Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 20, 2020 | Jun. 30, 2019 | |
Cover page. | |||
Document Transition Report | false | ||
Document Annual Report | true | ||
Entity Interactive Data Current | Yes | ||
Title of 12(b) Security | Common shares, no par value | ||
City Area Code | 614 | ||
Entity Address, Postal Zip Code | 43215 | ||
Entity Incorporation, State or Country Code | OH | ||
Entity File Number | 000-24498 | ||
Entity Registrant Name | DIAMOND HILL INVESTMENT GROUP, INC | ||
Entity Address, Address Line One | 325 John H. McConnell Blvd | ||
Entity Address, Address Line Two | Suite 200 | ||
Entity Address, City or Town | Columbus | ||
Entity Address, State or Province | OH | ||
Entity Central Index Key | 0000909108 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 3,289,865 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Public Float | $ 468,216,662 | ||
Entity Tax Identification Number | 65-0190407 | ||
Local Phone Number | 255-3333 | ||
Trading Symbol | DHIL | ||
Security Exchange Name | NASDAQ | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, are incorporated by reference into Part III of this Annual Report on Form 10-K. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 93,176,253 | $ 84,430,059 |
Investments | 139,437,178 | 203,488,217 |
Accounts receivable | 17,223,362 | 20,290,283 |
Prepaid expenses | 2,857,468 | 2,372,712 |
Income taxes receivable | 3,849,099 | 0 |
Property and equipment, net of depreciation | 5,733,737 | 3,680,472 |
Deferred taxes | 10,386,853 | 11,466,100 |
Total assets | 272,663,950 | 325,727,843 |
Liabilities | ||
Accounts payable and accrued expenses | 8,671,731 | 15,561,491 |
Accrued incentive compensation | 26,615,510 | 26,754,167 |
Income taxes payable | 0 | 2,768,681 |
Deferred compensation | 30,342,204 | 22,387,874 |
Total liabilities | 65,629,445 | 67,472,213 |
Redeemable noncontrolling interest | 14,178,824 | 62,679,687 |
Permanent Shareholders’ Equity | ||
Common stock, no par value 7,000,000 shares authorized; 3,294,672 issued and outstanding at December 31, 2019 (inclusive of 227,844 unvested shares); 3,499,285 issued and outstanding at December 31, 2018 (inclusive of 211,575 unvested shares) | 95,853,477 | 124,933,060 |
Preferred stock, undesignated, 1,000,000 shares authorized and unissued | 0 | 0 |
Deferred equity compensation | (20,331,890) | (22,008,054) |
Retained Earnings | 117,334,094 | 92,650,937 |
Total permanent shareholders’ equity | 192,855,681 | 195,575,943 |
Total liabilities and shareholders’ equity | $ 272,663,950 | $ 325,727,843 |
Book value per share (in dollars per share) | $ 58.54 | $ 55.89 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, shares authorized | 7,000,000 | 7,000,000 |
Common stock, shares issued | 3,294,672 | 3,499,285 |
Common stock, shares outstanding | 3,294,672 | 3,499,285 |
Common stock, unvested shares | 227,844 | 211,575 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUES: | |||
Total revenue | $ 136,624,380 | $ 145,627,748 | $ 145,201,729 |
OPERATING EXPENSES: | |||
Compensation and related costs, excluding deferred compensation expense | 60,264,117 | 55,975,361 | 52,474,403 |
Deferred compensation expense (benefit) | 5,976,938 | (2,121,691) | 2,381,569 |
General and administrative | 13,277,843 | 11,648,925 | 14,036,681 |
Sales and marketing | 5,867,297 | 5,242,848 | 4,994,525 |
Mutual fund administration | 3,302,767 | 3,625,898 | 4,313,185 |
Total operating expenses | 88,688,962 | 74,371,341 | 78,200,363 |
NET OPERATING INCOME | 47,935,418 | 71,256,407 | 67,001,366 |
Investment income (loss), net | 30,507,375 | (6,272,678) | 14,017,593 |
INCOME BEFORE TAXES | 78,442,793 | 64,983,729 | 81,018,959 |
Income tax expense | (18,688,474) | (18,669,341) | (29,417,290) |
NET INCOME | 59,754,319 | 46,314,388 | 51,601,669 |
Net (income) loss attributable to redeemable noncontrolling interest | (4,795,295) | 1,061,441 | (1,612,712) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 54,959,024 | $ 47,375,829 | $ 49,988,957 |
Earnings per share attributable to common shareholders | |||
Basic (in dollars per share) | $ 15.99 | $ 13.49 | $ 14.49 |
Diluted (in dollars per share) | $ 15.99 | $ 13.48 | $ 14.48 |
Weighted average shares outstanding | |||
Basic (in shares) | 3,436,574 | 3,512,470 | 3,448,824 |
Diluted (in shares) | 3,436,641 | 3,514,528 | 3,451,838 |
Investment advisory | |||
REVENUES: | |||
Total revenue | $ 128,009,409 | $ 135,317,805 | $ 132,688,462 |
Mutual fund administration, net | |||
REVENUES: | |||
Total revenue | $ 8,614,971 | $ 10,309,943 | $ 12,513,267 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Total | Common Stock | Deferred Equity Compensation | Retained Earnings |
Beginning Balance (in shares) at Dec. 31, 2016 | 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 (in shares) | 57,350 | |||
Issuance of restricted stock grants | 0 | $ 8,454,411 | (8,454,411) | |
Amortization of restricted stock grants | 6,871,284 | 6,871,284 | ||
Issuance of stock grants (in shares) | 19,219 | |||
Issuance of stock grants | 3,892,424 | $ 3,892,424 | ||
Issuance of common stock related to 401k plan match (in shares) | 8,478 | |||
Issuance of common stock related to 401k plan match | 1,710,785 | $ 1,710,785 | ||
Shares withheld related to employee tax withholding (shares) | (24,425) | |||
Shares withheld related to employee tax withholding | (4,966,042) | $ (4,966,042) | ||
Forfeiture of restricted stock grants (in shares) | (1,750) | |||
Forfeiture of restricted stock grants | 0 | $ (176,270) | 176,270 | |
Cash dividend paid of $6.00 in 2016, $7.00 in 2017, and $8.00 in 2018 per share respectively | (24,277,743) | (24,277,743) | ||
Net income attributable to parent | 49,988,957 | 49,988,957 | ||
Ending Balance (in shares) at Dec. 31, 2017 | 3,470,428 | |||
Ending Balance at Dec. 31, 2017 | 172,443,820 | $ 118,209,111 | (19,134,963) | 73,369,672 |
Beginning balances attributable to redeemable noncontrolling interests at Dec. 31, 2016 | 13,840,688 | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Net (loss) income attributable to redeemable noncontrolling interests | 1,612,712 | |||
Net subscriptions of consolidated funds | 4,623,406 | |||
Ending balances attributable to redeemable noncontrolling interests at Dec. 31, 2017 | 20,076,806 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of restricted stock grants (in shares) | 73,025 | |||
Issuance of restricted stock grants | 0 | $ 13,654,592 | (13,654,592) | |
Amortization of restricted stock grants | 6,664,875 | 6,664,875 | ||
Issuance of stock grants (in shares) | 20,153 | |||
Issuance of stock grants | 4,109,197 | $ 4,109,197 | ||
Issuance of common stock related to 401k plan match (in shares) | 11,967 | |||
Issuance of common stock related to 401k plan match | 2,231,735 | $ 2,231,735 | ||
Shares withheld related to employee tax withholding (shares) | (9,918) | |||
Shares withheld related to employee tax withholding | (1,925,700) | $ (1,925,700) | ||
Forfeiture of restricted stock grants (in shares) | (20,900) | |||
Forfeiture of restricted stock grants | 0 | $ (4,116,626) | 4,116,626 | |
Repurchases of common stock (in shares) | (45,470) | |||
Repurchases of common stock | (7,229,249) | $ (7,229,249) | ||
Cash dividend paid of $6.00 in 2016, $7.00 in 2017, and $8.00 in 2018 per share respectively | (28,094,564) | (28,094,564) | ||
Net income attributable to parent | $ 47,375,829 | 47,375,829 | ||
Ending Balance (in shares) at Dec. 31, 2018 | 3,499,285 | 3,499,285 | ||
Ending Balance at Dec. 31, 2018 | $ 195,575,943 | $ 124,933,060 | (22,008,054) | 92,650,937 |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Net (loss) income attributable to redeemable noncontrolling interests | (1,061,441) | |||
Net subscriptions of consolidated funds | 27,219,682 | |||
Net deconsolidations of Company sponsored investments | 16,444,640 | |||
Ending balances attributable to redeemable noncontrolling interests at Dec. 31, 2018 | 62,679,687 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of restricted stock grants (in shares) | 53,969 | |||
Issuance of restricted stock grants | 0 | $ 7,471,799 | (7,471,799) | |
Amortization of restricted stock grants | 6,584,485 | 6,584,485 | ||
Issuance of stock grants (in shares) | 24,048 | |||
Issuance of stock grants | 3,655,296 | $ 3,655,296 | ||
Issuance of common stock related to 401k plan match (in shares) | 17,651 | |||
Issuance of common stock related to 401k plan match | 2,496,936 | $ 2,496,936 | ||
Shares withheld related to employee tax withholding (shares) | (9,928) | |||
Shares withheld related to employee tax withholding | (1,390,482) | $ (1,390,482) | ||
Forfeiture of restricted stock grants (in shares) | (14,200) | |||
Forfeiture of restricted stock grants | 0 | $ (2,563,478) | 2,563,478 | |
Repurchases of common stock (in shares) | (276,153) | |||
Repurchases of common stock | (38,749,654) | $ (38,749,654) | ||
Cash dividend paid of $6.00 in 2016, $7.00 in 2017, and $8.00 in 2018 per share respectively | (30,275,867) | (30,275,867) | ||
Net income attributable to parent | $ 54,959,024 | 54,959,024 | ||
Ending Balance (in shares) at Dec. 31, 2019 | 3,294,672 | 3,294,672 | ||
Ending Balance at Dec. 31, 2019 | $ 192,855,681 | $ 95,853,477 | $ (20,331,890) | $ 117,334,094 |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Net (loss) income attributable to redeemable noncontrolling interests | 4,795,295 | |||
Net subscriptions of consolidated funds | 8,095,940 | |||
Net deconsolidations of Company sponsored investments | (61,392,098) | |||
Ending balances attributable to redeemable noncontrolling interests at Dec. 31, 2019 | $ 14,178,824 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividend paid per share (in dollars per share) | $ 9 | $ 8 | $ 7 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income | $ 59,754,319 | $ 46,314,388 | $ 51,601,669 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 1,164,207 | 1,159,380 | 888,197 |
Share-based compensation | 9,081,421 | 8,896,610 | 8,582,069 |
Increase in accounts receivable | (5,021,516) | (1,014,839) | (1,615,070) |
Change in current income taxes | (6,617,780) | 6,883,643 | (3,003,072) |
Change in deferred income taxes | 1,079,247 | (5,622,396) | 2,893,063 |
Net (gain) loss on investments | (21,058,463) | 14,297,382 | (9,730,751) |
Net change in securities held by Consolidated Funds | 6,286,645 | (52,168,968) | (5,511,669) |
Increase in accrued incentive compensation | 3,516,639 | 5,366,864 | 6,705,424 |
Increase in deferred compensation | 7,954,330 | 1,907,084 | 6,298,320 |
Other changes in assets and liabilities | 827,194 | 2,111,443 | 3,811,579 |
Net cash provided by operating activities | 56,966,243 | 28,130,591 | 60,919,759 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (707,790) | (781,951) | (1,106,520) |
Purchase of Company sponsored investments | (14,351,062) | (6,332,090) | (21,044,429) |
Proceeds from sale of Company sponsored investments | 48,637,779 | 2,853,144 | 3,597,130 |
Net cash on deconsolidation of Company sponsored investments | (22,723,853) | 0 | 0 |
Net cash provided by (used in) investing activities | 10,855,074 | (4,260,897) | (18,553,819) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Value of shares withheld related to employee tax withholding | (1,390,482) | (1,925,700) | (4,966,042) |
Payment of dividends | (30,275,867) | (28,094,564) | (24,277,743) |
Repurchase of common stock | 11,340,880 | 21,207,770 | 6,290,077 |
Repurchase of common stock | (38,749,654) | (7,229,249) | 0 |
Net cash used in financing activities | (59,075,123) | (16,041,743) | (22,953,708) |
CASH AND CASH EQUIVALENTS | |||
Net change during the year | 8,746,194 | 7,827,951 | 19,412,232 |
At beginning of year | 84,430,059 | 76,602,108 | 57,189,876 |
At end of year | 93,176,253 | 84,430,059 | 76,602,108 |
Supplemental cash flow information: | |||
Income taxes paid | 24,227,006 | 17,408,094 | 29,527,299 |
Supplemental disclosure of non-cash transactions: | |||
Common stock issued as incentive compensation | 3,655,296 | 4,109,197 | 3,892,424 |
Charitable donation of corporate investments and property and equipment | 0 | 1,989,803 | 1,748,841 |
Net (redemptions) subscriptions of ETF Shares for marketable securities | $ (3,244,940) | $ 6,282,621 | $ (1,555,305) |
Business and Organization (Note
Business and Organization (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
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, sub-advised mutual funds, and separately managed accounts. In addition, DHCM is administrator for the Funds. |
Significant Accounting Policies
Significant Accounting Policies (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) and in accordance with the instructions to Form 10-K. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These Consolidated Financial Statements reflect, in the opinion of the Company, all material adjustments (which include only normal recurring adjustments) necessary to fairly present the Company’s financial position as of December 31, 2019 and 2018 , and results of operations for the years ended December 31, 2019 , 2018 and 2017 . The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expense during the reporting period. Estimates have been prepared on the basis of the most current and best available information, but actual results could differ materially from those estimates. Reclassification Certain prior period amounts and disclosures may have been reclassified to conform to the current period’s financial presentation. Book Value Per Share Book value per share is computed by dividing total shareholders’ equity by the number of shares issued and outstanding at the end of the measurement period. 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 previously held an investment in 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 was an individual series of ETF Series Solutions, which was also an open-end investment company registered under the 1940 Act. The ETF liquidated and its assets were distributed to its shareholders on April 5, 2019. Each of the individual mutual funds represents (and the ETF represented) a separate share class of a legal entity organized under the Trust. The Company performs its consolidation analysis at the individual mutual fund and ETF level and has concluded the mutual funds are, and the ETF was, voting rights entities ("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 Diamond Hill International Fund and the Diamond Hill Global Fund (collectively the "Consolidated Funds") as of December 31, 2019 . The Company deconsolidated the ETF, the Diamond Hill Core Bond Fund and the Diamond Hill High Yield Fund during the year ended December 31, 2019 as the Company's ownership declined to less than 50%. 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 recorded 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, sub-advised mutual funds, and separately managed accounts. Therefore, no disclosures relating to operating segments are presented in the annual financial statements. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market mutual funds held by DHCM. 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 December 31, 2019 or 2018 . Accounts receivable from the Funds were $10.7 million and $9.4 million as of December 31, 2019 and 2018 , respectively. Investments Management determines the appropriate classification of its investments at the time of purchase and re-evaluates its determination at each reporting period. 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, 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. Property and Equipment Property and equipment, consisting of leasehold improvements, computer equipment, furniture, and fixtures, are carried at cost less accumulated depreciation. Accumulated depreciation was $6.4 million and $5.2 million as of December 31, 2019 and 2018 , respectively. Depreciation is calculated using the straight-line method over the estimated lives of the assets. Revenue Recognition – General Revenue is recognized when performance obligations under the terms of a contract with a client are satisfied. The Company earns substantially all of its revenue from investment advisory and fund administration contracts. Investment advisory and administration fees, generally calculated as a percentage of 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 rate fees. Revenue earned for the years ended December 31, 2019 , 2018 and 2017 under contracts with clients include: Year Ended December 31, 2019 Investment advisory Mutual fund administration, net Total revenue Proprietary funds $ 97,327,310 $ 8,614,971 $ 105,942,281 Sub-advised funds and separately managed accounts 30,682,099 — 30,682,099 $ 128,009,409 $ 8,614,971 $ 136,624,380 Year Ended December 31, 2018 Investment advisory Mutual fund administration, net Total revenue Proprietary funds $ 105,228,977 $ 10,309,943 $ 115,538,920 Sub-advised funds and separately managed accounts 30,088,828 — 30,088,828 $ 135,317,805 $ 10,309,943 $ 145,627,748 Year Ended December 31, 2017 Investment advisory Mutual fund administration, net Total revenue Proprietary funds $ 104,233,581 $ 12,513,267 $ 116,746,848 Sub-advised funds and separately managed accounts 28,454,881 — 28,454,881 $ 132,688,462 $ 12,513,267 $ 145,201,729 Revenue Recognition – Investment Advisory Fees The Company’s investment advisory contracts have a single performance obligation (the investment advisory services provided to the client) as the promised services are not separately identifiable from other promises in the contracts and, therefore, are not distinct. All performance obligations to provide advisory services are satisfied over time and the Company recognizes revenue as time passes. The fees we receive for our services under our investment advisory contracts are based on our AUM, which changes based on the value of securities held under each advisory contract. These fees are thereby constrained and represent variable consideration, and are excluded from revenue until the AUM on which our client is billed is no longer subject to market fluctuations. The Company also provides services to UMA programs in which an investment manager provides its strategy model portfolio to the sponsor of the UMA program. The Company is paid a portion of the UMA fee for its services by the program sponsor at a pre-determined rate based on assets in the program. UMA program revenues were $2.0 million , $1.5 million and $1.2 million as of December 31, 2019 , 2018 and 2017 , respectively and are included in investment advisory fees in the consolidated statements of income. Revenue Recognition – Variable Rate Fees The Company manages certain client accounts that provide for variable rate fees. These fees are calculated based on client investment results over rolling five -year periods. The Company records variable rate fees at the end of the contract measurement period because the variable fees earned are constrained based on movements in the financial markets. During the years ended December 31, 2019 , 2018 , and 2017 , the Company recorded $1.3 million , $1.4 million , and $0.2 million , respectively, in variable rate fees. The table below shows AUM subject to variable rate fees and the amount of variable rate fees that would be recognized based upon investment results as of December 31, 2019 : As of December 31, 2019 AUM subject to variable rate fees Unearned variable rate fees Contractual Period Ending: Quarter Ending March 31, 2020 $ 14,805,313 $ — Quarter Ending September 30, 2021 308,024,014 6,932,423 Total $ 322,829,327 $ 6,932,423 The contractual end dates highlight the time remaining until the variable rate fees are scheduled to be earned. The amount of variable rate fees that would be recognized based upon investments results as of December 31, 2019 , 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 performance obligations, such as mutual fund administration, fund accounting, transfer agency, and other related functions. These services are performed concurrently under our agreement with the Funds, and all performance obligations to provide these administrative services are satisfied over time, and the Company recognizes revenue as time passes. 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. These fees are thereby constrained and represent variable consideration, and are excluded from revenue until the AUM on which we bill the Funds is no longer subject to market fluctuations. 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 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. Mutual fund administration gross and net revenue are summarized below: Year Ended December 31, 2019 2018 2017 Mutual fund administration: Administration revenue, gross $ 22,569,946 $ 24,463,538 $ 26,219,881 Fund related expense (13,989,139 ) (14,183,370 ) (13,748,445 ) Revenue, net of related expenses 8,580,807 10,280,168 12,471,436 DHCM C-Share financing: Broker commission advance repayments 240,459 332,680 416,614 Broker commission amortization (206,295 ) (302,905 ) (374,783 ) Financing activity, net 34,164 29,775 41,831 Mutual fund administration revenue, net $ 8,614,971 $ 10,309,943 $ 12,513,267 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, and 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 . The Company records interest and penalties within income tax expense on the income statement. See Note 9 . 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 10 . Newly Issued But Not Yet Adopted Accounting Guidance In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurements.” This update makes certain revisions to existing disclosure requirements for fair value measurement. ASU 2018-13 does not change fair value measurements already required or permitted by existing standards. ASU 2018-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Management does not believe that adoption of ASU 2018-13 will materially impact the Company’s financial statements. |
Investments (Notes)
Investments (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The following table summarizes the carrying value of investments as of December 31, 2019 and 2018 : As of December 31, 2019 2018 Fair value investments: Securities held in Consolidated Funds (a) $ 36,248,360 $ 153,730,480 Company sponsored investments 42,039,044 33,418,088 Company sponsored equity method investments 61,149,774 16,339,649 Total Investments $ 139,437,178 $ 203,488,217 (a) Of the securities held in the Consolidated Funds as of December 31, 2019 , $21.1 million were held directly by the Company and $15.1 million were held by noncontrolling shareholders. Of the securities held in the Consolidated Funds as of December 31, 2018 , $84.7 million were held directly by the Company and $69.0 million were held by noncontrolling shareholders. As of December 31, 2019 , our securities held in Consolidated Funds consisted of the Diamond Hill Global Fund and the Diamond Hill International Fund as our ownership percentage in these investments was greater than 50%. During the year ended December 31, 2019 , the Company began consolidating the Diamond Hill International Fund as ownership increased above 50% and deconsolidated the ETF, the Diamond Hill Core Bond Fund and the Diamond Hill High Yield Fund as our ownership in each declined to less than 50%. As of December 31, 2018 , our securities held in Consolidated Funds consisted of the ETF, the Diamond Hill Core Bond Fund, the Diamond Hill Global Fund, and the Diamond Hill High Yield Fund as our ownership percentage in these investments was greater than 50%. During the year ended December 31, 2018 , the Company consolidated the Diamond Hill Global Fund and the Diamond Hill High Yield Fund as our ownership interest in each increased to above 50%. The components of net investment income (loss) are as follows: For the Year Ended December 31, 2019 2018 2017 Realized gains $ 9,056,152 $ 2,143,695 $ 2,497,707 Unrealized gains (losses) 15,086,747 (16,067,048 ) 8,077,335 Dividends 5,350,146 2,814,026 2,248,185 Interest 987,240 4,857,261 1,195,995 Other investment income (loss) 27,090 (20,612 ) (1,629 ) Investment income (loss), net $ 30,507,375 $ (6,272,678 ) $ 14,017,593 Company Sponsored Equity Method Investments As of December 31, 2019 , our equity method investments consisted of the Diamond Hill Research Opportunities Fund and the Diamond Hill Core Bond Fund, and our ownership percentage in each of these investments was 23% and 36% , respectively. During the first half of 2019 there were periods of time where our ownership in the Diamond Hill High Yield Fund was between 20% and 50% , and thus, a portion of its income is included in the table below for the year ended December 31, 2019 . During the first half of 2019 there were periods of time where our ownership in the Diamond Hill Core Bond Fund was greater than 50%, and thus, a portion of its income is excluded from the table below for the year ended December 31, 2019 . As of December 31, 2018 , our equity method investment consisted of the Diamond Hill Research Opportunities Fund, and our ownership percentage in this investment was 28% and its income is included in the table below for the year ended December 31, 2018 . For the year ended December 31, 2017 , our equity method investments consisted of the Diamond Hill Research Opportunities Fund and the Diamond Hill High Yield Fund, as our ownership percentage in each of these investments were 26% and 48% , respectively, thus their income is included in the table below. 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 December 31, 2019 and 2018 and for the years ended December 31, 2019 , 2018 and 2017 : As of December 31, 2019 2018 Total assets $ 237,073,628 $ 80,845,124 Total liabilities 38,453,935 22,287,437 Net assets 198,619,693 58,557,687 DHCM’s portion of net assets 61,149,774 16,339,649 For the Year Ended December 31, 2019 2018 2017 Investment income $ 5,346,588 $ 1,154,007 $ 2,944,836 Expenses 1,551,291 978,322 1,176,896 Net realized gains 6,390,727 1,918,661 4,432,850 Net change in unrealized appreciation (depreciation) 14,805,837 (10,229,319 ) 5,613,627 Net income (loss) 24,991,861 (8,134,973 ) 11,814,417 DHCM’s portion of net income (loss) 8,301,571 (2,400,467 ) 3,206,702 |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company determines the fair value of our cash equivalents and certain investments using the following 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. We do not value any investments using Level 3 inputs. 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 as of December 31, 2019 and 2018 : December 31, 2019 Level 1 Level 2 Level 3 Total Cash equivalents $ 90,144,943 $ — $ — $ 90,144,943 Fair value investments Securities held in Consolidated Funds (a) 19,238,197 17,010,163 — $ 36,248,360 Company sponsored investments 42,039,044 — — $ 42,039,044 December 31, 2018 Cash equivalents 80,690,647 — — $ 80,690,647 Fair value investments Securities held in Consolidated Funds (a) 43,595,438 110,135,042 — $ 153,730,480 Company sponsored investments 33,418,088 — — $ 33,418,088 (a) Of the securities held in the Consolidated Funds as of December 31, 2019 , $21.1 million were held directly by the Company and $15.1 million were held by noncontrolling shareholders. Of the securities held in the Consolidated Funds as of December 31, 2018 , $84.7 million were held directly by the Company and $69.0 million were held by noncontrolling shareholders. 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 any of the years ended December 31, 2019 , 2018 , and 2017 . Changes to fair values of the investments are recorded in the Company’s consolidated statements of income as investment income (loss), net. |
Line Of Credit (Notes)
Line Of Credit (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit | Line of Credit The Company has a committed Line of Credit Agreement (the "Credit Agreement") with a commercial bank that matures on December 25, 2020 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 1.00% . The Company pays a commitment fee on the unused portion of the facility, accruing at a rate per annum of 0.10% . The Company has no t borrowed under the Credit Agreement as of and for the period ended December 31, 2019 . The proceeds of the Credit Agreement may be used by the Company and its subsidiaries for ongoing working capital needs, to seed new and existing investment strategies, and for other general corporate purposes. The Credit Agreement contains representations, warranties and covenants that are customary for agreements of this type. |
Capital Stock (Notes)
Capital Stock (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Capital Stock | Capital Stock Common Shares The Company has only one class of securities outstanding, common shares, no par value per share. Authorization of Preferred Shares The Company’s Amended and Restated Articles of Incorporation authorize the issuance of 1,000,000 “blank check” preferred shares with such designations, rights and preferences as may be determined from time to time by the Company’s Board of Directors. The Board of Directors is authorized, without shareholder approval, to issue preferred shares with dividend, liquidation, conversion, voting, or other rights, which could adversely affect the voting or other rights of the holders of the common shares. There were no preferred shares issued or outstanding at December 31, 2019 or 2018 . |
Compensation Plans (Notes)
Compensation Plans (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Compensation Plans | Compensation Plans Equity Incentive Plan The Company’s equity and incentive plan (the “Plan”) is intended to facilitate the Company’s ability to attract and retain staff, provide additional incentive to employees and directors, and promote the success of the Company’s business. The Plan authorizes the issuance of 600,000 common shares of the Company in various forms of equity awards. The Plan also authorizes cash incentive awards. As of December 31, 2019 , there were 233,582 common shares available for awards under the Plan. The Plan provides that the Board of Directors, or a committee appointed by the Board, may grant awards and otherwise administer the Plan. Restricted stock units and restricted stock grants issued under the Plan, which vest over time, are recorded as deferred compensation in the equity section of the balance sheet on the grant date and then recognized as compensation expense based on the grant date price over the vesting period of the respective grant. Stock grants issued under the Plan are recorded as compensation expense based on the grant date price. Share-Based Payment Transactions The Company issues restricted stock units and restricted stock awards (sometimes referred to collectively as, “Restricted Stock”) under the Plan. Restricted stock units represent common 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 years ended December 31, 2019 and 2018 : Shares Weighted-Average Outstanding Restricted Stock as of December 31, 2018 214,575 $ 177.22 Grants issued 50,969 146.59 Grants vested (23,500 ) 125.60 Grants forfeited (14,200 ) 180.53 Outstanding Restricted Stock as of December 31, 2019 227,844 $ 175.49 The weighted-average grant date price per share of Restricted Stock issued during the years ended December 31, 2018 and 2017 was $195.00 and $204.46 , respectively. The total fair value of Restricted Stock vested, as of their respective vesting dates, during the years ended December 31, 2019 , 2018 and 2017 was $3.3 million , $5.8 million and $13.3 million , respectively. Total deferred equity compensation related to unvested Restricted Stock grants was $20.3 million as of December 31, 2019 . Compensation expense related to Restricted Stock grants is calculated based upon the fair market value of the common shares on the 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: 2020 2021 2022 2023 2024 Thereafter Total $ 6,505,660 $ 5,229,101 $ 4,246,953 $ 2,181,995 $ 1,049,747 $ 1,118,434 $ 20,331,890 Stock Grant Transactions The following table represents shares issued as part of our incentive compensation program during the years ended December 31, 2019 , 2018 , and 2017 : Shares Issued Grant Date Value December 31, 2019 24,048 $ 3,655,296 December 31, 2018 20,153 4,109,197 December 31, 2017 19,219 3,892,424 401(k) Plan The Company sponsors a 401(k) plan in which all employees are eligible to participate. Employees may contribute a portion of their compensation subject to certain limits based on federal tax laws. Effective April 1, 2018, the Company increased its matching contributions of common shares of the Company with a value equal to 250 percent of the first six percent of an employee’s compensation contributed to the plan. Prior to April 1, 2018, the Company made matching contributions of common shares of the Company with a value equal to 200 percent of the first six percent of an employee’s compensation contribution to the plan. Employees become fully vested in the matching contributions after six plan years of employment. The following table summarizes the Company’s expenses attributable to the 401(k) plan during the years ended December 31, 2019 , 2018 and 2017 : Shares Issued Company Contribution December 31, 2019 17,651 $ 2,496,936 December 31, 2018 11,967 2,231,735 December 31, 2017 8,478 1,710,785 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. The gain (loss) on deferred compensation plan investments is recorded as deferred compensation expense (benefit), and is included in operating income. Deferred compensation expense is offset by an equal amount in investment income below net operating income on the consolidated statements of income statement, and thus has no impact on net income attributable to the Company. Deferred compensation liability was $30.3 million and $22.4 million as of December 31, 2019 and 2018 , respectively. |
Operating Leases (Notes)
Operating Leases (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Operating Leases | Operating Leases The Company currently leases office space of approximately 37,829 square feet at one location. In February 2016, the FASB issued ASU 2016-02, “Leases”, which, among other things, requires lessees to recognize most leases on-balance sheet. The Company adopted this ASU on its effective date, January 1, 2019, using a modified retrospective approach without restating prior comparative periods. Upon implementation, the Company recorded a right-of use asset of approximately $2.9 million , which includes the lease liability amount less deferred rent liabilities and lease incentives received, and a lease liability of approximately $3.6 million related to our office lease. As of December 31, 2019 , the carrying value of the right-of use asset, which is included in property and equipment, net of depreciation on the consolidated balance sheets, was approximately $2.5 million . As of December 31, 2019 , the carrying value of the lease liability which is included in accounts payable and accrued expenses on the consolidated balance sheets, was approximately $3.1 million . The adoption of this ASU had no impact on our consolidated statements of income and cash flows and there was no cumulative-effect adjustment required to opening retained earnings. The following table summarizes the total lease and the related operating expenses for the years ended December 31, 2019 , 2018 and 2017 : For the year ended December 31, 2019 2018 2017 $ 971,203 $ 970,143 $ 936,008 Lease and the related operating expenses are recorded in general and administrative expenses on the consolidated statements of income. The approximate future minimum lease payments under the operating lease are as follows: Future Minimum Lease Payments by Year Total 2020 2021 2022 2023 2024 Thereafter $ 3,267,481 $ 614,721 $ 624,179 $ 624,179 $ 624,179 $ 624,179 $ 156,044 In addition to the above lease payments, the Company is also responsible for normal operating expenses of the property. These annual operating expenses were approximately $0.4 million in each of 2019 , 2018 and 2017 . |
Income Taxes (Notes)
Income Taxes (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes consists of: As of December 31, 2019 2018 2017 Current federal income tax provision $ 13,952,230 $ 15,731,258 $ 24,749,832 Current state and local income tax provision 3,656,997 8,560,479 1,774,395 Deferred income tax expense (benefit) 1,079,247 (5,622,396 ) 2,893,063 Provision for income taxes $ 18,688,474 $ 18,669,341 $ 29,417,290 A reconciliation of income tax expense at the statutory federal rate to the Company’s income tax expense is as follows: 2019 2018 2017 Income tax computed at statutory rate $ 16,472,987 $ 13,646,583 $ 28,356,636 Expense (benefit) attributable to redeemable noncontrolling interests (a) (1,007,012 ) 222,624 (564,449 ) State and local income taxes, net of federal benefit 2,835,215 2,993,730 1,153,357 Change in uncertain state and local tax positions, net of federal benefit (47,197 ) 2,982,337 — Revaluation adjustment of net deferred tax assets (b) — (917,288 ) 3,557,039 Excess tax benefits on vesting of Restricted Stock (70,878 ) (667,697 ) (2,420,250 ) Income tax benefit from dividends paid on Restricted Stock (431,192 ) (340,200 ) (418,583 ) Interest and Penalties 101,010 786,711 — Other 835,541 (37,459 ) (246,460 ) Income tax expense $ 18,688,474 $ 18,669,341 $ 29,417,290 (a) The provision for income taxes includes expense (benefit) attributable to the fact that the Company’s operations include the Consolidated Funds which are not subject to federal income taxes. Accordingly, a portion of the Company’s earnings are not subject to corporate tax levels. (b) The provision for income taxes for 2018 includes the remeasurement of our net deferred tax assets of $(0.9) million due to the additional state and local tax we expect to pay in future tax periods. The provision for income taxes for 2017 includes a non-recurring charge of $3.6 million for the remeasurement of our net deferred tax assets to reflect the effect of the U.S. tax law changes enacted on December 22, 2017. Deferred income taxes and benefits arise from temporary differences between taxable income for financial statement and income tax return purposes. Net deferred tax assets consisted of the following at December 31, 2019 and 2018 : 2019 2018 Stock-based compensation $ 4,571,430 $ 4,025,255 Accrued compensation 8,496,929 6,684,531 Unrealized losses (gains) (2,150,699 ) 1,323,181 Property and equipment (553,265 ) (498,271 ) Other assets and liabilities 22,458 (68,596 ) Net deferred tax assets $ 10,386,853 $ 11,466,100 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 December 31, 2019 , 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 recognizes tax benefits related to positions taken, or expected to be taken, on its tax returns, only if the positions are "more-likely-than-not" sustainable. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company and its subsidiaries file income tax returns with the Internal Revenue Service and the taxing authorities of various states. Generally the Company is subject to federal, state and local examinations by tax authorities for the tax years ended December 31, 2015 through 2019. During 2019 the Company closed an examination with the New York State Department of Finance and Taxation for tax years 2014 through 2016. During 2018, the Company reassessed its New York City filing positions and filed a Voluntary Disclosure Agreement with the New York City Department of Finance. The Company is currently under examination by the California Franchise Tax Board for the Company’s 2015 and 2016 tax years and the audit is ongoing. The outcome of the current tax examination is not expected to have a material impact on the Company’s financial statements. The Company believes that some of these audits and negotiations will conclude within the next 12 months and that it is reasonably possible the amount of uncertain tax positions, including interest, may change by an immaterial amount due to settlements of audits. The amount of uncertain tax positions as of December 31, 2019 , 2018 and 2017 , respectively, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions is as follows: 2019 2018 2017 Uncertain tax positions, beginning of the year $ 2,982,337 $ — $ — Gross addition for tax positions of the current year — — — Gross additions for tax positions of prior years — 2,982,337 — Reductions of tax positions of prior years for: Lapses of applicable statutes of limitations — — — Settlements during the period (2,935,140 ) — — Changes in judgment/excess reserve (47,197 ) — — Uncertain tax positions, end of year $ — $ 2,982,337 $ — In addition to the above uncertain tax positions, the Company recognized $0.1 million and $0.8 million of interest and penalties in the years ended December 31, 2019 and 2018, respectively. No |
Earnings Per Share (Notes)
Earnings Per Share (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
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: Year Ended December 31, 2019 2018 2017 Net Income $ 59,754,319 $ 46,314,388 $ 51,601,669 Less: Net loss (income) attributable to redeemable noncontrolling interest (4,795,295 ) 1,061,441 (1,612,712 ) Net income attributable to common shareholders $ 54,959,024 $ 47,375,829 $ 49,988,957 Weighted average number of outstanding shares 3,436,574 3,512,470 3,448,824 Dilutive impact of restricted stock units 67 2,058 3,014 Weighted average number of outstanding shares - Diluted 3,436,641 3,514,528 3,451,838 Earnings per share attributable to common shareholders Basic $ 15.99 $ 13.49 $ 14.49 Diluted $ 15.99 $ 13.48 $ 14.48 |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
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. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) and in accordance with the instructions to Form 10-K. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These Consolidated Financial Statements reflect, in the opinion of the Company, all material adjustments (which include only normal recurring adjustments) necessary to fairly present the Company’s financial position as of December 31, 2019 and 2018 , and results of operations for the years ended December 31, 2019 , 2018 and 2017 . The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expense during the reporting period. Estimates have been prepared on the basis of the most current and best available information, but actual results could differ materially 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 previously held an investment in 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 was an individual series of ETF Series Solutions, which was also an open-end investment company registered under the 1940 Act. The ETF liquidated and its assets were distributed to its shareholders on April 5, 2019. Each of the individual mutual funds represents (and the ETF represented) a separate share class of a legal entity organized under the Trust. The Company performs its consolidation analysis at the individual mutual fund and ETF level and has concluded the mutual funds are, and the ETF was, voting rights entities ("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 Diamond Hill International Fund and the Diamond Hill Global Fund (collectively the "Consolidated Funds") as of December 31, 2019 . The Company deconsolidated the ETF, the Diamond Hill Core Bond Fund and the Diamond Hill High Yield Fund during the year ended December 31, 2019 as the Company's ownership declined to less than 50%. |
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 recorded 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, sub-advised mutual funds, and separately managed accounts. Therefore, no disclosures relating to operating segments are presented in the annual financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market mutual funds held by DHCM. |
Accounts Receivable | Accounts 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 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, 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. |
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. Accumulated depreciation was $6.4 million and $5.2 million as of December 31, 2019 and 2018 , respectively. Depreciation is calculated using the straight-line method over the estimated lives of the assets. |
Revenue Recognition | 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 performance obligations, such as mutual fund administration, fund accounting, transfer agency, and other related functions. These services are performed concurrently under our agreement with the Funds, and all performance obligations to provide these administrative services are satisfied over time, and the Company recognizes revenue as time passes. 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. These fees are thereby constrained and represent variable consideration, and are excluded from revenue until the AUM on which we bill the Funds is no longer subject to market fluctuations. 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 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. Revenue Recognition – Investment Advisory Fees The Company’s investment advisory contracts have a single performance obligation (the investment advisory services provided to the client) as the promised services are not separately identifiable from other promises in the contracts and, therefore, are not distinct. All performance obligations to provide advisory services are satisfied over time and the Company recognizes revenue as time passes. The fees we receive for our services under our investment advisory contracts are based on our AUM, which changes based on the value of securities held under each advisory contract. These fees are thereby constrained and represent variable consideration, and are excluded from revenue until the AUM on which our client is billed is no longer subject to market fluctuations. The Company also provides services to UMA programs in which an investment manager provides its strategy model portfolio to the sponsor of the UMA program. The Company is paid a portion of the UMA fee for its services by the program sponsor at a pre-determined rate based on assets in the program. UMA program revenues were $2.0 million , $1.5 million and $1.2 million as of December 31, 2019 , 2018 and 2017 , respectively and are included in investment advisory fees in the consolidated statements of income. Revenue Recognition – Variable Rate Fees The Company manages certain client accounts that provide for variable rate fees. These fees are calculated based on client investment results over rolling five Revenue Recognition – General |
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, and 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 . The Company records interest and penalties within income tax expense on the income statement. See Note 9 . |
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 10 |
New and Newly Issued But Not Yet Adopted Accounting Guidance | Newly Issued But Not Yet Adopted Accounting Guidance In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurements.” This update makes certain revisions to existing disclosure requirements for fair value measurement. ASU 2018-13 does not change fair value measurements already required or permitted by existing standards. ASU 2018-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Management does not believe that adoption of ASU 2018-13 will materially impact the Company’s financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Revenue under contracts with clients | Revenue earned for the years ended December 31, 2019 , 2018 and 2017 under contracts with clients include: Year Ended December 31, 2019 Investment advisory Mutual fund administration, net Total revenue Proprietary funds $ 97,327,310 $ 8,614,971 $ 105,942,281 Sub-advised funds and separately managed accounts 30,682,099 — 30,682,099 $ 128,009,409 $ 8,614,971 $ 136,624,380 Year Ended December 31, 2018 Investment advisory Mutual fund administration, net Total revenue Proprietary funds $ 105,228,977 $ 10,309,943 $ 115,538,920 Sub-advised funds and separately managed accounts 30,088,828 — 30,088,828 $ 135,317,805 $ 10,309,943 $ 145,627,748 Year Ended December 31, 2017 Investment advisory Mutual fund administration, net Total revenue Proprietary funds $ 104,233,581 $ 12,513,267 $ 116,746,848 Sub-advised funds and separately managed accounts 28,454,881 — 28,454,881 $ 132,688,462 $ 12,513,267 $ 145,201,729 |
Assets under management (AUM) subject to variable rate fees and the variable rate fees | The table below shows AUM subject to variable rate fees and the amount of variable rate fees that would be recognized based upon investment results as of December 31, 2019 : As of December 31, 2019 AUM subject to variable rate fees Unearned variable rate fees Contractual Period Ending: Quarter Ending March 31, 2020 $ 14,805,313 $ — Quarter Ending September 30, 2021 308,024,014 6,932,423 Total $ 322,829,327 $ 6,932,423 |
Mutual fund administration gross and net revenue | Mutual fund administration gross and net revenue are summarized below: Year Ended December 31, 2019 2018 2017 Mutual fund administration: Administration revenue, gross $ 22,569,946 $ 24,463,538 $ 26,219,881 Fund related expense (13,989,139 ) (14,183,370 ) (13,748,445 ) Revenue, net of related expenses 8,580,807 10,280,168 12,471,436 DHCM C-Share financing: Broker commission advance repayments 240,459 332,680 416,614 Broker commission amortization (206,295 ) (302,905 ) (374,783 ) Financing activity, net 34,164 29,775 41,831 Mutual fund administration revenue, net $ 8,614,971 $ 10,309,943 $ 12,513,267 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of market value of investments | The following table summarizes the carrying value of investments as of December 31, 2019 and 2018 : As of December 31, 2019 2018 Fair value investments: Securities held in Consolidated Funds (a) $ 36,248,360 $ 153,730,480 Company sponsored investments 42,039,044 33,418,088 Company sponsored equity method investments 61,149,774 16,339,649 Total Investments $ 139,437,178 $ 203,488,217 (a) Of the securities held in the Consolidated Funds as of December 31, 2019 , $21.1 million were held directly by the Company and $15.1 million were held by noncontrolling shareholders. Of the securities held in the Consolidated Funds as of December 31, 2018 , $84.7 million were held directly by the Company and $69.0 million were held by noncontrolling shareholders. |
Investment Income | The components of net investment income (loss) are as follows: For the Year Ended December 31, 2019 2018 2017 Realized gains $ 9,056,152 $ 2,143,695 $ 2,497,707 Unrealized gains (losses) 15,086,747 (16,067,048 ) 8,077,335 Dividends 5,350,146 2,814,026 2,248,185 Interest 987,240 4,857,261 1,195,995 Other investment income (loss) 27,090 (20,612 ) (1,629 ) Investment income (loss), net $ 30,507,375 $ (6,272,678 ) $ 14,017,593 |
Equity Method Investments | The following table includes the condensed summary financial information from the Company’s equity method investments as of December 31, 2019 and 2018 and for the years ended December 31, 2019 , 2018 and 2017 : As of December 31, 2019 2018 Total assets $ 237,073,628 $ 80,845,124 Total liabilities 38,453,935 22,287,437 Net assets 198,619,693 58,557,687 DHCM’s portion of net assets 61,149,774 16,339,649 For the Year Ended December 31, 2019 2018 2017 Investment income $ 5,346,588 $ 1,154,007 $ 2,944,836 Expenses 1,551,291 978,322 1,176,896 Net realized gains 6,390,727 1,918,661 4,432,850 Net change in unrealized appreciation (depreciation) 14,805,837 (10,229,319 ) 5,613,627 Net income (loss) 24,991,861 (8,134,973 ) 11,814,417 DHCM’s portion of net income (loss) 8,301,571 (2,400,467 ) 3,206,702 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Investment Values Based Upon Fair Value Hierarchy | 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 as of December 31, 2019 and 2018 : December 31, 2019 Level 1 Level 2 Level 3 Total Cash equivalents $ 90,144,943 $ — $ — $ 90,144,943 Fair value investments Securities held in Consolidated Funds (a) 19,238,197 17,010,163 — $ 36,248,360 Company sponsored investments 42,039,044 — — $ 42,039,044 December 31, 2018 Cash equivalents 80,690,647 — — $ 80,690,647 Fair value investments Securities held in Consolidated Funds (a) 43,595,438 110,135,042 — $ 153,730,480 Company sponsored investments 33,418,088 — — $ 33,418,088 (a) Of the securities held in the Consolidated Funds as of December 31, 2019 , $21.1 million were held directly by the Company and $15.1 million were held by noncontrolling shareholders. Of the securities held in the Consolidated Funds as of December 31, 2018 , $84.7 million were held directly by the Company and $69.0 million were held by noncontrolling shareholders. |
Compensation Plans (Tables)
Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [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 years ended December 31, 2019 and 2018 : Shares Weighted-Average Outstanding Restricted Stock as of December 31, 2018 214,575 $ 177.22 Grants issued 50,969 146.59 Grants vested (23,500 ) 125.60 Grants forfeited (14,200 ) 180.53 Outstanding Restricted Stock as of December 31, 2019 227,844 $ 175.49 |
Expense recognition of deferred compensation | The recognition of compensation expense related to deferred compensation over the remaining vesting periods is as follows: 2020 2021 2022 2023 2024 Thereafter Total $ 6,505,660 $ 5,229,101 $ 4,246,953 $ 2,181,995 $ 1,049,747 $ 1,118,434 $ 20,331,890 |
Schedule of Grants Issued and Grant Date Fair Value | The following table represents shares issued as part of our incentive compensation program during the years ended December 31, 2019 , 2018 , and 2017 : Shares Issued Grant Date Value December 31, 2019 24,048 $ 3,655,296 December 31, 2018 20,153 4,109,197 December 31, 2017 19,219 3,892,424 |
Summary of company expenses attributable to the 401(k) Plan | The following table summarizes the Company’s expenses attributable to the 401(k) plan during the years ended December 31, 2019 , 2018 and 2017 : Shares Issued Company Contribution December 31, 2019 17,651 $ 2,496,936 December 31, 2018 11,967 2,231,735 December 31, 2017 8,478 1,710,785 |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Summary of total lease and operating expense | The following table summarizes the total lease and the related operating expenses for the years ended December 31, 2019 , 2018 and 2017 : For the year ended December 31, 2019 2018 2017 $ 971,203 $ 970,143 $ 936,008 |
Future minimum lease payments under the operating leases | The approximate future minimum lease payments under the operating lease are as follows: Future Minimum Lease Payments by Year Total 2020 2021 2022 2023 2024 Thereafter $ 3,267,481 $ 614,721 $ 624,179 $ 624,179 $ 624,179 $ 624,179 $ 156,044 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of consolidated provision for income taxes | The provision for income taxes consists of: As of December 31, 2019 2018 2017 Current federal income tax provision $ 13,952,230 $ 15,731,258 $ 24,749,832 Current state and local income tax provision 3,656,997 8,560,479 1,774,395 Deferred income tax expense (benefit) 1,079,247 (5,622,396 ) 2,893,063 Provision for income taxes $ 18,688,474 $ 18,669,341 $ 29,417,290 |
Summary of reconciliation of income tax expense | A reconciliation of income tax expense at the statutory federal rate to the Company’s income tax expense is as follows: 2019 2018 2017 Income tax computed at statutory rate $ 16,472,987 $ 13,646,583 $ 28,356,636 Expense (benefit) attributable to redeemable noncontrolling interests (a) (1,007,012 ) 222,624 (564,449 ) State and local income taxes, net of federal benefit 2,835,215 2,993,730 1,153,357 Change in uncertain state and local tax positions, net of federal benefit (47,197 ) 2,982,337 — Revaluation adjustment of net deferred tax assets (b) — (917,288 ) 3,557,039 Excess tax benefits on vesting of Restricted Stock (70,878 ) (667,697 ) (2,420,250 ) Income tax benefit from dividends paid on Restricted Stock (431,192 ) (340,200 ) (418,583 ) Interest and Penalties 101,010 786,711 — Other 835,541 (37,459 ) (246,460 ) Income tax expense $ 18,688,474 $ 18,669,341 $ 29,417,290 (a) The provision for income taxes includes expense (benefit) attributable to the fact that the Company’s operations include the Consolidated Funds which are not subject to federal income taxes. Accordingly, a portion of the Company’s earnings are not subject to corporate tax levels. (b) The provision for income taxes for 2018 includes the remeasurement of our net deferred tax assets of $(0.9) million due to the additional state and local tax we expect to pay in future tax periods. The provision for income taxes for 2017 includes a non-recurring charge of $3.6 million for the remeasurement of our net deferred tax assets to reflect the effect of the U.S. tax law changes enacted on December 22, 2017. |
Summary of deferred tax assets and liabilities | Net deferred tax assets consisted of the following at December 31, 2019 and 2018 : 2019 2018 Stock-based compensation $ 4,571,430 $ 4,025,255 Accrued compensation 8,496,929 6,684,531 Unrealized losses (gains) (2,150,699 ) 1,323,181 Property and equipment (553,265 ) (498,271 ) Other assets and liabilities 22,458 (68,596 ) Net deferred tax assets $ 10,386,853 $ 11,466,100 |
Reconciliation of uncertain tax positions | The amount of uncertain tax positions as of December 31, 2019 , 2018 and 2017 , respectively, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions is as follows: 2019 2018 2017 Uncertain tax positions, beginning of the year $ 2,982,337 $ — $ — Gross addition for tax positions of the current year — — — Gross additions for tax positions of prior years — 2,982,337 — Reductions of tax positions of prior years for: Lapses of applicable statutes of limitations — — — Settlements during the period (2,935,140 ) — — Changes in judgment/excess reserve (47,197 ) — — Uncertain tax positions, end of year $ — $ 2,982,337 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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: Year Ended December 31, 2019 2018 2017 Net Income $ 59,754,319 $ 46,314,388 $ 51,601,669 Less: Net loss (income) attributable to redeemable noncontrolling interest (4,795,295 ) 1,061,441 (1,612,712 ) Net income attributable to common shareholders $ 54,959,024 $ 47,375,829 $ 49,988,957 Weighted average number of outstanding shares 3,436,574 3,512,470 3,448,824 Dilutive impact of restricted stock units 67 2,058 3,014 Weighted average number of outstanding shares - Diluted 3,436,641 3,514,528 3,451,838 Earnings per share attributable to common shareholders Basic $ 15.99 $ 13.49 $ 14.49 Diluted $ 15.99 $ 13.48 $ 14.48 |
Significant Accounting Polici_4
Significant Accounting Policies - Revenue From Contracts with Customers (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 136,624,380 | $ 145,627,748 | $ 145,201,729 |
Investment advisory | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 128,009,409 | 135,317,805 | 132,688,462 |
Mutual fund administration revenue, net | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 8,614,971 | 10,309,943 | 12,513,267 |
Proprietary funds | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 105,942,281 | 115,538,920 | 116,746,848 |
Proprietary funds | Investment advisory | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 97,327,310 | 105,228,977 | 104,233,581 |
Proprietary funds | Mutual fund administration revenue, net | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 8,614,971 | 10,309,943 | 12,513,267 |
Sub-advised funds and separately managed accounts | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 30,682,099 | 30,088,828 | 28,454,881 |
Sub-advised funds and separately managed accounts | Investment advisory | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 30,682,099 | 30,088,828 | 28,454,881 |
Sub-advised funds and separately managed accounts | Mutual fund administration revenue, net | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici_5
Significant Accounting Policies - Summary of Assets Under Management Subject to Fees (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Quarter Ending March 31, 2020 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable rate fees | $ 14,805,313 |
Unearned variable rate fees | 0 |
Quarter Ending September 30, 2021 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable rate fees | 308,024,014 |
Unearned variable rate fees | 6,932,423 |
Total | |
Principal Transaction Revenue [Line Items] | |
AUM subject to variable rate fees | 322,829,327 |
Unearned variable rate fees | $ 6,932,423 |
Significant Accounting Polici_6
Significant Accounting Policies - Mutual Fund Administration Revenue (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from External Customer [Line Items] | |||
Total revenue | $ 136,624,380 | $ 145,627,748 | $ 145,201,729 |
Administration revenue, gross | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 22,569,946 | 24,463,538 | 26,219,881 |
Fund related expense | |||
Revenue from External Customer [Line Items] | |||
Expenses | (13,989,139) | (14,183,370) | (13,748,445) |
Revenue, net of related expenses | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 8,580,807 | 10,280,168 | 12,471,436 |
Broker Commission | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 240,459 | 332,680 | 416,614 |
Expenses | (206,295) | (302,905) | (374,783) |
Financing activity, net | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 34,164 | 29,775 | 41,831 |
Mutual fund administration revenue, net | |||
Revenue from External Customer [Line Items] | |||
Total revenue | $ 8,614,971 | $ 10,309,943 | $ 12,513,267 |
Significant Accounting Polici_7
Significant Accounting Policies - Textual (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Business Organization And Significant Accounting Policies [Line Items] | |||
Number of business segment | Segment | 1 | ||
Allowance for doubtful accounts | $ 0 | $ 0 | |
Accounts receivable, related parties | 10,700,000 | 9,400,000 | |
Accumulated depreciation | $ 6,400,000 | 5,200,000 | |
Client performance period | 5 years | ||
Revenue | $ 136,624,380 | 145,627,748 | $ 145,201,729 |
Advance commissions amortization period | 12 months | ||
UMA Program [Member] | |||
Business Organization And Significant Accounting Policies [Line Items] | |||
Revenue | $ 2,000,000 | 1,500,000 | 1,200,000 |
Variable rate fees | |||
Business Organization And Significant Accounting Policies [Line Items] | |||
Revenue | 1,300,000 | 1,400,000 | 200,000 |
Mutual fund administration revenue, net | |||
Business Organization And Significant Accounting Policies [Line Items] | |||
Revenue | $ 8,614,971 | $ 10,309,943 | $ 12,513,267 |
Investments - Summary of Marke
Investments - Summary of Market Value of Investments (Detail) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Investment Holdings [Line Items] | ||
Company sponsored equity method investments | $ 61,149,774 | $ 16,339,649 |
Total Investments | 139,437,178 | 203,488,217 |
Securities held in Consolidated Funds | ||
Investment Holdings [Line Items] | ||
Fair value investments | 36,248,360 | 153,730,480 |
Securities held in Consolidated Funds | Parent | ||
Investment Holdings [Line Items] | ||
Fair value investments | 21,100,000 | 84,700,000 |
Securities held in Consolidated Funds | Redeemable Noncontrolling Interest | ||
Investment Holdings [Line Items] | ||
Fair value investments | 15,100,000 | 69,000,000 |
Company sponsored investments | ||
Investment Holdings [Line Items] | ||
Fair value investments | 42,039,044 | 33,418,088 |
Fair value investments | $ 42,039,044 | $ 33,418,088 |
Investments - Equity Method In
Investments - Equity Method Investments (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |||
Total assets | $ 237,073,628 | $ 80,845,124 | |
Total liabilities | 38,453,935 | 22,287,437 | |
Net assets | 198,619,693 | 58,557,687 | |
DHCM's portion of net assets | 61,149,774 | 16,339,649 | |
Investment income | 5,346,588 | 1,154,007 | $ 2,944,836 |
Expenses | 1,551,291 | 978,322 | 1,176,896 |
Net realized gains | 6,390,727 | 1,918,661 | 4,432,850 |
Net change in unrealized appreciation (depreciation) | 14,805,837 | (10,229,319) | 5,613,627 |
Net income (loss) | 24,991,861 | (8,134,973) | 11,814,417 |
DHCM’s portion of net income (loss) | $ 8,301,571 | $ (2,400,467) | $ 3,206,702 |
Investments - Investment Income
Investments - Investment Income (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |||
Realized gains | $ 9,056,152 | $ 2,143,695 | $ 2,497,707 |
Unrealized gains (losses) | 15,086,747 | (16,067,048) | 8,077,335 |
Dividends | 5,350,146 | 2,814,026 | 2,248,185 |
Interest | 987,240 | 4,857,261 | 1,195,995 |
Other investment income (loss) | 27,090 | (20,612) | (1,629) |
Net investment income (loss) | $ 30,507,375 | $ (6,272,678) | $ 14,017,593 |
Investments - Textual (Details
Investments - Textual (Details) - Securities held in Consolidated Funds - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading Investments | $ 36,248,360 | $ 153,730,480 |
Parent | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading Investments | 21,100,000 | 84,700,000 |
Redeemable Noncontrolling Interest | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading Investments | $ 15,100,000 | $ 69,000,000 |
Investments - Equity Investmen
Investments - Equity Investment Ownership (Details) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Research Opportunities Fund | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 23.00% | 28.00% | 26.00% |
Core Bond Fund | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 36.00% | ||
High Yield Fund | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 48.00% | ||
Minimum | Research Opportunities Fund | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 20.00% | ||
Maximum | Research Opportunities Fund | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 50.00% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Investment Values Based Upon Fair Value Hierarchy (Detail) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 90,144,943 | $ 80,690,647 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 90,144,943 | 80,690,647 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 36,248,360 | 153,730,480 |
Securities held in Consolidated Funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 19,238,197 | 43,595,438 |
Securities held in Consolidated Funds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 17,010,163 | 110,135,042 |
Securities held in Consolidated Funds | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 0 | 0 |
Company sponsored investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 42,039,044 | 33,418,088 |
Company sponsored investments | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 42,039,044 | 33,418,088 |
Company sponsored investments | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 0 | 0 |
Company sponsored investments | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 0 | 0 |
Parent | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 21,100,000 | 84,700,000 |
Redeemable Noncontrolling Interest | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | $ 15,100,000 | $ 69,000,000 |
Fair Value Measurements - Textu
Fair Value Measurements - Textual (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 90,144,943 | $ 80,690,647 |
Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 36,248,360 | 153,730,480 |
Parent | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 21,100,000 | 84,700,000 |
Redeemable Noncontrolling Interest | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 15,100,000 | 69,000,000 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 90,144,943 | 80,690,647 |
Level 1 | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | $ 19,238,197 | $ 43,595,438 |
Line Of Credit (Details)
Line Of Credit (Details) - The Credit Agreement - Line of Credit | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 25,000,000 |
Debt Instrument, Unused Borrowing Capacity Fee Rate | 0.10% |
Long-term Line of Credit, Noncurrent | $ 0 |
London Interbank Offered Rate (LIBOR) | |
Line of Credit Facility [Line Items] | |
Debt Instrument, Basis Spread on Variable Rate | 1.00% |
Capital Stock (Details)
Capital Stock (Details) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Equity [Abstract] | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Compensation Plans - Roll Forw
Compensation Plans - Roll Forward of Restricted Stock Grants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Shares | |||
Outstanding shares, Beginning Balance (in shares) | 211,575 | ||
Outstanding shares, Ending Balance (in shares) | 227,844 | 211,575 | |
Restricted Stock Units (RSUs) | |||
Shares | |||
Outstanding shares, Beginning Balance (in shares) | 214,575 | ||
Grants issued (in shares) | 50,969 | ||
Grants vested (in shares) | (23,500) | ||
Grants forfeited (in shares) | (14,200) | ||
Outstanding shares, Ending Balance (in shares) | 227,844 | 214,575 | |
Weighted-Average Grant Date Price per Share | |||
Beginning of the period (in dollars per share) | $ 177.22 | ||
Grants issued (in dollars per share) | 146.59 | $ 195 | $ 204.46 |
Grants vested (in dollars per share) | 125.60 | ||
Grants forfeited (in dollars per share) | 180.53 | ||
End of the period (in dollars per share) | $ 175.49 | $ 177.22 |
Compensation Plans - Summary o
Compensation Plans - Summary of Deferred Compensation Expense Recognition (Details) - Restricted Stock Units (RSUs) | Dec. 31, 2019USD ($) |
Expense recognition of deferred compensation | |
2020 | $ 6,505,660 |
2021 | 5,229,101 |
2022 | 4,246,953 |
2023 | 2,181,995 |
2024 | 1,049,747 |
Thereafter | 1,118,434 |
Total | $ 20,331,890 |
Compensation Plans - Schedule
Compensation Plans - Schedule of Grants Issued and Grant Date Fair Value (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Grant Date Value | $ 3,655,296 | $ 4,109,197 | $ 3,892,424 |
Common Stock | |||
Shares Issued | 24,048 | 20,153 | 19,219 |
Grant Date Value | $ 3,655,296 | $ 4,109,197 | $ 3,892,424 |
Compensation Plans - 401(k) Pl
Compensation Plans - 401(k) Plan (Details) - 401K - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Issuance of common stock related to 401k plan match (in shares) | 17,651 | 11,967 | 8,478 |
Expenses attributable to the 401(k) Plan | $ 2,496,936 | $ 2,231,735 | $ 1,710,785 |
Compensation Plans - Textual (
Compensation Plans - Textual (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 3,300,000 | $ 5,800,000 | $ 13,300,000 | ||
Deferred compensation equity | $ 22,008,054 | 20,331,890 | 22,008,054 | ||
Deferred compensation liability, current and noncurrent | $ 22,387,874 | $ 30,342,204 | $ 22,387,874 | ||
Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Deferred compensation arrangement, fully vested employee elected deferral period | 5 years | ||||
401K | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Defined contribution plan, employer matching contribution, percent of match | 200.00% | 250.00% | |||
Employee's compensation contributed to the plan | 6.00% | 6.00% | |||
Number of years of employment required to vest in contribution | 6 years | ||||
2011 Equity and Cash Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Authorizes the issuance of Common Shares in various forms of equity awards (in shares) | 600,000 | ||||
Common Shares available for awards (in shares) | 233,582 | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants issued (in dollars per share) | $ 146.59 | $ 195 | $ 204.46 |
Operating Leases - Textual (De
Operating Leases - Textual (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019USD ($)ft²Location | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | |
Leases [Abstract] | ||||
Lessee leasing agreements, operating leases, area under lease (in sqft) | ft² | 37,829 | |||
Number of office space locations | Location | 1 | |||
Operating lease expense excluding rent | $ 0.4 | $ 0.4 | $ 0.4 | |
Operating Lease, Right-of-Use Asset | 2.5 | $ 2.9 | ||
Operating Lease, Liability | $ 3.1 | $ 3.6 |
Operating Leases - Summary of
Operating Leases - Summary of Lease and Operating Expenses (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of total lease and operating expense | |||
Lease and operating expenses | $ 971,203 | $ 970,143 | $ 936,008 |
Operating Leases - Schedule of
Operating Leases - Schedule of Future Minimum Lease Payments (Details) | Dec. 31, 2019USD ($) |
Future minimum lease payments under the operating leases | |
Total | $ 3,267,481 |
2020 | 614,721 |
2021 | 624,179 |
2022 | 624,179 |
2023 | 624,179 |
2024 | 624,179 |
Thereafter | $ 156,044 |
Income Taxes - Summary of Cons
Income Taxes - Summary of Consolidated Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of consolidated Federal income tax return | |||
Current federal income tax provision | $ 13,952,230 | $ 15,731,258 | $ 24,749,832 |
Current state and local income tax provision | 3,656,997 | 8,560,479 | 1,774,395 |
Deferred income tax expense (benefit) | 1,079,247 | (5,622,396) | 2,893,063 |
Provision for income taxes | $ 18,688,474 | $ 18,669,341 | $ 29,417,290 |
Income Taxes - Reconciliation
Income Taxes - Reconciliation of Income Tax Expense to Federal Statutory Rate (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of reconciliation of income tax expense | |||
Income tax computed at statutory rate | $ 16,472,987 | $ 13,646,583 | $ 28,356,636 |
Expense (benefit) attributable to redeemable noncontrolling interests | (1,007,012) | 222,624 | (564,449) |
State and local income taxes, net of federal benefit | 2,835,215 | 2,993,730 | 1,153,357 |
Change in uncertain state and local tax positions, net of federal benefit | (47,197) | 2,982,337 | 0 |
Revaluation adjustment of net deferred tax assets | 0 | (917,288) | 3,557,039 |
Excess tax benefits on vesting of Restricted Stock | (70,878) | (667,697) | (2,420,250) |
Income tax benefit from dividends paid on Restricted Stock | (431,192) | (340,200) | (418,583) |
Interest and Penalties | 101,010 | 786,711 | 0 |
Other | 835,541 | (37,459) | (246,460) |
Provision for income taxes | $ 18,688,474 | $ 18,669,341 | $ 29,417,290 |
Income Taxes - Schedule of Def
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of Deferred tax assets and liabilities | ||
Stock-based compensation | $ 4,571,430 | $ 4,025,255 |
Accrued compensation | 8,496,929 | 6,684,531 |
Unrealized losses (gains) | (2,150,699) | |
Unrealized losses (gains) | 1,323,181 | |
Property and equipment | (553,265) | (498,271) |
Other assets and liabilities | 22,458 | (68,596) |
Net deferred tax assets | $ 10,386,853 | $ 11,466,100 |
Income Taxes - Roll Forward of
Income Taxes - Roll Forward of Uncertain Tax Positions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Uncertain tax positions, beginning of the year | $ 2,982,337 | $ 0 | $ 0 |
Gross addition for tax positions of the current year | 0 | 0 | 0 |
Gross additions for tax positions of prior years | 0 | 2,982,337 | 0 |
Settlements during the period | (2,935,140) | 0 | 0 |
Changes in judgment/excess reserve | (47,197) | 0 | 0 |
Uncertain tax positions, end of year | $ 0 | $ 2,982,337 | $ 0 |
Income Taxes - Textual (Detail
Income Taxes - Textual (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Deferred tax assets, valuation allowance | $ 0 | |||
Uncertain tax positions | 0 | $ 2,982,337 | $ 0 | $ 0 |
Interest and penalties expense | $ 101,010 | $ 786,711 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Computation for earnings per share | |||
Net Income | $ 59,754,319 | $ 46,314,388 | $ 51,601,669 |
Less: Net loss (income) attributable to redeemable noncontrolling interest | (4,795,295) | 1,061,441 | (1,612,712) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 54,959,024 | $ 47,375,829 | $ 49,988,957 |
Weighted average number of outstanding shares | |||
Weighted average number of outstanding shares (in shares) | 3,436,574 | 3,512,470 | 3,448,824 |
Dilutive impact of restricted stock units (in shares) | 67 | 2,058 | 3,014 |
Weighted average number of outstanding shares - Diluted (in shares) | 3,436,641 | 3,514,528 | 3,451,838 |
Earnings per share attributable to common shareholders | |||
Basic (in dollars per share) | $ 15.99 | $ 13.49 | $ 14.49 |
Diluted (in dollars per share) | $ 15.99 | $ 13.48 | $ 14.48 |