Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 26, 2017 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | DIAMOND HILL INVESTMENT GROUP INC | |
Entity Central Index Key | 909,108 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 3,469,263 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 89,890,396 | $ 57,189,876 |
Investment portfolio | 129,743,381 | 108,015,635 |
Accounts receivable | 17,711,289 | 18,605,209 |
Prepaid expenses | 2,210,563 | 2,032,726 |
Income taxes receivable | 1,543,958 | 1,111,890 |
Property and equipment, net of depreciation | 3,689,621 | 4,025,758 |
Deferred taxes | 10,390,291 | 8,736,767 |
Total assets | 255,179,499 | 199,717,861 |
Liabilities | ||
Accounts payable and accrued expenses | 10,404,894 | 9,787,048 |
Accrued incentive compensation | 21,060,000 | 22,683,500 |
Deferred compensation | 19,571,038 | 14,182,470 |
Total liabilities | 51,035,932 | 46,653,018 |
Redeemable noncontrolling interest | 19,464,643 | 13,840,688 |
Shareholders’ equity | ||
Common stock, no par value 7,000,000 shares authorized; 3,468,565 issued and outstanding at September 30, 2017 (inclusive of 203,650 unvested shares); 3,411,556 issued and outstanding at December 31, 2016 (inclusive of 201,800 unvested shares) | 119,167,093 | 109,293,803 |
Preferred stock, undesignated, 1,000,000 shares authorized and unissued | 0 | 0 |
Deferred equity compensation | (20,240,809) | (17,728,106) |
Retained earnings | 85,752,640 | 47,658,458 |
Total shareholders’ equity | 184,678,924 | 139,224,155 |
Total liabilities and shareholders’ equity | $ 255,179,499 | $ 199,717,861 |
Book value per share (usd per share) | $ 53.24 | $ 40.81 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (usd per share) | ||
Common stock, shares authorized | 7,000,000 | 7,000,000 |
Common stock, shares issued | 3,468,565 | 3,411,556 |
Common stock, shares outstanding | 3,468,565 | 3,411,556 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred Stock, shares Outstanding | ||
Unvested shares | 203,650 | 201,800 |
Consolidated Statements of Inco
Consolidated Statements of Income (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUES: | ||||
Investment advisory | $ 33,782,603 | $ 29,512,076 | $ 98,105,905 | $ 84,751,943 |
Mutual fund administration, net | 2,989,026 | 3,425,165 | 9,247,339 | 11,312,222 |
Total revenue | 36,771,629 | 32,937,241 | 107,353,244 | 96,064,165 |
OPERATING EXPENSES: | ||||
Compensation and related costs | 14,446,102 | 12,714,404 | 42,438,985 | 38,494,459 |
General and administrative | 3,088,000 | 2,994,186 | 9,556,585 | 8,055,287 |
Sales and marketing | 1,230,306 | 1,052,101 | 3,612,877 | 3,106,269 |
Mutual fund administration | 1,119,889 | 1,037,987 | 3,149,242 | 2,865,905 |
Total operating expenses | 19,884,297 | 17,798,678 | 58,757,689 | 52,521,920 |
NET OPERATING INCOME | 16,887,332 | 15,138,563 | 48,595,555 | 43,542,245 |
Investment income, net | 2,767,747 | 3,555,368 | 9,673,720 | 4,995,255 |
Gain on sale of subsidiary | 0 | 2,675,766 | 0 | 2,675,766 |
INCOME BEFORE TAXES | 19,655,079 | 21,369,697 | 58,269,275 | 51,213,266 |
Income tax expense | (6,496,980) | (7,700,732) | (19,018,708) | (18,497,315) |
NET INCOME | 13,158,099 | 13,668,965 | 39,250,567 | 32,715,951 |
Less: Net income attributable to redeemable noncontrolling interest | (459,252) | (242,401) | (1,156,385) | (309,172) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 12,698,847 | $ 13,426,564 | $ 38,094,182 | $ 32,406,779 |
Earnings per share attributable to common shareholders | ||||
Basic (USD per share) | $ 3.68 | $ 3.93 | $ 11.07 | $ 9.52 |
Diluted (USD per share) | $ 3.67 | $ 3.93 | $ 11.05 | $ 9.50 |
Weighted average shares outstanding | ||||
Basic (in shares) | 3,454,178 | 3,413,164 | 3,442,402 | 3,405,460 |
Diluted (in shares) | 3,461,418 | 3,420,123 | 3,447,976 | 3,410,208 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interest (unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Total | Common Stock | Deferred Equity Compensation | Retained Earnings |
Beginning balance (shares) at Dec. 31, 2016 | 3,411,556 | 3,411,556 | ||
Beginning Balance at Dec. 31, 2016 | $ 139,224,155 | $ 109,293,803 | $ (17,728,106) | $ 47,658,458 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of restricted stock grants (shares) | 47,100 | |||
Issuance of restricted stock grants | 0 | $ 7,679,436 | (7,679,436) | |
Amortization of restricted stock grants | 4,990,463 | 4,990,463 | ||
Issuance of stock grants (shares) | 19,219 | |||
Issuance of stock grants | 3,892,424 | $ 3,892,424 | ||
Issuance of common stock related to 401k plan match (shares) | 6,359 | |||
Issuance of common stock related to 401k plan match | 1,267,649 | $ 1,267,649 | ||
Shares withheld related to employee tax withholding (shares) | (13,919) | |||
Shares withheld related to employee tax withholding | (2,789,949) | $ (2,789,949) | ||
Forfeiture of restricted stock grants (shares) | (1,750) | |||
Forfeiture of restricted stock grants | 0 | $ (176,270) | 176,270 | |
Net Income (Loss) Attributable to Parent | $ 38,094,182 | 38,094,182 | ||
Ending balance (shares) at Sep. 30, 2017 | 3,468,565 | 3,468,565 | ||
Ending Balance at Sep. 30, 2017 | $ 184,678,924 | $ 119,167,093 | $ (20,240,809) | $ 85,752,640 |
Beginning balance attributable to redeemable noncontrolling Interests at Dec. 31, 2016 | 13,840,688 | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Net Income Attributable to Redeemable Noncontrolling Interest | 1,156,385 | |||
Net subscriptions of consolidated funds | 4,467,570 | |||
Ending balance attributable to redeemable noncontrolling Interests at Sep. 30, 2017 | $ 19,464,643 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income | $ 39,250,567 | $ 32,715,951 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 659,707 | 496,250 |
Share-based compensation | 6,258,112 | 6,259,300 |
Decrease in accounts receivable | 143,920 | 1,612,207 |
Change in current income taxes | (432,068) | 5,780,008 |
Change in deferred income taxes | (1,653,524) | 82,427 |
Gain on sale of subsidiary | 0 | (2,675,766) |
Net gains on investments | (7,829,950) | (4,212,479) |
Net change in trading securities held by Consolidated Funds | (5,639,151) | (29,436,380) |
Decrease (increase) in accrued incentive compensation | 2,268,924 | (1,950,069) |
Increase in deferred compensation | 5,388,568 | 3,133,176 |
Excess income tax benefit from share-based compensation | 0 | (4,652,983) |
Income tax benefit from dividends paid on restricted stock | 0 | (925,000) |
Other changes in assets and liabilities | 2,188,850 | 1,929,846 |
Net cash provided by operating activities | 40,603,955 | 8,156,488 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (509,750) | (339,638) |
Purchase of Company sponsored investments | (13,372,301) | (17,468,890) |
Proceeds from sale of Company sponsored investments | 1,995,690 | 18,717,308 |
Proceeds from sale of subsidiary, net of cash disposed | 750,000 | 1,163,769 |
Net cash provided by (used in) investing activities | (11,136,361) | 2,072,549 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Value of shares withheld related to employee tax withholding | (2,789,949) | (9,655,747) |
Excess income tax benefit from share-based compensation | 0 | 4,652,983 |
Income tax benefit from dividends paid on restricted stock | 0 | 925,000 |
Net subscriptions received from redeemable noncontrolling interest holders | 6,022,875 | 33,730 |
Net cash provided by (used in) financing activities | 3,232,926 | (4,044,034) |
CASH AND CASH EQUIVALENTS | ||
Net change during the period | 32,700,520 | 6,185,003 |
At beginning of period | 57,189,876 | 57,474,777 |
At end of period | 89,890,396 | 63,659,780 |
Supplemental cash flow information: | ||
Income taxes paid | 21,104,300 | 12,634,880 |
Supplemental disclosure of non-cash transactions: | ||
Common stock issued as incentive compensation | 3,892,424 | 3,879,431 |
Charitable donation of corporate investments and property and equipment | 1,748,841 | 1,729,735 |
Cumulative-effect adjustment from the adoption of ASU 2015-02 (Note 2) | 0 | 4,031,756 |
Net issuance (redemption) of ETF shares for marketable securities | $ (1,555,305) | $ (244,200) |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and Organization Diamond Hill Investment Group, Inc. (the "Company"), an Ohio corporation, derives its consolidated revenues and net income from investment advisory and fund administration services. Diamond Hill Capital Management, Inc. ("DHCM"), an Ohio corporation, is a wholly owned subsidiary of the Company and a registered investment adviser. DHCM is the investment adviser to the Diamond Hill Funds (the "Funds"), a series of open-end mutual funds, private investment funds ("Private Funds"), an exchange traded fund (the "ETF"), and other institutional accounts. In addition, DHCM is administrator for the Funds. Beacon Hill Fund Services, Inc. (“BHFS”) and BHIL Distributors, Inc. (“BHIL”), collectively operated as "Beacon Hill," were operating subsidiaries of the Company. The Company sold Beacon Hill on July 31, 2016 (See Note 10 ). Prior to the sale, Beacon Hill provided compliance, treasury, underwriting and other fund administration services to investment advisers and mutual funds. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of September 30, 2017 and December 31, 2016 , and for the three- and nine- month periods ended September 30, 2017 and 2016 , for Diamond Hill Investment Group, Inc. and its subsidiaries (referred to in these notes to the condensed consolidated financial statements as "the Company," "management," "we," "us," and "our") have been prepared in accordance with United States generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission ("SEC") Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair statement of the financial condition and results of operations at the dates and for the interim periods presented, have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for any full fiscal year. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (" 2016 Annual Report") as filed with the SEC. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions related to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Reclassification Certain prior period amounts and disclosures may have been reclassified to conform to the current period's financial presentation. Principles of Consolidation The accompanying consolidated financial statements include the operations of the Company and its controlled subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. The Company holds certain investments in the Funds and the ETF for general corporate investment purposes, to provide seed capital for newly formed strategies or to add capital to existing strategies. The Funds are organized in a series fund structure in which there are multiple mutual funds within one Trust. The Trust is an open-end investment company registered under the Investment Company Act of 1940, as amended (the"1940 Act"). The ETF is an individual series of ETF Series Solutions which is also an open-end investment company registered under the 1940 Act. Each of the individual mutual funds and the ETF represent a separate share class of a legal entity organized under the Trust. As of January 1, 2016, the Company adopted ASU 2015-02 - Consolidation (Topic 810): Amendments to the Consolidation Analysis ("ASU 2015-02") and we have performed our analysis at the individual mutual fund and ETF level and have concluded the mutual funds and ETF are voting rights entities ("VREs"). The Company has concluded that the mutual funds and the ETF are VREs because the structure of the investment product is such that the shareholders are deemed to have the power through voting rights to direct the activities that most significantly impact the entity's economic performance. To the extent material, these investment products are consolidated if Company ownership, directly or indirectly, represents a majority interest (greater than 50%). The Company records redeemable noncontrolling interests in consolidated investments for which the Company's ownership is less than 100%. The Company has consolidated the ETF and one of our individual mutual funds (collectively the "Consolidated Funds") as our ownership was greater than 50% in each. DHCM is the managing member of Diamond Hill General Partner, LLC (the “General Partner”), the general partner of Diamond Hill Investment Partners, L.P. (“DHIP”), Diamond Hill Global Fund, L.P. ("DHGF"), and Diamond Hill International Equity Fund, L.P. ("DHIEF"), each a limited partnership (collectively, the "Partnerships" or “LPs”) whose underlying assets consist primarily of marketable securities. DHCM is wholly owned by the Company and is consolidated by us. Further, DHCM, through its control of the General Partner, has the power to direct each LP’s economic activities and the right to receive investment advisory fees that may be significant to the LPs. The Company concluded we did not have a variable interest in DHIP as the fees paid to the General Partner are considered to contain customary terms and conditions as found in the market for similar products and the Company has no equity ownership in DHIP. The Company concluded DHGF and DHIEF were variable interest entities ("VIEs") as DHCM has disproportionately less voting interests than economic interests in each LP, given the limited partners have full power to remove the Company as the General Partner due to the existence of substantive kick-out rights. In addition, substantially all of the LPs' activities are conducted on behalf of the General Partner which has disproportionately few voting rights. The Company concluded we are not the primary beneficiary of DHGF or DHIEF as we lack the power to control the entities due to the existence of single-party kick-out rights where the limited partners have the unilateral ability to remove the General Partner without cause. DHCM’s investments in DHGF and DHIEF are reported as a component of the Company’s investment portfolio, valued at DHCM’s respective share of the net income or loss of each LP. The LPs are not subject to lock-up periods and can be redeemed on demand. Gains and losses attributable to changes in the value of DHCM’s interests in the LPs are included in the Company’s reported investment income. The Company’s exposure to loss as a result of its involvement with the LPs is limited to the amount of its investments. DHCM is not obligated to provide, and has not provided, financial or other support to the LPs, other than its investments to date and its contractually provided investment advisory responsibilities. The Company has not provided liquidity arrangements, guarantees or other commitments to support the LPs’ operations, and the LPs’ creditors and interest holders have no recourse to the general credit of the Company. Certain board members, officers and employees of the Company invest in the LPs and are not subject to a management fee or an incentive fee. These individuals receive no remuneration as a result of their personal investment in the LPs. The capital of the General Partner is not subject to a management fee or an incentive fee. Redeemable Noncontrolling Interest Redeemable noncontrolling interest represents third-party interests in the Consolidated Funds. This interest is redeemable at the option of the investors and therefore is not treated as permanent equity. Redeemable noncontrolling interest is remeasured at redemption value, which approximates the fair value each reporting period. Segment Information Management has determined that the Company operates in one business segment, providing investment management and administration services to mutual funds, institutional accounts, and private investment funds. Therefore, no disclosures relating to operating segments are presented in the Company's annual or interim financial statements. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market mutual funds. Accounts Receivable Accounts receivable are recorded when they are due and are presented on the balance sheet net of any allowance for doubtful accounts. Accounts receivable are written off when they are determined to be uncollectible. Any allowance for doubtful accounts is estimated based on the Company’s historical losses, existing conditions in the industry, and the financial stability of the individuals or entities that owe the receivable. No allowance for doubtful accounts was deemed necessary at September 30, 2017 or December 31, 2016 . Accounts receivable from the Funds were $10.7 million as of September 30, 2017 and $10.4 million as of December 31, 2016 . Investments Management determines the appropriate classification of its investments at the time of purchase and re-evaluates its determination at each reporting period. Investments classified as trading represent investments in the Funds we advise where the Company has neither control nor the ability to exercise significant influence, as well as securities held in the Consolidated Funds. These investments are measured at fair value based on quoted market prices. Unrealized gains and losses are recorded as investment income (loss) in the Company's consolidated statements of income. Investments classified as equity method investments represent investments in which the Company owns between 20-50% of the outstanding voting interests in the entity or when it is determined that the Company is able to exercise significant influence but not control over the investments. When using the equity method, the Company recognizes its respective share of the investee's net income or loss for the period which is recorded as investment income in the Company's consolidated statements of income. Fair Value Measurements Accounting Standards Codification Topic 820, Fair Value Measurement ("ASC 820") specifies a hierarchy of valuation classifications based on whether the inputs to the valuation techniques used in each valuation classification are observable or unobservable. These classifications are summarized in the three broad levels listed below: Level 1 - Unadjusted quoted prices for identical instruments in active markets. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-driven valuations in which all significant inputs are observable. Level 3 - Valuations derived from techniques in which significant inputs are unobservable. Inputs used to measure fair value might fall in different levels of the fair value hierarchy, in which case the Company defaults to the lowest level input that is significant to the fair value measurement in its entirety. These levels are not necessarily an indication of the risk or liquidity associated with investments. The following table summarizes investments that are recognized in our consolidated balance sheet using fair value measurements (excludes investments classified as equity method investments) determined based upon the differing levels of inputs as of September 30, 2017 : Level 1 Level 2 Level 3 Total Cash equivalents $ 89,125,334 $ — $ — $ 89,125,334 Trading Investments Securities held in Consolidated Funds (a) 17,948,350 47,158,391 — 65,106,741 Company sponsored investments 34,883,067 — — 34,883,067 (a) Of the securities held in the Consolidated Funds as of September 30, 2017 , $41.9 million were held directly by the Company and $23.2 million were held by noncontrolling shareholders. Level 1 investments are all registered investment companies (mutual funds) or securities held in the Consolidated Funds and include $89.1 million of investments in money market mutual funds that the Company classifies as cash equivalents. Level 2 investments are comprised of investments in debt securities, which are valued by an independent pricing service using pricing techniques which take into account factors such as trading activity, readily available market quotations, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit rates and other observable inputs. The Company determines transfers between fair value hierarchy levels at the end of the reporting period. There were no transfers in or out of the levels during the nine months ended September 30, 2017 . Changes in fair values of the investments are recorded in the Company's consolidated statements of income as investment income (loss). Property and Equipment Property and equipment, consisting of leasehold improvements, computer equipment, furniture, and fixtures, are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated lives of the assets. Revenue Recognition – General The Company earns substantially all of its revenue from investment advisory and fund administration services. Investment advisory and administration fees, generally calculated as a percentage of assets under management ("AUM"), are recorded as revenue as services are performed. In addition to fixed fees based on a percentage of AUM, certain client accounts also provide periodic variable fees. Total revenue from the Funds was $29.6 million and $25.9 million for the three months ended September 30, 2017 and 2016 , respectively. Total revenue from the Funds was $86.2 million and $73.9 million for the nine months ended September 30, 2017 and 2016 , respectively. Revenue Recognition – Variable Fees The Company manages certain client accounts that provide for variable fees. These fees are calculated based on client investment results over rolling five -year periods. The Company records variable fees at the end of the contract measurement period. No variable fees were earned during the three and nine months ended September 30, 2017 or 2016 . The table below shows AUM subject to variable fees and the amount of variable fees that would be recognized based upon investment results as of September 30, 2017 : As of September 30, 2017 AUM subject to variable fees Unearned variable fees Contractual Period Ends: Quarter Ended December 31, 2018 $ 107,864,155 $ 1,379,545 Quarter Ended September 30, 2019 34,040,712 495,418 Quarter Ended March 31, 2020 11,680,413 — Quarter Ended September 30, 2021 264,626,823 1,971,752 Total $ 418,212,103 $ 3,846,715 The contractual end dates highlight the time remaining until the variable fees are scheduled to be earned. The amount of variable fees that would be recognized based upon investment results as of September 30, 2017 will increase or decrease based on future client investment results through the contractual period end. There can be no assurance that the unearned amounts will ultimately be earned. Revenue Recognition – Mutual Fund Administration DHCM has an administrative and transfer agency services agreement with the Funds under which DHCM performs certain services for each Fund. These services include mutual fund administration, fund accounting, transfer agency and other related functions. For performing these services each Fund pays DHCM a fee, which is calculated using an annual rate times the average daily net assets of each respective share class. The Funds have selected and contractually engaged certain vendors to fulfill various services to benefit the Funds’ shareholders or to satisfy regulatory requirements of the Funds. These services include, among others, required shareholder mailings, federal and state registrations, and legal and audit services. DHCM, in fulfilling a portion of its role under the administration agreement with the Funds, acts as agent to pay these obligations of the Funds. Each vendor is independently responsible for fulfillment of the services it has been engaged to provide and negotiates fees and terms with the management and board of trustees of the Funds. The fee that each Fund pays to DHCM is reviewed annually by the Funds’ board of trustees and specifically takes into account the contractual expenses that DHCM pays on behalf of the Funds. As a result, DHCM is not involved in the delivery or pricing of these services and bears no risk related to these services. Revenue has been recorded net of these Fund related expenses, in accordance with FASB ASC 605-45, Revenue Recognition – Principal Agent Considerations . In addition, DHCM advances the upfront commissions that are paid to brokers who sell Class C shares of the Funds. These advances are capitalized and amortized over 12 months to correspond with the repayments DHCM receives from the principal underwriter to recoup this commission advancement. Prior to the sale of Beacon Hill, the Company, through Beacon Hill, had underwriting and administrative service agreements with certain clients, including registered mutual funds. The fee arrangements varied from client to client based upon services provided and have been recorded as revenue under mutual fund administration on the Company's consolidated statements of income. Part of Beacon Hill’s role as underwriter was to act as an agent on behalf of its mutual fund clients to receive 12b-1/service fees and commission revenue and facilitate the payment of those fees and commissions to third parties who provide services to the funds and their shareholders. The majority of 12b-1/service fees were paid to independent third parties and the remainder were retained by the Company as reimbursement for expenses the Company had incurred. The amounts of 12b-1/service fees and commissions were determined by each mutual fund client, and Beacon Hill bore no financial risk related to these services. As a result, 12b-1/service fees and commission revenue was recorded net of the expense payments to third parties, in accordance with the appropriate accounting treatment for this agency relationship. Mutual fund administration gross and net revenue are summarized below: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Mutual fund administration: Administration revenue, gross $ 6,557,054 $ 6,445,936 $ 19,432,002 $ 20,557,388 12b-1/service fees and commission revenue received from fund clients — 933,752 — 6,360,400 12b-1/service fees and commission expense payments to third parties — (831,198 ) — (5,660,429 ) Fund related expense (3,576,598 ) (3,136,319 ) (10,214,948 ) (9,958,315 ) Revenue, net of related expenses 2,980,456 3,412,171 9,217,054 11,299,044 DHCM C-Share financing: Broker commission advance repayments 101,238 157,732 315,283 558,641 Broker commission amortization (92,668 ) (144,738 ) (284,998 ) (545,463 ) Financing activity, net 8,570 12,994 30,285 13,178 Mutual fund administration revenue, net $ 2,989,026 $ 3,425,165 $ 9,247,339 $ 11,312,222 Mutual fund administrative net revenue from the Funds was $3.0 million for both the three months ended September 30, 2017 and 2016 . Mutual fund administrative net revenue from the Funds was $9.2 million and $8.8 million for the nine months ended September 30, 2017 and 2016 , respectively. Income Taxes The Company accounts for current and deferred income taxes through an asset and liability approach. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is subject to examination by federal and applicable state and local jurisdictions for various tax periods. The Company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which it does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws among those jurisdictions, as well as the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company’s estimates of income tax liabilities may differ from actual payments or assessments. The Company regularly assesses its position with regard to tax exposures and records liabilities for these uncertain tax positions and related interest and penalties, if any, according to the principles of FASB ASC 740, Income Taxes . As of September 30, 2017 , the Company had not recorded any liability for uncertain tax positions. The Company records interest and penalties, if any, within income tax expense on the income statement. Earnings Per Share Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income by the weighted average number of Common Shares outstanding for the period, which includes participating securities. Diluted EPS reflects the potential dilution of EPS due to unvested restricted stock units. See Note 8 . Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers", which supersedes existing accounting standards for revenue recognition and creates a single framework. ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This standard also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. This ASU will supersede much of the existing revenue recognition guidance in GAAP and is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period, and requires either a retrospective or a modified retrospective approach to adoption. Early application is permitted for the first interim period within annual reporting periods beginning after December 15, 2016. We anticipate adopting the new ASU on its effective date, January 1, 2018, and expect to utilize the full retrospective approach. Our implementation efforts include a detailed review of revenue contracts within the scope of the guidance and evaluation of the impact on the Company's revenue recognition policies. While we are continuing to assess the potential impacts of the ASU on our financial position and results of operations, we believe that the adoption of this ASU will not have an impact on revenue recognition. While we have not identified changes in the timing of revenue recognition, we continue to evaluate the related disclosures. In February 2016, the FASB issued ASU 2016-02, "Leases", which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase the reported assets and liabilities of lessees - in some cases significantly. Lessor accounting remains substantially similar to current GAAP. ASU 2016-02 supersedes Topic 840, Leases . ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures. |
Investment Portfolio
Investment Portfolio | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Portfolio | Investment Portfolio As of September 30, 2017 , the Company held investments (excluding money market funds, which are included with cash and cash equivalents) worth $129.7 million . The following table summarizes the carrying value of these investments as of September 30, 2017 and December 31, 2016 : As of September 30, 2017 December 31, 2016 Trading investments: Securities held in Consolidated Funds (a) $ 65,106,741 $ 57,355,471 Company sponsored investments 34,883,067 9,322,118 Company sponsored equity method investments 29,753,573 41,338,046 Total Investment portfolio $ 129,743,381 $ 108,015,635 (a) Of the securities held in the Consolidated Funds as of September 30, 2017 , $41.9 million were held directly by the Company and $23.2 million were held by noncontrolling shareholders. Of the securities held in the Consolidated Funds as of December 31, 2016 , $42.6 million were held directly by the Company and $14.7 million were held by noncontrolling shareholders. As of September 30, 2017 , our equity method investees consisted of the Diamond Hill High Yield Fund, the Diamond Hill Research Opportunities Fund, DHGF, and DHIEF and our ownership percentages in these funds were 47% , 22% , 95% , and 30% , respectively. The Company's equity method investments consist of cash, marketable equity securities and fixed income securities. The following table includes the condensed summary financial information from the Company's equity method investments as of and for the period ended September 30, 2017 : As of September 30, 2017 Total assets $ 130,983,409 Total liabilities 36,624,404 Net assets 94,359,005 DHCM's portion of net assets 29,753,573 For the Three Months Ended For the Nine Months Ended September 30, 2017 September 30, 2017 Investment income $ 643,059 $ 2,164,621 Expenses 300,273 865,475 Net realized gains 599,849 3,171,574 Net change in unrealized appreciation/depreciation (726,509 ) 2,887,675 Net income 216,126 7,358,395 DHCM's portion of net income 324,189 2,372,528 |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Line of Credit | Line of Credit The Company has an uncommitted Line of Credit Agreement (the "Credit Agreement") with a commercial bank that matures in November of 2017 and permits the Company to borrow up to $25.0 million . Borrowings under the Credit Agreement bear interest at a rate equal to LIBOR plus 1.50% . The Company has not borrowed under the Credit Agreement as of and for the period ended September 30, 2017 . No interest is payable on the unused portion of the Credit Agreement. The proceeds of the Credit Agreement may be used by the Company and its subsidiaries for ongoing working capital needs, to seed new investment strategies and other general corporate purposes. The Credit Agreement contains representations, warranties and covenants that are customary for agreements of this type. |
Compensation Plans
Compensation Plans | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Compensation Plans | Compensation Plans Share-Based Payment Transactions The Company issues restricted stock units and restricted stock awards (collectively, "Restricted Stock") under the 2014 Equity and Cash Incentive Plan ("2014 Plan"). Restricted stock units represent shares which may be issued in the future, whereas restricted stock awards represent common shares issued and outstanding upon grant subject to vesting restrictions. The following table represents a roll-forward of outstanding Restricted Stock and related activity during the nine months ended September 30, 2017 : Shares Weighted-Average Grant Date Price per Share Outstanding Restricted Stock as of December 31, 2016 223,800 $ 132.96 Grants issued 37,600 204.24 Grants vested (43,500 ) 95.86 Grants forfeited (1,750 ) 100.73 Total Outstanding Restricted Stock as of September 30, 2017 216,150 $ 153.08 As of September 30, 2017 , there were 356,261 Common Shares available for awards under the 2014 Plan. Total deferred equity compensation related to unvested Restricted Stock grants was $20.2 million as of September 30, 2017 . Compensation expense related to Restricted Stock grants is calculated based upon the fair market value of the common shares on grant date. The Company's policy is to adjust compensation expense for forfeitures as they occur. The recognition of compensation expense related to deferred compensation over the remaining vesting periods is as follows: Three Months 2017 2018 2019 2020 2021 Thereafter Total $ 1,880,821 $ 5,943,563 $ 5,207,109 $ 3,534,581 $ 2,054,744 $ 1,619,991 $ 20,240,809 Stock Grant Transactions The following table represents stock issued as part of our incentive compensation program during the nine months ended September 30, 2017 and 2016 : Shares Issued Grant Date Value September 30, 2017 19,219 $ 3,892,424 September 30, 2016 21,940 3,879,431 Deferred Compensation Plans The Company offers two deferred compensation plans, the Diamond Hill Fixed Term Deferred Compensation Plan and the Diamond Hill Variable Term Deferred Compensation Plan (collectively the “Plans”). Under the Plans, participants may elect to voluntarily defer, for a minimum of five years, certain incentive compensation, which the Company then contributes into the Plans. Each participant is responsible for designating investment options for assets they contribute, and the distribution paid to each participant reflects any gains or losses on the assets realized while in the Plans. Assets held in the Plans are included in the Company’s investment portfolio, and the associated obligation to participants is included in deferred compensation liability. Assets held in the Plans are recorded at fair value. Deferred compensation liability was $19.6 million and $14.2 million as of September 30, 2017 and December 31, 2016 , respectively. |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Operating Leases | Operating Leases The Company currently leases office space of approximately 37,829 square feet at one location. The following table summarizes the total lease and operating expenses for the three and nine months ended September 30, 2017 and 2016 : September 30, September 30, Three Months Ended $ 235,272 $ 218,640 Nine Months Ended $ 700,926 $ 679,195 The approximate future minimum lease payments under the operating lease are as follows: Future Minimum Lease Payments Three Months 2017 2018 2019 2020 2021 Thereafter Total $ 146,587 $ 586,350 $ 595,807 $ 624,179 $ 624,179 $ 1,716,000 $ 4,293,102 In addition to the above lease payments, the Company is also responsible for normal operating expenses of the property. Such operating expenses were approximately $0.4 million in 2016 , and are expected to be approximately the same in 2017 . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company has determined its interim tax provision projecting an estimated annual effective tax rate. For the three months ended September 30, 2017 , the Company recorded income tax expense of $6.5 million , yielding an effective tax rate of 33.1% . The effective tax rate of 33.1% differed from the federal statutory tax rate of 35% due primarily to $0.4 million of excess tax benefits from the vesting of stock awards. The tax benefits were partially offset by the additional income tax expense recorded in the state and city jurisdictions in which we do business. For the nine months ended September 30, 2017 , the Company recorded income tax expense of $19.0 million , yielding an effective tax rate of 32.6% . The effective tax rate of 32.6% differed from the federal statutory tax rate of 35% due primarily to $1.7 million of excess tax benefits from the vesting of stock awards. The tax benefits were partially offset by the additional income tax expense recorded in the state and city jurisdictions in which we do business. The Company implemented ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" on January 1, 2017. As of January 1, 2017, any excess tax benefits or deficiencies from the vesting of stock awards are recognized through the income tax provision as opposed to common stock. For Restricted Stock, the Company receives an excess income tax benefit calculated as the tax effect of the difference between the fair market value of the stock at the time of grant and vesting. The Company also records tax benefits on dividends paid on Restricted Stock. This change is required to be applied prospectively to all excess tax benefits and tax deficiencies after the date of adoption of the ASU. No adjustment is recorded for any windfall benefits previously recorded in common stock. In addition, all tax-related cash flows resulting from share-based payments will be reported as operating activities in the statement of cash flows under the new guidance, rather than the prior requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities. The Company has elected to adopt this change in cash flow presentation prospectively after the date of adoption of the ASU. For the three months ended September 30, 2016 , the Company recorded income tax expense of $7.7 million , yielding an effective tax rate of 36.0% . The effective tax rate of 36.0% differed from the federal statutory tax rate of 35% due primarily to the additional income tax expense recorded in the state and city jurisdictions in which we do business. The Company had net tax benefits from equity awards of $0.2 million for the three months ended September 30, 2016 , which was reflected as an increase in equity. For the nine months ended September 30, 2016 , the Company recorded income tax expense of $18.5 million , yielding an effective tax rate of 36.1% . The effective tax rate of 36.1% differed from the federal statutory tax rate of 35% due primarily to the additional income tax expense recorded in the state and city jurisdictions in which we do business, which was partially offset by a $0.1 million tax benefit related to a charitable donation of appreciated securities previously held in our investment portfolio. The Company had net tax benefits from equity awards of $5.6 million for the nine months ended September 30, 2016 , which was reflected as an increase in equity. The net temporary differences incurred to date will reverse in future periods as the Company generates taxable earnings. The Company believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets recorded. The Company records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of September 30, 2017 and December 31, 2016 , no valuation allowance was deemed necessary. FASB ASC 740, Income Taxes , prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not record an accrual for tax related uncertainties or unrecognized tax positions as of September 30, 2017 or December 31, 2016 . |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company’s Common Shares outstanding consist of all shares issued and outstanding, including unvested restricted shares. Basic and diluted EPS are calculated under the two-class method. Restricted stock units are considered dilutive. The following table sets forth the computation for basic and diluted EPS and reconciliation between basic and diluted shares outstanding: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net Income $ 13,158,099 $ 13,668,965 $ 39,250,567 $ 32,715,951 Less: Net income attributable to redeemable noncontrolling interest (459,252 ) (242,401 ) (1,156,385 ) (309,172 ) Net income attributable to common shareholders $ 12,698,847 $ 13,426,564 $ 38,094,182 $ 32,406,779 Weighted average number of outstanding shares - Basic 3,454,178 3,413,164 3,442,402 3,405,460 Dilutive impact of restricted stock units 7,240 6,959 5,574 4,748 Weighted average number of outstanding shares - Diluted 3,461,418 3,420,123 3,447,976 3,410,208 Earnings per share attributable to common shareholders Basic $ 3.68 $ 3.93 $ 11.07 $ 9.52 Diluted $ 3.67 $ 3.93 $ 11.05 $ 9.50 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company indemnifies its directors, officers and certain of its employees for certain liabilities that might arise from their performance of their duties to the Company. From time to time, the Company is involved in legal matters relating to claims arising in the ordinary course of business. There are currently no such matters pending that the Company believes could have a material adverse effect on its consolidated financial statements. Additionally, in the normal course of business, the Company enters into agreements that contain a variety of representations and warranties and which provide general indemnifications. Certain agreements do not contain any limits on the Company’s liability and could involve future claims that may be made against the Company that have not yet occurred. Therefore, it is not possible to estimate the Company’s potential liability under these indemnities. Further, the Company maintains insurance policies that may provide coverage against certain claims under these indemnities. |
Sale of Beacon Hill (Notes)
Sale of Beacon Hill (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Beacon Hill | Sale of Beacon Hill On July 31, 2016, the Company sold the entirety of Beacon Hill’s business. The Company received $1.2 million in cash consideration, net of cash disposed, as well as contingent consideration with a fair value of $1.5 million in the form of a promissory note. During the nine months ended September 30, 2017 , the Company received $0.8 million of proceeds from the scheduled collection of the promissory note. The promissory note is included in accounts receivable on the consolidated balance sheets. |
Subsequent Event (Notes)
Subsequent Event (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event On October 26, 2017 , the Company’s board of directors approved a special cash dividend of $7.00 per share payable December 11, 2017 to shareholders of record on December 1, 2017 . This dividend will reduce shareholders' equity by approximately $24.3 million . |
Significant Accounting Polici18
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of September 30, 2017 and December 31, 2016 , and for the three- and nine- month periods ended September 30, 2017 and 2016 , for Diamond Hill Investment Group, Inc. and its subsidiaries (referred to in these notes to the condensed consolidated financial statements as "the Company," "management," "we," "us," and "our") have been prepared in accordance with United States generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission ("SEC") Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair statement of the financial condition and results of operations at the dates and for the interim periods presented, have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for any full fiscal year. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (" 2016 Annual Report") as filed with the SEC. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions related to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
Reclassification | Reclassification Certain prior period amounts and disclosures may have been reclassified to conform to the current period's financial presentation. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the operations of the Company and its controlled subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. The Company holds certain investments in the Funds and the ETF for general corporate investment purposes, to provide seed capital for newly formed strategies or to add capital to existing strategies. The Funds are organized in a series fund structure in which there are multiple mutual funds within one Trust. The Trust is an open-end investment company registered under the Investment Company Act of 1940, as amended (the"1940 Act"). The ETF is an individual series of ETF Series Solutions which is also an open-end investment company registered under the 1940 Act. Each of the individual mutual funds and the ETF represent a separate share class of a legal entity organized under the Trust. As of January 1, 2016, the Company adopted ASU 2015-02 - Consolidation (Topic 810): Amendments to the Consolidation Analysis ("ASU 2015-02") and we have performed our analysis at the individual mutual fund and ETF level and have concluded the mutual funds and ETF are voting rights entities ("VREs"). The Company has concluded that the mutual funds and the ETF are VREs because the structure of the investment product is such that the shareholders are deemed to have the power through voting rights to direct the activities that most significantly impact the entity's economic performance. To the extent material, these investment products are consolidated if Company ownership, directly or indirectly, represents a majority interest (greater than 50%). The Company records redeemable noncontrolling interests in consolidated investments for which the Company's ownership is less than 100%. The Company has consolidated the ETF and one of our individual mutual funds (collectively the "Consolidated Funds") as our ownership was greater than 50% in each. DHCM is the managing member of Diamond Hill General Partner, LLC (the “General Partner”), the general partner of Diamond Hill Investment Partners, L.P. (“DHIP”), Diamond Hill Global Fund, L.P. ("DHGF"), and Diamond Hill International Equity Fund, L.P. ("DHIEF"), each a limited partnership (collectively, the "Partnerships" or “LPs”) whose underlying assets consist primarily of marketable securities. DHCM is wholly owned by the Company and is consolidated by us. Further, DHCM, through its control of the General Partner, has the power to direct each LP’s economic activities and the right to receive investment advisory fees that may be significant to the LPs. The Company concluded we did not have a variable interest in DHIP as the fees paid to the General Partner are considered to contain customary terms and conditions as found in the market for similar products and the Company has no equity ownership in DHIP. The Company concluded DHGF and DHIEF were variable interest entities ("VIEs") as DHCM has disproportionately less voting interests than economic interests in each LP, given the limited partners have full power to remove the Company as the General Partner due to the existence of substantive kick-out rights. In addition, substantially all of the LPs' activities are conducted on behalf of the General Partner which has disproportionately few voting rights. The Company concluded we are not the primary beneficiary of DHGF or DHIEF as we lack the power to control the entities due to the existence of single-party kick-out rights where the limited partners have the unilateral ability to remove the General Partner without cause. DHCM’s investments in DHGF and DHIEF are reported as a component of the Company’s investment portfolio, valued at DHCM’s respective share of the net income or loss of each LP. The LPs are not subject to lock-up periods and can be redeemed on demand. Gains and losses attributable to changes in the value of DHCM’s interests in the LPs are included in the Company’s reported investment income. The Company’s exposure to loss as a result of its involvement with the LPs is limited to the amount of its investments. DHCM is not obligated to provide, and has not provided, financial or other support to the LPs, other than its investments to date and its contractually provided investment advisory responsibilities. The Company has not provided liquidity arrangements, guarantees or other commitments to support the LPs’ operations, and the LPs’ creditors and interest holders have no recourse to the general credit of the Company. Certain board members, officers and employees of the Company invest in the LPs and are not subject to a management fee or an incentive fee. These individuals receive no remuneration as a result of their personal investment in the LPs. The capital of the General Partner is not subject to a management fee or an incentive fee. |
Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interest Redeemable noncontrolling interest represents third-party interests in the Consolidated Funds. This interest is redeemable at the option of the investors and therefore is not treated as permanent equity. Redeemable noncontrolling interest is remeasured at redemption value, which approximates the fair value each reporting period. |
Segment Information | Segment Information Management has determined that the Company operates in one business segment, providing investment management and administration services to mutual funds, institutional accounts, and private investment funds. Therefore, no disclosures relating to operating segments are presented in the Company's annual or interim financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market mutual funds. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded when they are due and are presented on the balance sheet net of any allowance for doubtful accounts. Accounts receivable are written off when they are determined to be uncollectible. Any allowance for doubtful accounts is estimated based on the Company’s historical losses, existing conditions in the industry, and the financial stability of the individuals or entities that owe the receivable. |
Investments | Investments Management determines the appropriate classification of its investments at the time of purchase and re-evaluates its determination at each reporting period. Investments classified as trading represent investments in the Funds we advise where the Company has neither control nor the ability to exercise significant influence, as well as securities held in the Consolidated Funds. These investments are measured at fair value based on quoted market prices. Unrealized gains and losses are recorded as investment income (loss) in the Company's consolidated statements of income. Investments classified as equity method investments represent investments in which the Company owns between 20-50% of the outstanding voting interests in the entity or when it is determined that the Company is able to exercise significant influence but not control over the investments. When using the equity method, the Company recognizes its respective share of the investee's net income or loss for the period which is recorded as investment income in the Company's consolidated statements of income. |
Fair Value Measurements | Fair Value Measurements Accounting Standards Codification Topic 820, Fair Value Measurement ("ASC 820") specifies a hierarchy of valuation classifications based on whether the inputs to the valuation techniques used in each valuation classification are observable or unobservable. These classifications are summarized in the three broad levels listed below: Level 1 - Unadjusted quoted prices for identical instruments in active markets. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-driven valuations in which all significant inputs are observable. Level 3 - Valuations derived from techniques in which significant inputs are unobservable. Inputs used to measure fair value might fall in different levels of the fair value hierarchy, in which case the Company defaults to the lowest level input that is significant to the fair value measurement in its entirety. These levels are not necessarily an indication of the risk or liquidity associated with investments. The following table summarizes investments that are recognized in our consolidated balance sheet using fair value measurements (excludes investments classified as equity method investments) determined based upon the differing levels of inputs as of September 30, 2017 : Level 1 Level 2 Level 3 Total Cash equivalents $ 89,125,334 $ — $ — $ 89,125,334 Trading Investments Securities held in Consolidated Funds (a) 17,948,350 47,158,391 — 65,106,741 Company sponsored investments 34,883,067 — — 34,883,067 (a) Of the securities held in the Consolidated Funds as of September 30, 2017 , $41.9 million were held directly by the Company and $23.2 million were held by noncontrolling shareholders. Level 1 investments are all registered investment companies (mutual funds) or securities held in the Consolidated Funds and include $89.1 million of investments in money market mutual funds that the Company classifies as cash equivalents. Level 2 investments are comprised of investments in debt securities, which are valued by an independent pricing service using pricing techniques which take into account factors such as trading activity, readily available market quotations, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit rates and other observable inputs. The Company determines transfers between fair value hierarchy levels at the end of the reporting period. There were no transfers in or out of the levels during the nine months ended September 30, 2017 . Changes in fair values of the investments are recorded in the Company's consolidated statements of income as investment income (loss). |
Property and Equipment | Property and Equipment Property and equipment, consisting of leasehold improvements, computer equipment, furniture, and fixtures, are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated lives of the assets. |
Revenue Recognition - General | Revenue Recognition – General The Company earns substantially all of its revenue from investment advisory and fund administration services. Investment advisory and administration fees, generally calculated as a percentage of assets under management ("AUM"), are recorded as revenue as services are performed. In addition to fixed fees based on a percentage of AUM, certain client accounts also provide periodic variable fees. |
Revenue Recognition - Variable Incentive Revenue | Revenue Recognition – Variable Fees The Company manages certain client accounts that provide for variable fees. These fees are calculated based on client investment results over rolling five -year periods. The Company records variable fees at the end of the contract measurement period. No variable fees were earned during the three and nine months ended September 30, 2017 or 2016 . The table below shows AUM subject to variable fees and the amount of variable fees that would be recognized based upon investment results as of September 30, 2017 : As of September 30, 2017 AUM subject to variable fees Unearned variable fees Contractual Period Ends: Quarter Ended December 31, 2018 $ 107,864,155 $ 1,379,545 Quarter Ended September 30, 2019 34,040,712 495,418 Quarter Ended March 31, 2020 11,680,413 — Quarter Ended September 30, 2021 264,626,823 1,971,752 Total $ 418,212,103 $ 3,846,715 The contractual end dates highlight the time remaining until the variable fees are scheduled to be earned. The amount of variable fees that would be recognized based upon investment results as of September 30, 2017 will increase or decrease based on future client investment results through the contractual period end. There can be no assurance that the unearned amounts will ultimately be earned. |
Revenue Recognition - Mutual Fund Administration | Revenue Recognition – Mutual Fund Administration DHCM has an administrative and transfer agency services agreement with the Funds under which DHCM performs certain services for each Fund. These services include mutual fund administration, fund accounting, transfer agency and other related functions. For performing these services each Fund pays DHCM a fee, which is calculated using an annual rate times the average daily net assets of each respective share class. The Funds have selected and contractually engaged certain vendors to fulfill various services to benefit the Funds’ shareholders or to satisfy regulatory requirements of the Funds. These services include, among others, required shareholder mailings, federal and state registrations, and legal and audit services. DHCM, in fulfilling a portion of its role under the administration agreement with the Funds, acts as agent to pay these obligations of the Funds. Each vendor is independently responsible for fulfillment of the services it has been engaged to provide and negotiates fees and terms with the management and board of trustees of the Funds. The fee that each Fund pays to DHCM is reviewed annually by the Funds’ board of trustees and specifically takes into account the contractual expenses that DHCM pays on behalf of the Funds. As a result, DHCM is not involved in the delivery or pricing of these services and bears no risk related to these services. Revenue has been recorded net of these Fund related expenses, in accordance with FASB ASC 605-45, Revenue Recognition – Principal Agent Considerations . In addition, DHCM advances the upfront commissions that are paid to brokers who sell Class C shares of the Funds. These advances are capitalized and amortized over 12 months to correspond with the repayments DHCM receives from the principal underwriter to recoup this commission advancement. Prior to the sale of Beacon Hill, the Company, through Beacon Hill, had underwriting and administrative service agreements with certain clients, including registered mutual funds. The fee arrangements varied from client to client based upon services provided and have been recorded as revenue under mutual fund administration on the Company's consolidated statements of income. Part of Beacon Hill’s role as underwriter was to act as an agent on behalf of its mutual fund clients to receive 12b-1/service fees and commission revenue and facilitate the payment of those fees and commissions to third parties who provide services to the funds and their shareholders. The majority of 12b-1/service fees were paid to independent third parties and the remainder were retained by the Company as reimbursement for expenses the Company had incurred. The amounts of 12b-1/service fees and commissions were determined by each mutual fund client, and Beacon Hill bore no financial risk related to these services. As a result, 12b-1/service fees and commission revenue was recorded net of the expense payments to third parties, in accordance with the appropriate accounting treatment for this agency relationship. |
Income Taxes | Income Taxes The Company accounts for current and deferred income taxes through an asset and liability approach. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is subject to examination by federal and applicable state and local jurisdictions for various tax periods. The Company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which it does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws among those jurisdictions, as well as the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company’s estimates of income tax liabilities may differ from actual payments or assessments. The Company regularly assesses its position with regard to tax exposures and records liabilities for these uncertain tax positions and related interest and penalties, if any, according to the principles of FASB ASC 740, Income Taxes . As of September 30, 2017 , the Company had not recorded any liability for uncertain tax positions. The Company records interest and penalties, if any, within income tax expense on the income statement. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income by the weighted average number of Common Shares outstanding for the period, which includes participating securities. Diluted EPS reflects the potential dilution of EPS due to unvested restricted stock units. See Note 8 . |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers", which supersedes existing accounting standards for revenue recognition and creates a single framework. ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This standard also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. This ASU will supersede much of the existing revenue recognition guidance in GAAP and is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period, and requires either a retrospective or a modified retrospective approach to adoption. Early application is permitted for the first interim period within annual reporting periods beginning after December 15, 2016. We anticipate adopting the new ASU on its effective date, January 1, 2018, and expect to utilize the full retrospective approach. Our implementation efforts include a detailed review of revenue contracts within the scope of the guidance and evaluation of the impact on the Company's revenue recognition policies. While we are continuing to assess the potential impacts of the ASU on our financial position and results of operations, we believe that the adoption of this ASU will not have an impact on revenue recognition. While we have not identified changes in the timing of revenue recognition, we continue to evaluate the related disclosures. In February 2016, the FASB issued ASU 2016-02, "Leases", which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase the reported assets and liabilities of lessees - in some cases significantly. Lessor accounting remains substantially similar to current GAAP. ASU 2016-02 supersedes Topic 840, Leases . ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures. |
Significant Accounting Polici19
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following table summarizes investments that are recognized in our consolidated balance sheet using fair value measurements (excludes investments classified as equity method investments) determined based upon the differing levels of inputs as of September 30, 2017 : Level 1 Level 2 Level 3 Total Cash equivalents $ 89,125,334 $ — $ — $ 89,125,334 Trading Investments Securities held in Consolidated Funds (a) 17,948,350 47,158,391 — 65,106,741 Company sponsored investments 34,883,067 — — 34,883,067 (a) Of the securities held in the Consolidated Funds as of September 30, 2017 , $41.9 million were held directly by the Company and $23.2 million were held by noncontrolling shareholders. |
Assets under Management (AUM) Subject to Incentive Fees and Incentive Fees | The table below shows AUM subject to variable fees and the amount of variable fees that would be recognized based upon investment results as of September 30, 2017 : As of September 30, 2017 AUM subject to variable fees Unearned variable fees Contractual Period Ends: Quarter Ended December 31, 2018 $ 107,864,155 $ 1,379,545 Quarter Ended September 30, 2019 34,040,712 495,418 Quarter Ended March 31, 2020 11,680,413 — Quarter Ended September 30, 2021 264,626,823 1,971,752 Total $ 418,212,103 $ 3,846,715 |
Mutual Fund Administration Gross and Net Revenue | Mutual fund administration gross and net revenue are summarized below: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Mutual fund administration: Administration revenue, gross $ 6,557,054 $ 6,445,936 $ 19,432,002 $ 20,557,388 12b-1/service fees and commission revenue received from fund clients — 933,752 — 6,360,400 12b-1/service fees and commission expense payments to third parties — (831,198 ) — (5,660,429 ) Fund related expense (3,576,598 ) (3,136,319 ) (10,214,948 ) (9,958,315 ) Revenue, net of related expenses 2,980,456 3,412,171 9,217,054 11,299,044 DHCM C-Share financing: Broker commission advance repayments 101,238 157,732 315,283 558,641 Broker commission amortization (92,668 ) (144,738 ) (284,998 ) (545,463 ) Financing activity, net 8,570 12,994 30,285 13,178 Mutual fund administration revenue, net $ 2,989,026 $ 3,425,165 $ 9,247,339 $ 11,312,222 |
Investment Portfolio (Tables)
Investment Portfolio (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Market Value of Investments | The following table summarizes the carrying value of these investments as of September 30, 2017 and December 31, 2016 : As of September 30, 2017 December 31, 2016 Trading investments: Securities held in Consolidated Funds (a) $ 65,106,741 $ 57,355,471 Company sponsored investments 34,883,067 9,322,118 Company sponsored equity method investments 29,753,573 41,338,046 Total Investment portfolio $ 129,743,381 $ 108,015,635 (a) Of the securities held in the Consolidated Funds as of September 30, 2017 , $41.9 million were held directly by the Company and $23.2 million were held by noncontrolling shareholders. Of the securities held in the Consolidated Funds as of December 31, 2016 , $42.6 million were held directly by the Company and $14.7 million were held by noncontrolling shareholders. |
Equity Method Investments | The following table includes the condensed summary financial information from the Company's equity method investments as of and for the period ended September 30, 2017 : As of September 30, 2017 Total assets $ 130,983,409 Total liabilities 36,624,404 Net assets 94,359,005 DHCM's portion of net assets 29,753,573 For the Three Months Ended For the Nine Months Ended September 30, 2017 September 30, 2017 Investment income $ 643,059 $ 2,164,621 Expenses 300,273 865,475 Net realized gains 599,849 3,171,574 Net change in unrealized appreciation/depreciation (726,509 ) 2,887,675 Net income 216,126 7,358,395 DHCM's portion of net income 324,189 2,372,528 |
Compensation Plans (Tables)
Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Roll-Forward of Outstanding Restricted Stock Grants Issued | The following table represents a roll-forward of outstanding Restricted Stock and related activity during the nine months ended September 30, 2017 : Shares Weighted-Average Grant Date Price per Share Outstanding Restricted Stock as of December 31, 2016 223,800 $ 132.96 Grants issued 37,600 204.24 Grants vested (43,500 ) 95.86 Grants forfeited (1,750 ) 100.73 Total Outstanding Restricted Stock as of September 30, 2017 216,150 $ 153.08 |
Expense Recognition of Deferred Compensation | The recognition of compensation expense related to deferred compensation over the remaining vesting periods is as follows: Three Months 2017 2018 2019 2020 2021 Thereafter Total $ 1,880,821 $ 5,943,563 $ 5,207,109 $ 3,534,581 $ 2,054,744 $ 1,619,991 $ 20,240,809 |
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value | The following table represents stock issued as part of our incentive compensation program during the nine months ended September 30, 2017 and 2016 : Shares Issued Grant Date Value September 30, 2017 19,219 $ 3,892,424 September 30, 2016 21,940 3,879,431 |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Summary of Total Lease and Operating Expenses | The following table summarizes the total lease and operating expenses for the three and nine months ended September 30, 2017 and 2016 : September 30, September 30, Three Months Ended $ 235,272 $ 218,640 Nine Months Ended $ 700,926 $ 679,195 |
Future Minimum Lease Payments under Operating Leases | The approximate future minimum lease payments under the operating lease are as follows: Future Minimum Lease Payments Three Months 2017 2018 2019 2020 2021 Thereafter Total $ 146,587 $ 586,350 $ 595,807 $ 624,179 $ 624,179 $ 1,716,000 $ 4,293,102 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation for Earnings Per Share | The following table sets forth the computation for basic and diluted EPS and reconciliation between basic and diluted shares outstanding: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net Income $ 13,158,099 $ 13,668,965 $ 39,250,567 $ 32,715,951 Less: Net income attributable to redeemable noncontrolling interest (459,252 ) (242,401 ) (1,156,385 ) (309,172 ) Net income attributable to common shareholders $ 12,698,847 $ 13,426,564 $ 38,094,182 $ 32,406,779 Weighted average number of outstanding shares - Basic 3,454,178 3,413,164 3,442,402 3,405,460 Dilutive impact of restricted stock units 7,240 6,959 5,574 4,748 Weighted average number of outstanding shares - Diluted 3,461,418 3,420,123 3,447,976 3,410,208 Earnings per share attributable to common shareholders Basic $ 3.68 $ 3.93 $ 11.07 $ 9.52 Diluted $ 3.67 $ 3.93 $ 11.05 $ 9.50 |
Significant Accounting Polici24
Significant Accounting Policies - Summary of Investments Values Based Upon Fair Value Hierarchy(Detail) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 89,125,334 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 89,125,334 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 65,106,741 | $ 57,355,471 |
Securities held in Consolidated Funds | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 65,106,741 | |
Securities held in Consolidated Funds | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 17,948,350 | |
Securities held in Consolidated Funds | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 47,158,391 | |
Securities held in Consolidated Funds | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 0 | |
Company sponsored investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 34,883,067 | $ 9,322,118 |
Company sponsored investments | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 34,883,067 | |
Company sponsored investments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 34,883,067 | |
Company sponsored investments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | 0 | |
Company sponsored investments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Investments | $ 0 |
Significant Accounting Polici25
Significant Accounting Policies - Assets under Management (AUM) Subject to Incentive Fees and Incentive Fees (Detail) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Quarter Ended December 31, 2018 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable fees | $ 107,864,155 |
Unearned variable fees | 1,379,545 |
Quarter Ended September 30, 2019 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable fees | 34,040,712 |
Unearned variable fees | 495,418 |
Quarter Ended March 31, 2020 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable fees | 11,680,413 |
Unearned variable fees | 0 |
Quarter Ended September 30, 2021 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable fees | 264,626,823 |
Unearned variable fees | 1,971,752 |
Total | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable fees | 418,212,103 |
Unearned variable fees | $ 3,846,715 |
Significant Accounting Polici26
Significant Accounting Policies - Mutual Fund Administration Gross and Net Revenue (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Mutual fund administration: | ||||
Administration revenue, gross | $ 6,557,054 | $ 6,445,936 | $ 19,432,002 | $ 20,557,388 |
12b-1/service fees and commission revenue received from fund clients | 0 | 933,752 | 0 | 6,360,400 |
12b-1/service fees and commission expense payments to third parties | 0 | (831,198) | 0 | (5,660,429) |
Fund related expense | (3,576,598) | (3,136,319) | (10,214,948) | (9,958,315) |
Revenue, net of related expenses | 2,980,456 | 3,412,171 | 9,217,054 | 11,299,044 |
DHCM C-Share financing: | ||||
Broker commission advance repayments | 101,238 | 157,732 | 315,283 | 558,641 |
Broker commission amortization | (92,668) | (144,738) | (284,998) | (545,463) |
Financing activity, net | 8,570 | 12,994 | 30,285 | 13,178 |
Mutual fund administration revenue, net | $ 2,989,026 | $ 3,425,165 | $ 9,247,339 | $ 11,312,222 |
Significant Accounting Polici27
Significant Accounting Policies - Narrative (Detail) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Segment | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Business Organization And Significant Accounting Policies [Line Items] | |||||
Number of business segment | Segment | 1 | ||||
Allowance for doubtful accounts | $ 0 | $ 0 | $ 0 | ||
Accounts receivable, related parties | 10,700,000 | 10,700,000 | 10,400,000 | ||
Transfers between fair value levels | 0 | $ 0 | 0 | ||
Client performance period | 5 years | ||||
Variable fees | $ 0 | $ 0 | |||
Advance commissions amortization period | 12 months | ||||
Liability for uncertain tax positions | 0 | $ 0 | 0 | ||
Securities held in Consolidated Funds | |||||
Business Organization And Significant Accounting Policies [Line Items] | |||||
Trading Investments | 65,106,741 | 65,106,741 | 57,355,471 | ||
Money Market Funds | Fair Value, Inputs, Level 1 | |||||
Business Organization And Significant Accounting Policies [Line Items] | |||||
Cash equivalents | 89,100,000 | 89,100,000 | |||
Parent | Securities held in Consolidated Funds | |||||
Business Organization And Significant Accounting Policies [Line Items] | |||||
Trading Investments | 41,900,000 | 41,900,000 | 42,600,000 | ||
Redeemable Noncontrolling Interest | Securities held in Consolidated Funds | |||||
Business Organization And Significant Accounting Policies [Line Items] | |||||
Trading Investments | 23,200,000 | 23,200,000 | $ 14,700,000 | ||
Affiliated Entity | Investment advisory and fund administration services | |||||
Business Organization And Significant Accounting Policies [Line Items] | |||||
Revenue from related parties | 29,600,000 | $ 25,900,000 | 86,200,000 | 73,900,000 | |
Affiliated Entity | Mutual fund administrative services | |||||
Business Organization And Significant Accounting Policies [Line Items] | |||||
Revenue from related parties | $ 3,000,000 | $ 3,000,000 | $ 9,200,000 | $ 8,800,000 |
Investment Portfolio - Summary
Investment Portfolio - Summary of Market Value of Investments (Detail) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Investment Holdings [Line Items] | ||
Company sponsored equity method investments | $ 29,753,573 | $ 41,338,046 |
Total Investment portfolio | 129,743,381 | 108,015,635 |
Securities held in Consolidated Funds | ||
Investment Holdings [Line Items] | ||
Trading investments | 65,106,741 | 57,355,471 |
Securities held in Consolidated Funds | Parent | ||
Investment Holdings [Line Items] | ||
Trading investments | 41,900,000 | 42,600,000 |
Securities held in Consolidated Funds | Redeemable Noncontrolling Interest | ||
Investment Holdings [Line Items] | ||
Trading investments | 23,200,000 | 14,700,000 |
Company sponsored investments | ||
Investment Holdings [Line Items] | ||
Trading investments | $ 34,883,067 | $ 9,322,118 |
Investment Portfolio - Equity M
Investment Portfolio - Equity Method Investments (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Investments, Debt and Equity Securities [Abstract] | ||
Total assets | $ 130,983,409 | $ 130,983,409 |
Total liabilities | 36,624,404 | 36,624,404 |
Net assets | 94,359,005 | 94,359,005 |
DHCM's portion of net assets | 29,753,573 | 29,753,573 |
Investment Income | 643,059 | 2,164,621 |
Expenses | 300,273 | 865,475 |
Net realized gains (losses) | 599,849 | 3,171,574 |
Net change in unrealized appreciation/depreciation | (726,509) | 2,887,675 |
Net income | 216,126 | 7,358,395 |
DHCM's portion of net income | $ 324,189 | $ 2,372,528 |
Investment Portfolio - Narrativ
Investment Portfolio - Narrative (Detail) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Investments, Debt and Equity Securities [Abstract] | ||
Fair value of investment | $ 129,700,000 | |
Securities held in Consolidated Funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Trading Investments | 65,106,741 | $ 57,355,471 |
Total | Securities held in Consolidated Funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Trading Investments | 41,900,000 | 42,600,000 |
Redeemable Noncontrolling Interest | Securities held in Consolidated Funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Trading Investments | $ 23,200,000 | $ 14,700,000 |
Investment Portfolio Schedule o
Investment Portfolio Schedule of Equity Method Investment Ownership (Details) | Sep. 30, 2017 |
High Yield Fund | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 47.00% |
Research Opportunities Fund | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 22.00% |
Global Fund LP | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 95.00% |
International Equity Fund LP | |
Schedule of Equity Method Investments [Line Items] | |
Equity Method Investment, Ownership Percentage | 30.00% |
Line of Credit (Details)
Line of Credit (Details) - The Credit Agreement - Line of Credit | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Line of Credit Facility [Line Items] | |
Line of credit, remaining borrowing capacity | $ 25,000,000 |
Line of credit, unused capacity, commitment fee percentage | 0.00% |
London Interbank Offered Rate (LIBOR) | |
Line of Credit Facility [Line Items] | |
Line of credit, interest rate description | 1.50% |
Compensation Plans - Roll-Forwa
Compensation Plans - Roll-Forward of Outstanding Restricted Stock Grants Issued (Detail) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Shares | |
Outstanding shares, Beginning Balance (shares) | 201,800 |
Outstanding shares, Ending Balance (shares) | 203,650 |
Restricted Stock Units (RSUs) | |
Shares | |
Outstanding shares, Beginning Balance (shares) | 223,800 |
Shares issued (shares) | 37,600 |
Grants vested (shares) | (43,500) |
Grants forfeited (shares) | (1,750) |
Outstanding shares, Ending Balance (shares) | 216,150 |
Weighted-Average Grant Date Price per Share | |
Weighted-Average Grant Date Price per Share, Beginning of Period (usd per share) | $ / shares | $ 132.96 |
Weighted-Average Grant Date Price per Share, Grants issued (usd per share) | $ / shares | 204.24 |
Weighted-Average Grant Date Price per Share, Grants vested (usd per share) | $ / shares | 95.86 |
Weighted-Average Grant Date Price per Share, Grants forfeited (usd per share) | $ / shares | 100.73 |
Weighted-Average Grant Date Price per Share, End of Period (usd per share) | $ / shares | $ 153.08 |
Compensation Plans - Expense Re
Compensation Plans - Expense Recognition of Deferred Compensation (Detail) - Restricted Stock Units (RSUs) | Sep. 30, 2017USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
2017 (Remaining Period) | $ 1,880,821 |
2,018 | 5,943,563 |
2,019 | 5,207,109 |
2,020 | 3,534,581 |
2,021 | 2,054,744 |
Thereafter | 1,619,991 |
Total | $ 20,240,809 |
Compensation Plans - Schedule o
Compensation Plans - Schedule of Grants Issued and Grant Date Fair Value (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Issuance of stock grants | $ 3,892,424 | $ 3,879,431 |
Shares Issued | ||
Shares issued (shares) | 19,219 | 21,940 |
Grant Date Value | ||
Shares issued (shares) | 19,219 | |
Issuance of stock grants | $ 3,892,424 | $ 3,879,431 |
Compensation Plans - Narrative
Compensation Plans - Narrative (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Deferred compensation equity | $ 20,240,809 | $ 17,728,106 |
Deferred compensation liability | $ 19,571,038 | $ 14,182,470 |
2014 Equity and Cash Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common shares available for issuance (in shares) | 356,261 | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fully vested employee elected deferral period | 5 years |
Operating Leases - Summary of T
Operating Leases - Summary of Total Lease and Operating Expenses (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Leases [Abstract] | ||||
Lease and operating expenses | $ 235,272 | $ 218,640 | $ 700,926 | $ 679,195 |
Operating Leases - Future Minim
Operating Leases - Future Minimum Lease Payments under Operating Leases (Detail) | Sep. 30, 2017USD ($) |
Leases [Abstract] | |
Remainder of 2017 | $ 146,587 |
2,018 | 586,350 |
2,019 | 595,807 |
2,020 | 624,179 |
2,021 | 624,179 |
Thereafter | 1,716,000 |
Total future lease payments due | $ 4,293,102 |
Operating Leases - Narrative (D
Operating Leases - Narrative (Detail) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017ft²location | Dec. 31, 2016USD ($) | |
Leases [Abstract] | ||
Area of operating lease | ft² | 37,829 | |
Number of office space locations | location | 1 | |
Operating lease expense excluding rent | $ | $ 0.4 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ 6,496,980 | $ 7,700,732 | $ 19,018,708 | $ 18,497,315 | |
Effective tax rate | 33.10% | 36.00% | 32.60% | 36.10% | |
Federal statutory income tax rate, percent | 35.00% | 35.00% | 35.00% | 35.00% | |
Effective income tax rate reconciliation, share-based compensation, excess tax benefit (tax shortfall), Amount | $ 400,000 | $ 1,700,000 | |||
Effective income tax rate reconciliation, tax benefit due to donation of appreciated securities, Amount | $ 100,000 | ||||
Income tax effects allocated directly to equity | $ (200,000) | $ (5,600,000) | |||
Valuation allowance | $ 0 | $ 0 | $ 0 |
Earnings Per Share - Computatio
Earnings Per Share - Computation for Earnings Per Share (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net Income | $ 13,158,099 | $ 13,668,965 | $ 39,250,567 | $ 32,715,951 |
Less: Net income attributable to redeemable noncontrolling interest | (459,252) | (242,401) | (1,156,385) | (309,172) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 12,698,847 | $ 13,426,564 | $ 38,094,182 | $ 32,406,779 |
Weighted average shares outstanding | ||||
Basic (in shares) | 3,454,178 | 3,413,164 | 3,442,402 | 3,405,460 |
Dilutive impact of restricted stock units (in shares) | 7,240 | 6,959 | 5,574 | 4,748 |
Diluted (in shares) | 3,461,418 | 3,420,123 | 3,447,976 | 3,410,208 |
Earnings per share | ||||
Basic (USD per share) | $ 3.68 | $ 3.93 | $ 11.07 | $ 9.52 |
Diluted (USD per share) | $ 3.67 | $ 3.93 | $ 11.05 | $ 9.50 |
Sale of Beacon Hill (Details)
Sale of Beacon Hill (Details) - USD ($) | Jul. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Cash consideration received net of cash disposed | $ 750,000 | $ 1,163,769 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Beacon Hill | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Cash consideration received net of cash disposed | $ 1,200,000 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Beacon Hill | Promissory Note | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Contingent consideration received | $ 1,500,000 | ||
Proceeds from collection of notes receivable | $ 800,000 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event $ / shares in Units, $ in Millions | Oct. 26, 2017USD ($)$ / shares |
Subsequent Event [Line Items] | |
Dividends declared (in usd per share) | $ / shares | $ 7 |
Dividends to be paid in cash | $ | $ 24.3 |