Horizon Kinetics Holding

Good afternoon, everyone. Thank you for joining us for this call. My name is Mark Herndon, Chief Financial Officer of Horizon Connect. We're pleased to have you join us for our call that will cover our results for the fourth quarter and full year of 2025. But first, a reminder that today's presentation may include forward-looking statements. Reliance on forward-looking statements involves 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, intend may be used in our discussion of our goals or events in the future. Management cannot provide any assurance that future results will be 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 future results. It should not be assumed that any of the security transactions referenced today have been or will be proved to be profitable. or that future investment decisions will be profitable or will equal or exceed the 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 fund any forward-looking statements made today. These filings can 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 Chief Executive Officer. 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 on the telephone connection will be in listen-only mode. So, again, if you are on the GoToMeeting platform, you can submit the questions via the chat function, and I will direct those questions or please direct those questions to the presenters, and I will summarize and relay as best I can so that we can address as many questions as possible. I'd also like to provide a reminder to you that our Form 10Q, excuse me, our Form 10K continues the required GAAP presentation that includes certain proprietary funds as consolidated entities. And our press release continues to include a non-GAAP presentation supplement that presents our financial statements excluding those funds. And we refer to that presentation as the advisor-only presentation. Consistent with what we have previously reported, this is a presentational matter that does not impact the company's earnings available to HKHC shareholders or the shareholders' equity of HKHC. And now, just as a brief backdrop to our discussion, the company continues to perform favorably for our HKAC shareholders. The company recorded revenues of $17 million for the quarter and $72.8 million for the full year of 2025. These results represented a 6% decrease for the quarter. and a 30.5% increase for the full year. These results continued the company's revenue growth and experience throughout 2025 based on higher overall average AUM during the period. Our mutual fund portfolio led the revenue growth, particularly at the Paradigm Fund, the Market Opportunity Fund, and the Small Cap Fund. At the advisor-only level, as presented in our supplemental table with the press release, operating income was $5.3 million for the fourth quarter and $21.4 million for the full year. These results are lower than 2024, as we did not have the benefit of the 2024 incentive fee, which was $51.7 million, which impacts the comparability between the two years. Overall, the company recorded a net loss of 78 cents per share for the quarter and net income of 28 cents per share for the 2025 annual period. The quarter's net loss was the result of a negative swing in our investment results, particularly related to Bitcoin-linked investments. And I should emphasize again that our net income or loss will often be impacted by swings and unrealized gains or losses associated with these investments, including digital assets. For example, our fourth quarter included an aggregate of $29 million of unrealized losses related to investment securities and equity holdings in our proprietary funds. and those unrealized losses compared to the fourth quarter of 2024, which had unrealized gains aggregating $50.9 million. This is just an illustration of what we have previously noted for you, and that we may continue to see volatility from quarter to quarter. From a balance sheet perspective, the company continues to have substantial cash and investments, including amounts outside of the consolidated investment products. And we have no third-party debt. Our long-term liabilities are limited to the various long-term office space leases. And lastly, I'll comment on dividends. The company paid a total of 39.5 cents per share in dividends during 2025, and the company's board recently declared a 12.1 cents per share dividend to be paid in the first quarter of 2026. That dividend will be paid on March 31st for shareholders of record as of March 23rd. So with that as backdrop, I'll turn it over to Murray for some opening comments.

Okay. Thank you, Mark, and thanks, everybody, for joining us. So, with that backdrop, you'll see with the consolidation, it makes it difficult to understand what's going on. So, I'll try to break it down very simply into a couple of components, make it easier to understand. So, let's start in the year 2025. We have $21.4 million of operating income. That operating income, represents the business in a normalized basis, excluding performance space. So that $21.4 million has a value, and you can put any multiple you like on it. And there's also another piece of cash flow, interest and dividends. And that was $2.3 million because we have substantial liquidity in this company. So, $21.4 million of operating income, $2.3 million of interest and dividend income, apply whatever you think the tax rate is. That's the base business. There's a second component. Second component is the assets that we have, almost all of which are liquid. They could be turned into cash very quickly. So, we have $36 million in cash in the balance sheet. At year end, we had $76 million we call fair value investments, meaning mark-to-market, and $220 million of what's called on the balance sheet other investments. They're basically investments in our various funds, most of which are interest funds. It's a fancy way for saying they charge performance fees. And we had $12.5 million worth of digital assets. Those are cryptocurrencies, primarily Bitcoin. And that has a value. It's fairly straightforward. You can add those numbers up. Now, what's happening in the businesses? Well, there is, in addition to normal business, there are some new businesses, one of which is the ETF business. So you might have observed in the last several years, we've been launching ETFs, the largest of which is the inflation ETF. We launched a couple years ago a blockchain development ETF that owns a lot of exchanges. We have a Texas ETF that we launched at the end of the January of this year, 2026. And there's a Japan ETF. There is an energy development ETF. There's an ETF to invest in SPACs, SPACs are S-P-A-Q, special purpose acquisition companies. All together, the ETF business has and I didn't list all of the ETFs. We have over a billion and a half dollars worth of AUM. We're very, very interested in growing that business. Then something that's relatively new, we've established private funds. There are two dimensions to private funds. I'm going to read some names. We have funds that are single-purpose funds that invest in a certain security. They're private. And then these securities, the private ones, also find their way into various horizon proprietary funds so to mention some names we have a fund invest in the company called sandbox aq it's involved in high performance mathematical models or computationally intensive mathematical models is where i should say We have a fund that invested in Bolt Technology. The Bolt Technology Company is the company that joint ventured with Texas Pacific to build data centers in the Permian Basin. There is the Canadian Security Exchange, which is the second security exchange in Canada. has all the rights and privileges of Toronto Stock Exchange. It's growing fairly nicely. It's something called Tetra Trust. Tetra Trust is a custodian of cryptocurrencies that is launching, or maybe I should say has launched, a stablecoin in Canadian dollars. It will be the first Canadian dollar stablecoin at the moment. Stablecoin market, which is growing very rapidly in the world. is dollar-dominated. To the best of my knowledge, there is no Canadian dollar stablecoin. If there is one, its size is fairly de minimis. Tetra is partnering with some very large institutions. I'm very hopeful that's going to be successful. We have a fund that invests in private royalties, although it has some public securities as well, so it's a mix. I count that among the private funds. And then there is MyEx. So MyEx is the outgrowth of some private investments we made years ago. We invested in MyEx directly, and we also invested in the Minneapolis Grading Exchange, of which we are the largest holder for a number of years. And we invested in the Bermuda Stock Exchange, private exchange, in which we are the largest holder for a number of years. Those two exchanges merged with MyEx. we ended up with MIAC shares. MIACs in August 2025 became publicly traded company. So, we are entitled to a performance fee that we did not recognize in the fourth quarter of 2025, but we were highly likely to recognize in the first quarter of 2026, and there is some verbiage in the 10K about it. It's not easy to see, which is another way of saying it's very easy to miss. But in round numbers, you might think of a sum of the best estimate I can give you is $22 million of performance fees. You can see this performance fee is the size more or less of the operating income. entirety of 2025 and you can see why the private investments are so important and you can also see it in the 2024 performance fees except 2024 performance fees were made by publicly traded securities we can still make those fees in 2026 but to do that the difference between the private funds and the public funds are the public funds fluctuate and we can attain a high watermark but we might not stay that high watermark every year and therefore we might episodically miss a year or two in performance fees there was a private equity you leave the or the predominant practices you leave the investment at cost until you have a reason to change it either positively negatively um and um If it's positive, you accrue performance fee. If there's a realization event, you collect the performance fee. So that's the way it is. So the potential to collect performance fees is greater than any time in our history. And one other thing I'd like to mention is a private investment. It's not in any fund. Just made it to ourselves. We own the company called Hashmaster. Sometimes we refer to it as HM Tech. it was involved in mining bitcoin and we merged that with another private company called syntek s-y-n-t-q and now we are a proud investor of this company syntek and we've received a fair amount of compensation for that largely in syntek equity so we're carrying that at its cost value, meaning the value that we collected at the time. And we have high hopes for that as well. So there's a lot of asset power in this company, a lot of potential earnings power in this company, and a tremendous amount of liquidity in this company. So that gives you an overview of what we're up to. And I think now is a great time to go to questions. If there are any questions, I'd be delighted to

Okay. We don't have much, but I'll start with one about recent developments in the Middle East. And the question is, have your long-term forecast for commodity prices or inflation in general changed in any meaningful way?