcoin. So all you have to do is turn the chart upside down. So if on your typical media program, instead of announcing Bitcoin was up X percent today, if they simply said the dollar lost X percent of value in relation to Bitcoin, and since Bitcoin came out in 2009, the dollar has lost 99 plus percent for vis-a-vis Bitcoin, everybody in the plant would buy Bitcoin. They say, oh my God, my dollar is losing its value in relation to Bitcoin. They don't understand what's happening. because they think it's a stock and it's not. So I don't want to elaborate too much. I could say a lot more, but I hope I've touched on the salient points and give you an idea of what the investment thesis is.

And I have a couple more around that concept of investing, if you can. And again, this is probably a question that you've heard before in other forums. And this person asking is asking this really in relation to consensus and FOMO, but it's similarly applicable to HKHC in that HKHC has a very small, tiny portion of Bitcoin mining. And if our belief is... The premise of the question is if you believe Bitcoin is... their words going up in value relative to other currencies. Why not buy more Bitcoin as opposed to mining? The mining operations that we have, either directly or indirectly, are, again, in their words, relatively small. So why would we not just make additional financial investments into Bitcoin?

I'm going to interpret the question a certain way, which I hope is not incorrect, but I'm going to take the liberty of interpreting the question. I think what the question, the sense of the question is, well, consensus mining has a certain amount of cash. So why don't we just leave the money in cash? If Bitcoin is really appreciating relative cash, we leave the cash around. Why don't we just invest the cash or at least most of the cash? Bitcoin might have more money. and uh that is um a problem to do that there are two reasons first the minor reason and then the major reason the minor reason so we want to be in the mining business because it's cheaper to accumulate bitcoin relative in mining than this graph by it i want to do it the problem if you throw your cash in is the having now you understand what the having is so at the moment we're about 1110 days away from having. I may be off for a day or two, but forgive me. It's something like that. It's a little bit less than three years. So if I went out and I bought a mining rig today, which I'm not doing, if I did that, it might not be profitable to mine Bitcoin. It might be obsolete. 1110 days now. Matter of fact, to be exact, If I bought today, it might take 45 days to get delivery. So we would be like 1,000, I don't know, 75 days or something. Maybe even 1,065. I think it would be 1,065 days. So we wouldn't get a return on investment. So I can't go out and buy the rig right now. You might say, okay, well, why don't you go out and buy the coins and take the money and just be that? Because the trouble is this. Let's compare it to an ETF. Because we basically, we would take consensus mining or Winland. We become an ETF. We take the money and we'd buy the coins. It's okay. We're appreciating. But it would be a delusion. A serious delusion. Why? Because we're a C-corp. So we're a C-corp. Then what's happening is we have to reserve for taxes. So Bitcoin really appreciates. We don't have to capture all the appreciation. We're going to have to pay the corporate tax. And depending on whatever the corporate tax is at the time, we've got to pay that. We have to reserve against it. So you're not going to get all the appreciation. So your next question would be, now that you realize that would be the consequence, well then, why not turn it into a mutual fund? Even a closed-end fund, if you really wanted to hang on to the money, why not turn it into a closed-end fund and do that? So it could be an open-end fund or a closed-end fund. and you limit taxing because mutual funds have an exemption from taxes. They're a corporation. That's the Investment Company Act. It gives you an exemption from paying federal income tax and state income taxes too. Well, that's all fine, except for the fact that even just to simplistically hold Bitcoin, there are costs to holding Bitcoin. You've got to put it somewhere. And what would happen in the fullness of time is, You exhausted your money. You spend it all on Bitcoin. Bitcoin's appreciating, but the only asset you have is Bitcoin. You're not getting a cash return. So every month that you have expenses, you have to sell a handful of Bitcoin to pay the expenses. And little by little, you wouldn't realize it. It's very different than a mutual fund. Little by little, you wouldn't realize it. You're actually going to dissipate your Bitcoin holdings. And if you held it long enough, you're not going to have very much Bitcoin. So what you need to do is, if you really want to have the optimal investment, you need to set up your portfolio in a way that number of Bitcoin per share, which is the critical variable, is rising. So if you made it into a mutual fund, so you put in a corporation, the number of Bitcoin you have per share because of taxes is going to be declining. That's not going to work over the long run. And then if you say, I'll eliminate the tax, that's a lot better. I'll turn it into some kind of fund. it's just going to dissipate slower. And that's not going to be good. And to make it worse, you don't know what kind of regulations there are. What are you going to do if it's a mutual fund and regulation is passed? Let's say it's an ETF. So you can keep your expenses really low if you keep your coins in cold storage. But then people want to trade the ETF. People like to trade Bitcoin, like to trade everything. So what are you going to do if the regulators make a law And they say 50% of your assets can't be kept in cold storage. They have to be made available because people want to trade, meaning put money into the fund or take money out of the fund. It's an entirely plausible scenario. It might happen. Well, you're much more vulnerable being hacked. Now, you can guard against that by having enough insurance. So for a price, an insurance company will insure you against that. But then you're really going to dissipate your Bitcoins. So all those things, if you think it through, they are not viable long-term transactions. So to come back to what we do, you have three choices with Bitcoin. You can buy the Bitcoin, obviously. You can mine the Bitcoin, which is a lot cheaper. Or you can do a third thing. You can indirectly mine Bitcoin. So what is indirect mining? I'm going to leave it there because I've got to talk about what consensus mining is doing, and I don't want to do it because I might inadvertently violate some law because it's not publicly traded yet, so I shouldn't talk about it. But there's a third thing you can do, and when we get to the point where consensus mining is publicly traded, I will give you a long and boring lecture on what... Indirect mining is, I personally think it's really cool. I believe we're the only people doing it. And I hope you think it's pretty cool too, but it's highly lucrative. I wish more people would do it, even though you might think I don't want people to copy me, but take my word for it. I'm going to go into detail right now. If they tried to copy us, it'd be a pretty good thing. So I'm going to leave it there. So I'm going to have to leave a little suspense for the day that we can talk more about, but I think you'll find the whole thing fascinating.

Yes, and another question on investment style and current events here. How is our investment style positioned given the tariff and deficit reduction efforts of the current administration?

Oh, insofar as the tariffs are concerned, fabulous. It almost couldn't be better. We didn't design it that way because it's the same portfolio we had before the tariffs came into place. The reason is, if you look at our portfolios, we don't own global multinational companies. So our companies, say what you will about them, they have their good side and their bad side. We don't import and we don't export for the most part. And if you look close enough, you might find some tiny little positions where that's not a truthful statement. There's some variance around that. But as a generalization, it's absolutely true. So you consider our big holdings. They're not bringing anything into the country. They're not taking anything out of the country. They don't even buy anything that needs to come to the country to make anything with that might stay in the country or go out of the country. Just a non-issue for our companies. So we didn't do that consciously. We didn't give a lot of thought to tariffs that one day there might be tariffs never gave it a moment's thought. It just coincidentally, when the issue finally came to the fore, and we looked through our portfolio, we just realized we don't have any material exposure, so we just didn't worry about it.

Okay. Another question has come in to kind of go back towards the performance specific to the company of what should they be expecting with respect to revenues in terms of the ratio of performance fees versus the ongoing management fees? And should that relationship to AUM stay fixed or should it be increasing or decreasing over time?

Truthful answer is I don't know. And even if I sat down to try to do it and say x percent of our aum is subject to performance fee and y percent of our aum is not it wouldn't help to even calculate that number because the performance fee is not so much based on how many assets get a performance fee it's based on what the performance is you have a small number of assets that have fabulous performance get a performance fee it can be a big number so I don't know what the performance fee is going to be. I can just tell you that in planning, which I alluded to this before, we have to think through the problem. If we ended up accruing a performance fee that crystallized at year end, and if it happened in some of the private assets, which it really might happen, we'd need some cash to pay the taxes. So even though we didn't collect anything yet, we accrued it. As far as our government is concerned, they want the money. So I don't know what the ratio is going to be. And that's what makes it such a difficult problem. So I don't know the ratio. I also don't know the quantity. And I have to plan for the circumstance that I have enough cash laying around to be able to pay any kind of conceivable tax. and even a big one. So I think you could look at 2024 Horizon Kinetics earnings in a very different light. Yes, it was the record earnings. That's great. But I think the checks that we paid to government, they're the record checks we ever paid. So we never had expenses that were that big. That's nothing we knew about. That's the law. We have to pay it. And it's possible it might happen again or even be bigger. So I don't know what the ratio is going to be. I hope we have it. It's a problem. I hope it's a very nice problem. And I would be delighted if it happens again. And all I can do is at the end of a quarter, when we have a number, we can look at it in retrospect. I will certainly report what the number is. But prospectively, just don't know.

I'm going to add just a little bit if I can. I would suggest that our cost structure is within... the normal or sort of kind of ongoing management fees, right? The management fees we get just from normal operations, sort of that lower base fee is an amount, right? And the cost structure is generally close to that amount. And then the performance fees are by their very nature going to be more variable from year to year. And then if you think about it from a quarter to quarter basis, Just want to make sure that our investors realize that, you know, you're not going to see that, you know, you're not going to see much dramatics on a Q1, Q2, Q3 basis because we, there's, you know, most of them have our, from a revenue reporting perspective, the revenue for the, or the calculation of incentives, we can calculate every quarter and we disclose it of what the unearned amount is every quarter, but it's not recorded as revenue until that contingency is resolved, right? Because it's based on the, performance of the underlying investments and we'll have a circumstance at the end of the year where that gets finalized and resolved and you can calculate how much the performance fee is for that particular calendar year. So it will continue to be a fourth quarter event and I would expect it continue to be variable based on the results that we achieve. I think we are coming, I just wanna just check one more time to see if we have any other questions in the chat. I think we are running about out of questions. Do a quick scan. I think we've covered all the topics that have been presented to us. If I didn't hit your questions, I apologize and certainly give me a call and we can talk about them separately. But Murray, did you have any other closing remarks that you want to make before we wrap it up?

Yeah, let me just say this. Obviously, we're going to reprise this in 90 days. And we actually read less 90 days because our first quarter is almost finished. So we can get the quarterly earnings faster. So we're going to be back to you in less 90 days, considerably less 90 days with the first quarter results. And I, of course, will answer any questions. now you'll be able to read document um easier document will look more like the historical document because as mark alluded to um we are calculating the uncrystallized performance fee quarterly but we're not booking it as revenue even unearned revenue um it's just a number that we compute internally um so we'll see how that goes and you'll be able to see so to speak our non performance fee profits. So what you'll see in this case is the expenses will be commensurate with the revenues we get. It'll look much more normal to you. And after the inclusionist call, if there's always a situation where you think I should have asked the following question, but you didn't ask that question, don't worry about it. Just send us a note or give us a call. We will get you an answer to your question. You don't have to wait until the next conference call. In any event, I look forward to doing this again. I thought the questions were really fabulous. And thanks for all the support. And with that, I'll just say good afternoon and see you shortly and talk to you shortly in the next call. Thanks so much.