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?

Well, it's not for me to comment on the Middle East. So I'll just give you some numbers, and maybe that'll answer all your questions. You might not know it and you might not believe it, but there is a Tehran. Tehran is capital of Iran. There is a Tehran stock exchange. You might not know it and you might not believe it, but there actually is a Tehran stock exchange index. By the way, there are index funds and ETFs. in tehran so it shows you how far things have gone so with all the war talk and everything else and before the war there was all the arrest it was all the civil unrest and what have you so the civil unrest you might recall started in the summer so i personally would date it um in august so on august 19th 2025 the tehran stock exchange index um traded an index price now this is not the way we calculate dow jones and a way of doing it it's actually calculated in the millions but the index value such as it was on that day was um I'm going to read this so I don't want to get it wrong. Let's see if I can get this. Here we go. Bear with me just one minute. I get the value right. So the index value on August 19th. Yeah, can't get August 19th. Maybe the market was closed that day. I'm going to have to give you August 10th, but in any event, August 10th, 2025, the index value was 2,562,000, August 10th, 2025. The most recent index value I have is February 24th, 2026. The most recent index value that I have is for reasons that I'm sure you will regard as self-evident. the Tehran Stock Exchange has not traded since February 24th, 2026. In any event, on that day, because there's no electric power and there's no internet and a lot of other things for reasons that are self-evident, in any event, the index value on February 24th, 2026 was $3,652,000, obviously a much higher number. So at least the investment community of Iran, such as it is, They think things are going to get a lot better. What a lot better means to the investors in the turnaround stock exchange, I leave it to your sensible judgment. But I think all of this is going to have a favorable outcome. I don't look for a runaway in oil prices. I think matters will be resolved fairly shortly. I don't think it's going to be resolved tomorrow, but I think it's going to be resolved fairly shortly. And it's not a major factor in my – my investment considerations. If they weren't resolved that way, if we ended up with a permanent oil crisis, obviously given our investments, that would be a positive development for us, even though it would be a negative development for other people. I don't expect a prolonged high oil price. So I hope that answers your question.

Okay, great. Another question, different topic, is about AI agents that are scaling. Do you have a view on how this technology could be affecting the themes of blockchain exchanges and natural resource royalty companies?

Well, I think the question is you're saying AI, meaning artificial intelligence. Did I hear that properly?

Yeah, the questioner uses the term AI agents, but you could extend that to bots or anything.

Okay. Well, as far as natural resources go, minimal to no effect. And the reason is the easier to extract natural resources have been extracted, and as a generalization even though there are exceptions and even with improvements in technology the natural resources are going progressively more difficult to extract and therefore as a generalization becoming more expensive to extract but that's not the primary consideration so i'll ask you to turn your attention to gold depends on the company but I would say as a generalization, most companies on an all-in sustaining cost basis can extract gold, let's say somewhere between $1,500 an ounce and $1,600 an ounce. Gold is over $5,000 an ounce. So that differential, the cost of extraction relative to price, that profit margin has never, as far as I have been able to see as far as data is published, ever been this big. So why is that big? In other words, let me rephrase my own question. Why is it not the case that the profit margins being so big, the companies, whether they're using artificial intelligence or not, why don't they just increase production? And the answer is the critical variable is not technology. The critical variable is getting the permission of governments to extract natural resources. And in most places in the world, that permission is being denied. Being denied because you ever visited a gold mine or saw pictures of a gold mine, as an example, it does not make the environment any better. Let's put it that way. It causes a host of environmental issues, which takes a lot of money and a lot of years to mitigate, and in some cases, can't really be entirely mitigated. So demand for gold rises. But the production doesn't increase. As a matter of fact, the second largest gold company in the world, this might shock you, you might want to check this, but I assure you these numbers are accurate. The second largest gold company in the world, Barrick, with all the increases in the price of gold, Barrick is not only this year going to experience decrease production, But this is going to be the sixth year of decreasing production. Supply is actually falling. And that's becoming more and more true of many commodities. It's just getting very, very difficult. There are many constraints. One constraint is water. It's a constraint on developing electric vehicles. I wrote about this many times. You really can't extract lithium from the earth without extracting groundwater. That lowers the water table, which most countries won't tolerate. Therefore, you can never extract enough lithium at a reasonable enough price to have a worldwide fleet of electric vehicles. There are many other reasons to go with this, but I won't bore you with. But there are constraints in extracting things. So I don't think artificial intelligence is going to do much to resolve any of that. And one more thing, which I don't think you asked your question, but I'll add it. just as my own commentary. A lot of people talk about the coming job replacements and all the people get made redundant because of artificial intelligence. And I really personally take great issue with that. I don't think it's true. I don't think it's going to happen. And it's a very lengthy discussion. And I'd be glad to discuss with people. But as a piece of evidence, I ask you to turn your attention to your 1900s Think about how many jobs were available in 1900 that earned A, not particularly skilled jobs, and B, skilled or unskilled, don't even exist today because they're nowhere to be met. Nevertheless, the worldwide demand for unskilled labor is the highest it's ever been. And if it weren't high, you wouldn't have a problem with immigration over the world. People want to immigrate. A lot of them are either low-skilled laborers or non-skilled laborers. They want to move countries, and there is demand for their labor. So I'm not making any commentary on the pluses or minuses of immigration. I'm just talking about there's demand for unskilled labor that's obviously unfulfilled, and it's greater at any time in history, which is one of the reasons why Migrations are greater than any time in history. That's all the machinery and the computers and the automation and everything else. So I know this. So the higher the standard of living of a nation is, the more low-skilled and unskilled labor and demand there is. And I invite you to consider any country in the world. It very much doesn't matter. So I don't think artificial intelligence is going to change that in any meaningful degree. So I hope that's a fulsome answer to your question.

Okay, thank you. A handful of other questions have come in, so I'm going to try to compare or combine a couple of these. On the topic of TPL, one person has noted or is asking about TPL's proportion as part of our overall AUM, and while we haven't substantially changed, I guess, our aggregate exposure or investments in TPL dramatically. The mix as a percentage of AUM could change from period to period, as other investments may go up or down in value. But more specific than that, we've had a question about a commenter has noted that TPL is up in 2026. And just for those that are listening, it's up about 75% so far year to date. And he wanted us to elaborate on how that would flow through to the company via management fees and earnings. Obviously a positive development. Okay.

Well, what it does is since We're not really trading it, so market value is higher, and therefore, all things being constant, which they usually are not, but in this case, our assets and our management are higher. Our expenses are more or less the same, not exactly the same, but more or less the same, and it's more revenue on more or less the same expense base. Here and there, an expense goes up, and here and there, we trim the expense, but the expenses are not radically different in any degree. and the revenue is higher, so that makes for higher operating income. That's the simplistic answer to it.

And, again, obviously a positive development for the company. Another couple questions are related to the trading of HKHC stock in particular. So if we have any update or thoughts about the float of the company or the liquidity of the shares themselves in the open market.

Okay. Well, I get this question a lot, so. About approximately half of Horizon Canix shares is owned by a private company called Horizon Common. That company is not selling any stocks. That's half right there. Various people that work in the company of whom one is me, I'm the holder of Horizon Common as well. I'm a buyer of the stock. Last time it was open window, I bought some shares. Horizon Common bought some shares. FMO Corporation bought some shares. A fund that the principals of Horizon hold jointly called HK Hard Assets bought some shares. So the only way the float is going to go up is meaningfully if the other shareholders sell some shares. Your shareholders are not disposed to sell very many shares. The only other thing we can do to get the float up is, now, some people think that's a horrifically bad thing if the float isn't high enough, because a higher float, some people associate that with a more robust share price. Well, in order to get there, you have to have people who would like to sell the company, and I think it's a pretty good thing that the shareholders don't want to sell the company. and they want to hang on to it but in any event the only other way we can do it is we would have to um issue stock to shareholders that would be inclined to sell it and what we get in the change is we get cash we reviewed the balance sheet we reviewed our liquidity we don't really need cash more cash for any pressing need so we could do an offering and get ourselves a primary listing if we were so inclined, but then we'd be deluding everybody. So the question is, is it worth it to issue some shares and put some more cash in the balance sheet with the views of making a stock more? Those are the only two ways it can happen. Now, some of the shareholders are older and I suspect for estate planning purposes are the reasons they will sell some shares. So matter of fact, I'm aware of one estate that's in the process of being settled that will probably want to sell some shares at some point in time, but time is not going to be tomorrow. What day is going to be, I don't have the slightest idea. So eventually, some shares will come out. I myself, as I said last time, I myself was a buyer of shares. So no windows. My history has been I've been a buyer. So beyond that, there's no other information to relate. So I hope that's an adequate answer to your question. If everybody wanted to do a stock offering for the purpose of liquidity and had a good reason and we had a good use of proceeds, I would consider it. But right now, I just don't have a good use of proceeds. So anyway, that's the best answer I can give.

Okay. We've had another one come in. We're going to go back to the topic of TPL and Bolt. The questioner has indicated that TPL stated it acquired approximately one-third of Bolt and that we've also disclosed an ownership position in Bolt through certain funds. And the questioner is asking approximately how much exposure to Bolt does HK have across its funds, and can you share any thoughts in general about the Bolt opportunity? Okay.

Yeah, well, this is a round number, so I don't have the exact number in front of me. But in round numbers, we own about 10% in bulk. That's in various funds. And, of course, HK is an investor in the funds, so we get that. It's roughly 10%. What I can tell you about Bolt is that it's making great progress, and in due course, Bolt itself will make some announcements and, you know, just an opinion. I think you'll be very favorably impressed with how it's coming along, but I really don't want to speak for Bolt. I think Bolt should speak for Bolt. So I'm going to, other than saying Bolt, I personally am very impressed with what Bolt is doing, but Beyond that, I'm going to leave it for Bolt to talk about Bolt, which I suspect they will do in the not-too-distant future.

Okay. That brings us to a close of questions. I have no other questions in the queue, and I'll just turn it back over to you if you want to say anything in closing, and we can call it a short call.

Okay, well, as you know, when we have these calls, I'm available to answer questions. It sometimes happens that a question occurs to one after the call has concluded. If that happens, and it's happened very frequently, don't hesitate to contact us. We will get you an answer. We don't really have any great secrets at Horizon itself. We're involved with other companies. and we don't like to speak for our investments other than to say that we're very impressed with the progress they're making, but we think our investments or the management's investments should speak for themselves. But if there are questions we can answer about Horizon or anything that's of interest, that's permissible to talk about. I'd be delighted to answer it, so don't hesitate to contact us. Of course, normally I say we're going to reprise this in about 90 days. But I think in this particular case, given the date, I think we're going to reprise this in less than 90 days. Is that accurate, Mark?

That is correct. That is correct. It will be the early to mid-May that investors should expect to see our 10Q and this call.

Okay. So at that time, we're going to have a 10Q. and shortly thereafter we're going to have q a and i hope to see all of you then and i'll be delighted to answer any questions in the interim and failing that i'll be available on next call so thanks for your interest and thanks for attending and i'm going to sign off and just say good afternoon thanks again