Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 25, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
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, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 3,160,419 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 353,257,260 | ||
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 2021 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, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 98,478,202 | $ 93,176,253 |
Investments | 128,401,136 | 139,437,178 |
Accounts receivable | 17,805,864 | 17,223,362 |
Prepaid expenses | 2,977,759 | 2,857,468 |
Income taxes receivable | 256,538 | 3,849,099 |
Property and equipment, net of depreciation | 6,740,396 | 5,733,737 |
Deferred taxes | 8,437,446 | 10,386,853 |
Total assets | 263,097,341 | 272,663,950 |
Liabilities | ||
Accounts payable and accrued expenses | 8,002,303 | 8,671,731 |
Accrued incentive compensation | 28,400,000 | 26,615,510 |
Deferred compensation | 33,241,952 | 30,342,204 |
Total liabilities | 69,644,255 | 65,629,445 |
Redeemable noncontrolling interest | 9,372,333 | 14,178,824 |
Permanent Shareholders’ Equity | ||
Common stock, no par value 7,000,000 shares authorized; 3,168,823 issued and outstanding at December 31, 2020 (inclusive of 183,718 unvested shares); 3,294,672 issued and outstanding at December 31, 2019 (inclusive of 227,844 unvested shares) | 80,810,946 | 95,853,477 |
Preferred stock, undesignated, 1,000,000 shares authorized and unissued | 0 | 0 |
Deferred equity compensation | (14,748,118) | (20,331,890) |
Retained Earnings | 118,017,925 | 117,334,094 |
Total permanent shareholders’ equity | 184,080,753 | 192,855,681 |
Total liabilities and shareholders’ equity | $ 263,097,341 | $ 272,663,950 |
Book value per share (in dollars per share) | $ 58.09 | $ 58.54 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, shares authorized | 7,000,000 | 7,000,000 |
Common stock, shares issued | 3,168,823 | 3,294,672 |
Common stock, shares outstanding | 3,168,823 | 3,294,672 |
Common stock, unvested shares | 183,718 | 211,575 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
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, 2017 | 3,470,428 | |||
Beginning Balance at Dec. 31, 2017 | $ 172,443,820 | $ 118,209,111 | $ (19,134,963) | $ 73,369,672 |
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 | |||
Common stock issued as incentive compensation | 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 | |
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 | |||
Ending Balance at Dec. 31, 2018 | 195,575,943 | $ 124,933,060 | (22,008,054) | 92,650,937 |
Beginning balances attributable to redeemable noncontrolling interests at Dec. 31, 2017 | 20,076,806 | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Net (loss) income attributable to redeemable noncontrolling interests | (1,061,441) | |||
Net subscriptions of consolidated funds | 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 | |||
Common stock issued as incentive compensation | 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 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of restricted stock grants (in shares) | 22,099 | |||
Issuance of restricted stock grants | 0 | $ 2,548,440 | (2,548,440) | |
Amortization of restricted stock grants | 5,227,574 | 5,227,574 | ||
Issuance of stock grants (in shares) | 23,640 | |||
Common stock issued as incentive compensation | 3,396,359 | $ 3,396,359 | ||
Issuance of common stock related to 401k plan match (in shares) | 20,976 | |||
Issuance of common stock related to 401k plan match | 2,511,746 | $ 2,511,746 | ||
Shares withheld related to employee tax withholding (shares) | (19,189) | |||
Shares withheld related to employee tax withholding | (1,947,456) | $ (1,947,456) | ||
Forfeiture of restricted stock grants (in shares) | (15,625) | |||
Forfeiture of restricted stock grants | 0 | $ (2,904,638) | 2,904,638 | |
Repurchases of common stock (in shares) | (157,750) | |||
Repurchases of common stock | (18,646,982) | $ (18,646,982) | ||
Cash dividend paid of $6.00 in 2016, $7.00 in 2017, and $8.00 in 2018 per share respectively | (37,976,714) | (37,976,714) | ||
Net income attributable to parent | $ 38,660,545 | 38,660,545 | ||
Ending Balance (in shares) at Dec. 31, 2020 | 3,168,823 | 3,168,823 | ||
Ending Balance at Dec. 31, 2020 | $ 184,080,753 | $ 80,810,946 | $ (14,748,118) | $ 118,017,925 |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Net (loss) income attributable to redeemable noncontrolling interests | (495,407) | |||
Net subscriptions of consolidated funds | (4,311,084) | |||
Ending balances attributable to redeemable noncontrolling interests at Dec. 31, 2020 | $ 9,372,333 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividend paid per share (in dollars per share) | $ 12 | $ 9 | $ 8 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income | $ 38,165,138 | $ 59,754,319 | $ 46,314,388 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 992,836 | 1,164,207 | 1,159,380 |
Share-based compensation | 7,739,320 | 9,081,421 | 8,896,610 |
Increase in accounts receivable | (582,502) | (5,021,516) | (1,014,839) |
Change in current income taxes | 3,592,561 | (6,617,780) | 6,883,643 |
Change in deferred income taxes | 1,949,407 | 1,079,247 | (5,622,396) |
Net (gain) loss on investments | (3,005,441) | (21,058,463) | 14,297,382 |
Net change in securities held by Consolidated Funds | 3,179,362 | 6,286,645 | (52,168,968) |
Increase in accrued incentive compensation | 5,180,849 | 3,516,639 | 5,366,864 |
Increase in deferred compensation | 2,899,748 | 7,954,330 | 1,907,084 |
Other changes in assets and liabilities | (338,793) | 827,194 | 2,111,443 |
Net cash provided by operating activities | 59,772,485 | 56,966,243 | 28,130,591 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (2,450,421) | (707,790) | (781,951) |
Purchase of Company sponsored investments | (14,852,892) | (14,351,062) | (6,332,090) |
Proceeds from sale of Company sponsored investments | 25,715,013 | 48,637,779 | 2,853,144 |
Net cash on deconsolidation of Company sponsored investments | 0 | (22,723,853) | 0 |
Net cash provided by (used in) investing activities | 8,411,700 | 10,855,074 | (4,260,897) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Value of shares withheld related to employee tax withholding | (1,947,456) | (1,390,482) | (1,925,700) |
Payment of dividends | (37,976,714) | (30,275,867) | (28,094,564) |
Repurchase of common stock | (4,311,084) | 11,340,880 | 21,207,770 |
Repurchase of common stock | (18,646,982) | (38,749,654) | (7,229,249) |
Net cash used in financing activities | (62,882,236) | (59,075,123) | (16,041,743) |
CASH AND CASH EQUIVALENTS | |||
Net change during the year | 5,301,949 | 8,746,194 | 7,827,951 |
At beginning of year | 93,176,253 | 84,430,059 | 76,602,108 |
At end of year | 98,478,202 | 93,176,253 | 84,430,059 |
Supplemental cash flow information: | |||
Income taxes paid | 8,415,900 | 24,227,006 | 17,408,094 |
Supplemental disclosure of non-cash transactions: | |||
Common stock issued as incentive compensation | 3,396,359 | 3,655,296 | 4,109,197 |
Charitable donation of corporate investments | 0 | 0 | 1,989,803 |
Net (redemptions) subscriptions of ETF Shares for marketable securities | $ 0 | $ (3,244,940) | $ 6,282,621 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES: | |||
Total revenue | $ 126,387,718 | $ 136,624,380 | $ 145,627,748 |
OPERATING EXPENSES: | |||
Compensation and related costs, excluding deferred compensation expense | 58,291,670 | 60,264,117 | 55,975,361 |
Deferred compensation expense (benefit) | 2,218,898 | 5,976,938 | (2,121,691) |
General and administrative | 11,002,572 | 13,277,843 | 11,648,925 |
Sales and marketing | 5,999,846 | 5,867,297 | 5,242,848 |
Mutual fund administration | 3,336,575 | 3,302,767 | 3,625,898 |
Total operating expenses | 80,849,561 | 88,688,962 | 74,371,341 |
NET OPERATING INCOME | 45,538,157 | 47,935,418 | 71,256,407 |
Investment income (loss), net | 6,584,849 | 30,507,375 | (6,272,678) |
INCOME BEFORE TAXES | 52,123,006 | 78,442,793 | 64,983,729 |
Income tax expense | (13,957,868) | (18,688,474) | (18,669,341) |
NET INCOME | 38,165,138 | 59,754,319 | 46,314,388 |
Net loss (income) attributable to redeemable noncontrolling interest | 495,407 | (4,795,295) | 1,061,441 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 38,660,545 | $ 54,959,024 | $ 47,375,829 |
Earnings per share attributable to common shareholders | |||
Basic (in dollars per share) | $ 12.03 | $ 15.99 | $ 13.49 |
Diluted (in dollars per share) | $ 12.03 | $ 15.99 | $ 13.48 |
Weighted average shares outstanding | |||
Basic (in shares) | 3,214,564 | 3,436,574 | 3,512,470 |
Diluted (in shares) | 3,214,564 | 3,436,641 | 3,514,528 |
Investment advisory | |||
REVENUES: | |||
Total revenue | $ 119,125,230 | $ 128,009,409 | $ 135,317,805 |
Mutual fund administration, net | |||
REVENUES: | |||
Total revenue | $ 7,262,488 | $ 8,614,971 | $ 10,309,943 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Asset Purchase Agreement DHCM entered into an asset purchase agreement dated February 2, 2021 (the “Agreement”) with Brandywine Global Investment Management, LLC (“Brandywine Global”), a specialist investment manager of Franklin Resources, Inc., pursuant to which Brandywine Global will acquire the businesses of Diamond Hill’s two high yield-focused mutual funds - the Corporate Credit Fund and the High Yield Fund (the “Acquired Funds”). In connection with the transaction, two of the Company’s portfolio managers and a research analyst will join Brandywine Global’s fixed income team. Pursuant to the Agreement, DHCM will receive an initial cash payment at closing of up to $9.0 million based upon the closing date net revenue of the Acquired Funds, and may receive two additional payments of up to $13.0 million in the aggregate based on the net revenue of the Acquired Funds on the one-year anniversary of the closing date. There can be no assurance that all or any of these additional payment amounts will be received by DHCM. The Agreement contains customary representations, warranties and covenants and is subject to customary closing conditions, including a minimum net revenue requirement as of the closing date and approval by the shareholders of the Acquired Funds. The sale is expected to close in the second quarter of 2021, subject to approval of each of the Acquired Fund’s shareholders. Dividends On February 25, 2021, the Company’s board of directors approved a quarterly cash dividend of $1.00 per share, payable |
Business and Organization (Note
Business and Organization (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and OrganizationDiamond Hill Investment Group, Inc. (the “Company”), an Ohio corporation, derives its consolidated revenues and net income from investment advisory and fund administration services. |
Significant Accounting Policies
Significant Accounting Policies (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
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 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, 2020 and 2019, and results of operations for the years ended December 31, 2020, 2019 and 2018. For further information regarding the risks to our business, refer to the consolidated financial statements and notes thereto included in “Part I – Item 1A. – Risk Factors” of this Annual Report on Form 10-K. Use of Estimates 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 based on 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 an exchange traded fund (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 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, 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 (together, the "Consolidated Funds") as of December 31, 2020. 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, which is providing investment management and administration services to mutual funds and separately managed accounts. Therefore, the Company does not present disclosures relating to operating segments in annual or interim financial statements. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market mutual funds held by DHCM. Accounts Receivable The Company records accounts receivable when they are due and presents them 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 individual or entity that owes the receivable. No allowance for doubtful accounts was deemed necessary at either December 31, 2020 or 2019. Accounts receivable from the Funds were $10.5 million and $10.7 million as of December 31, 2020 and 2019, respectively. Investments The Company’s 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 that DHCM advises 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, capitalized software, furniture, and fixtures, are carried at cost less accumulated depreciation. Accumulated depreciation was $7.4 million and $6.4 million as of December 31, 2020 and 2019, respectively. Depreciation is calculated using the straight-line method over the estimated lives of the assets. Revenue Recognition – General The Company recognizes revenue when it satisfies performance obligations under the terms of a contract with a client. 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 performance-based fees. Revenue earned for the years ended December 31, 2020, 2019 and 2018 under contracts with clients include: Year Ended December 31, 2020 Investment advisory Mutual fund Total revenue Proprietary funds $ 88,103,499 $ 7,262,488 $ 95,365,987 Sub-advised funds and separately managed accounts 31,021,731 — 31,021,731 $ 119,125,230 $ 7,262,488 $ 126,387,718 Year Ended December 31, 2019 Investment advisory Mutual fund 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 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 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 the Company receives for its services under its 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 they are excluded from revenue until the AUM on which the Company’s client is billed is no longer subject to market fluctuations. The Company also provides services to model delivery programs in which the Company provides its strategy model portfolio to the sponsor of the model delivery. The Company is paid a portion of the model delivery fee for its services by the program sponsor at a pre-determined rate based on assets in the program. Model delivery program revenues were $2.7 million, $2.0 million and $1.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Model delivery program revenue is included in investment advisory fees in the consolidated statements of income. Revenue Recognition – Performance-Based Fees The Company manages certain client accounts that provide for performance-based fees. These fees are calculated based on client investment results over rolling five-year periods. The Company records performance-based fees at the end of the contract measurement period because the performance-based fees earned are constrained based on movements in the financial markets. During the years ended December 31, 2020, 2019, and 2018, the Company recorded $0.5 million, $1.3 million, and $1.4 million, respectively, in performance-based fees. The table below shows AUM subject to performance-based fees and the amount of performance-based fees that would be recognized based upon investment results as of December 31, 2020: As of December 31, 2020 AUM subject to performance-based fees Unearned performance-based fees Contractual Period Ending: Quarter Ending September 30, 2021 $ 339,721,553 $ 9,228,080 Quarter Ending December 31, 2021 60,887,198 — Total $ 400,608,751 $ 9,228,080 The contractual end dates highlight the time remaining until the performance-based fees are scheduled to be earned. The amount of performance-based fees that would be recognized based upon investments results as of December 31, 2020, will increase or decrease based on future client investment results through the contractual period end. The Company cannot assure that it will earn the unearned amounts set forth above. 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 DHCM's agreement with the Funds, all performance obligations to provide these administrative services are satisfied over time, and the Company recognizes the related revenue as time progresses. Each Fund pays DHCM a fee for performing these services, which is calculated using an annual rate times the average daily net assets of each respective Fund share class. These fees are thereby constrained and represent variable consideration, and they are excluded from revenue until the AUM on which DHCM bills 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 and pays for these services on behalf of the Funds. Each vendor is independently responsible for fulfillment of the services it has been engaged to provide and negotiates its fees and terms directly with the management and board of trustees of the Funds. Each year, the Funds' board of trustees reviews the fee that each Fund pays to DHCM, and specifically considers 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, 2020 2019 2018 Mutual fund administration: Administration revenue, gross $ 22,296,535 $ 22,569,946 $ 24,463,538 Fund related expense (15,048,850) (13,989,139) (14,183,370) Revenue, net of related expenses 7,247,685 8,580,807 10,280,168 DHCM C-Share financing: Broker commission advance repayments 245,594 240,459 332,680 Broker commission amortization (230,791) (206,295) (302,905) Financing activity, net 14,803 34,164 29,775 Mutual fund administration revenue, net $ 7,262,488 $ 8,614,971 $ 10,309,943 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 positions 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 unvested restricted shares. Diluted EPS reflects the dilutive effect of outstanding and unvested restricted stock units, if any. See Note 10. Recently Adopted Accounting Guidance In August 2018, FASB issued Accounting Standards Update ("ASU") No. 2018-13, “Fair Value Measurements.” This update makes certain revisions to existing disclosure requirements for fair value measurement. ASU No. 2018-13 does not change fair value measurements already required or permitted by existing standards. ASU No. 2018-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020, without any impact on the Company’s consolidated financial statements. |
Investments (Notes)
Investments (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The following table summarizes the carrying value of the Company's investments as of December 31, 2020 and 2019: As of December 31, 2020 2019 Fair value investments: Securities held in Consolidated Funds (a) $ 33,233,307 $ 36,248,360 Company-sponsored investments 95,167,829 42,039,044 Company-sponsored equity method investments — 61,149,774 Total Investments $ 128,401,136 $ 139,437,178 (a) Of the securities held in the Consolidated Funds as of December 31, 2020, the Company directly held $23.6 million and non-controlling shareholders held $9.6 million. Of the securities held in the Consolidated Funds as of December 31, 2019, the Company directly held $21.1 million and non-controlling shareholders held $15.1 million. As of December 31, 2020, securities held by the Company in the 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%. As of December 31, 2019, securities held in the 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 de-consolidated 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%. The components of net investment income (loss) are as follows: For the Year Ended December 31, 2020 2019 2018 Realized gains (losses) $ (1,488,059) $ 9,056,152 $ 2,143,695 Unrealized gains (losses) 5,348,243 15,086,747 (16,067,048) Dividend income 2,824,542 5,350,146 2,814,026 Interest income — 987,240 4,857,261 Other investment income (loss) (99,877) 27,090 (20,612) Investment income (loss), net $ 6,584,849 $ 30,507,375 $ (6,272,678) Company-Sponsored Equity Method Investments As of December 31, 2020, the Company had no equity method investments. During 2020, there were periods of time when the Company’s ownership in the Diamond Hill Research Opportunities Fund 1 and the Diamond Hill Core Bond Fund was between 20% and 50%, respectively, and thus, a portion of these Funds’ income is included in the table below for the year ended December 31, 2020. As of December 31, 2019, the Company’s equity method investments consisted of the Diamond Hill Research Opportunities Fund and the Diamond Hill Core Bond Fund, and the Company’s ownership percentage in each of these investments was 23% and 36%, respectively. During 2019, there were periods of time where the Company’s ownership in the Diamond Hill High Yield Fund was between 20% and 50%, respectively, and thus, a portion of that Fund’s income is included in the table below for the year ended December 31, 2019. During 2019, there were periods of time where the Company’s ownership in the Diamond Hill Core Bond Fund was greater than 50%, and thus, a portion of that Fund’s income is excluded from the table below for the year ended December 31, 2019. For the year ended December 31, 2018, the Company’s equity method investments consisted of the Diamond Hill Research Opportunities Fund, and the Company’s ownership percentage in this investment was 28% as of December 31, 2018, and thus, that Fund’s 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, 2020 and 2019, and for the years ended December 31, 2020, 2019, and 2018: As of December 31, 2020 2019 Total assets $ — $ 237,073,628 Total liabilities — 38,453,935 Net assets — 198,619,693 DHCM’s portion of net assets $ — $ 61,149,774 For the Year Ended December 31, 2020 2019 2018 Investment income $ 4,246,021 $ 5,346,588 $ 1,154,007 Expenses 1,114,278 1,551,291 978,322 Net realized gains (losses) (1,577,639) 6,390,727 1,918,661 Net change in unrealized appreciation (depreciation) 2,289,667 14,805,837 (10,229,319) Net income (loss) 3,843,771 24,991,861 (8,134,973) DHCM’s portion of net income (loss) $ 1,807,279 $ 8,301,571 $ (2,400,467) |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 and 2019: December 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents $ 94,698,816 $ — $ — $ 94,698,816 Fair value investments Securities held in Consolidated Funds (a) 17,641,668 15,591,639 — 33,233,307 Company-sponsored investments 95,167,829 — — 95,167,829 December 31, 2019 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 (a) Of the securities held in the Consolidated Funds as of December 31, 2020, the Company directly held $23.6 million and non-controlling shareholders held $9.6 million. Of the securities held in the Consolidated Funds as of December 31, 2019, the Company directly held $21.1 million and non-controlling shareholders held $15.1 million. 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, 2020, 2019, and 2018. |
Line Of Credit (Notes)
Line Of Credit (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
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 24, 2021, which 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 did not borrow under the Credit Agreement as of and for the period ended December 31, 2020. |
Capital Stock (Notes)
Capital Stock (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
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 Company’s 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 as of December 31, 2020 or 2019. |
Compensation Plans (Notes)
Compensation Plans (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020, there were 222,657 common shares available for awards under the Plan. The Plan provides that the Company’s board of directors, or a committee appointed by the Board, may grant awards and otherwise administer the Plan. Share-Based Payment Transactions The Company has issued restricted stock awards under the Plan. Restricted stock awards 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. Restricted stock grants issued under the Plan are recorded as compensation expense based on the grant date price. The following table represents a roll-forward of outstanding restricted stock and related activity during the year ended December 31, 2020: Shares Weighted-Average Outstanding Restricted Stock as of December 31, 2019 227,844 $ 175.49 Grants issued 22,099 115.32 Grants vested (50,600) 160.79 Grants forfeited (15,625) 185.90 Outstanding Restricted Stock as of December 31, 2020 183,718 $ 173.80 The weighted-average grant date price per share of Restricted Stock issued during the years ended December 31, 2019 and 2018 was $146.59 and $195.00, respectively. The total fair value of Restricted Stock vested, as of their respective vesting dates, during the years ended December 31, 2020, 2019, and 2018 was $5.2 million, $3.3 million, and $5.8 million, respectively. Total deferred equity compensation related to unvested Restricted Stock grants was $14.7 million as of December 31, 2020. Compensation expense related to restricted stock is calculated based upon the fair market value of the common shares on the applicable 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: 2021 2022 2023 2024 2025 Thereafter Total $ 5,332,145 $ 4,375,573 $ 2,406,727 $ 1,308,272 $ 535,508 $ 789,893 $ 14,748,118 Stock Grant Transactions The following table represents shares issued as part of the Company’s incentive compensation program during the years ended December 31, 2020, 2019, and 2018: Shares Issued Grant Date Value December 31, 2020 23,640 $ 3,396,359 December 31, 2019 24,048 3,655,296 December 31, 2018 20,153 $ 4,109,197 401(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, 2020, 2019 and 2018: Shares Issued Company Contribution December 31, 2020 20,976 $ 2,511,746 December 31, 2019 17,651 2,496,936 December 31, 2018 11,967 $ 2,231,735 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 (together, the “Deferred Comp Plans”). Under the Deferred Comp Plans, participants may elect to voluntarily defer, for a minimum of five years, certain incentive compensation, which the Company then contributes into the Deferred Comp 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 in connection with the Plans. Assets held in the Deferred Comp 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 investments in the Deferred Comp Plans are recorded as deferred compensation expense (benefit) and are included in operating income. Deferred compensation expense is offset by an equal amount in investment income below net operating income on the consolidated |
Operating Leases (Notes)
Operating Leases (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Operating Leases | Operating Leases The Company currently leases office space of approximately 37,829 square feet at one location. As of December 31, 2020 and 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 $2.1 million and $2.5 million, respectively. As of December 31, 2020 and December 31, 2019, the carrying value of the lease liability, which is included in accounts payable and accrued expenses The following table summarizes the total lease and the related operating expenses for the years ended December 31, 2020, 2019 and 2018: For the year ended December 31, 2020 2019 2018 $ 947,398 $ 971,203 $ 970,143 Lease expense 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 2021 2022 2023 2024 2025 Thereafter $ 2,652,760 $ 624,179 $ 624,179 $ 624,179 $ 624,179 $ 156,044 $ — |
Income Taxes (Notes)
Income Taxes (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes consists of: As of December 31, 2020 2019 2018 Current federal income tax provision $ 9,633,927 $ 13,952,230 $ 15,731,258 Current state and local income tax provision 2,374,534 3,656,997 8,560,479 Deferred income tax expense (benefit) 1,949,407 1,079,247 (5,622,396) Provision for income taxes $ 13,957,868 $ 18,688,474 $ 18,669,341 A reconciliation of income tax expense at the statutory federal rate to the Company’s income tax expense is as follows: 2020 2019 2018 Income tax computed at statutory rate $ 10,945,831 $ 16,472,987 $ 13,646,583 Expense (benefit) attributable to redeemable noncontrolling interests (a) 104,035 (1,007,012) 222,624 State and local income taxes, net of federal benefit 1,875,882 2,835,215 2,993,730 Internal revenue code section 162 limitations 632,705 625,009 400,060 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) Excess tax deficit (benefit) on vesting of restricted stock 612,930 (70,878) (667,697) Income tax benefit from dividends paid on restricted stock (455,283) (431,192) (340,200) Interest and penalties 1,460 101,010 786,711 Other 240,308 210,532 (437,519) Income tax expense $ 13,957,868 $ 18,688,474 $ 18,669,341 (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 additional state and local tax that the Company expects to pay in future tax periods. 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 as of December 31, 2020 and 2019: 2020 2019 Stock-based compensation $ 3,500,026 $ 4,571,430 Accrued compensation 9,026,113 8,496,929 Unrealized gains (3,145,177) (2,150,699) Property and equipment (963,610) (553,265) Other assets and liabilities 20,094 22,458 Net deferred tax assets $ 8,437,446 $ 10,386,853 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, 2020, 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, 2016 through 2020. During 2020, the Company closed an examination by the California Franchise Tax Board for the Company’s 2015 and 2016 tax years. 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 amount of uncertain tax positions as of December 31, 2020, 2019, and 2018, 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: 2020 2019 2018 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 (Notes)
Earnings Per Share (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 2018 Net Income $ 38,165,138 $ 59,754,319 $ 46,314,388 Less: Net loss (income) attributable to redeemable noncontrolling interest 495,407 (4,795,295) 1,061,441 Net income attributable to common shareholders $ 38,660,545 $ 54,959,024 $ 47,375,829 Weighted average number of outstanding shares 3,214,564 3,436,574 3,512,470 Dilutive impact of restricted stock units — 67 2,058 Weighted average number of outstanding shares - Diluted 3,214,564 3,436,641 3,514,528 Earnings per share attributable to common shareholders Basic $ 12.03 $ 15.99 $ 13.49 Diluted $ 12.03 $ 15.99 $ 13.48 |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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 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, 2020 and 2019, and results of operations for the years ended December 31, 2020, 2019 and 2018. For further information regarding the risks to our business, refer to the consolidated financial statements and notes thereto included in “Part I – Item 1A. – Risk Factors” of this Annual Report on Form 10-K. Use of 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 an exchange traded fund (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 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. |
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, which is providing investment management and administration services to mutual funds and separately managed accounts. Therefore, the Company does not present disclosures relating to operating segments in annual or interim financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market mutual funds held by DHCM. |
Accounts Receivable | Accounts ReceivableThe Company records accounts receivable when they are due and presents them 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 individual or entity that owes the receivable. No allowance for doubtful accounts was deemed necessary at either |
Investments | Investments The Company’s 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 that DHCM advises 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, capitalized software, furniture, and fixtures, are carried at cost less accumulated depreciation. Accumulated depreciation was $7.4 million and $6.4 million as of December 31, 2020 and 2019, respectively. Depreciation is calculated using the straight-line method over the estimated lives of the assets. |
Revenue Recognition | Revenue Recognition – GeneralThe Company recognizes revenue when it satisfies performance obligations under the terms of a contract with a client. 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 performance-based fees. 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 the Company receives for its services under its 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 they are excluded from revenue until the AUM on which the Company’s client is billed is no longer subject to market fluctuations. The Company also provides services to model delivery programs in which the Company provides its strategy model portfolio to the sponsor of the model delivery. The Company is paid a portion of the model delivery fee for its services by the program sponsor at a pre-determined rate based on assets in the program. Model delivery program revenues were $2.7 million, $2.0 million and $1.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Model delivery program revenue is included in investment advisory fees in the consolidated statements of income. 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 DHCM's agreement with the Funds, all performance obligations to provide these administrative services are satisfied over time, and the Company recognizes the related revenue as time progresses. Each Fund pays DHCM a fee for performing these services, which is calculated using an annual rate times the average daily net assets of each respective Fund share class. These fees are thereby constrained and represent variable consideration, and they are excluded from revenue until the AUM on which DHCM bills 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 and pays for these services on behalf of the Funds. Each vendor is independently responsible for fulfillment of the services it has been engaged to provide and negotiates its fees and terms directly with the management and board of trustees of the Funds. Each year, the Funds' board of trustees reviews the fee that each Fund pays to DHCM, and specifically considers 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. |
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 positions 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 unvested restricted shares. Diluted EPS reflects the dilutive effect of |
New and Newly Issued But Not Yet Adopted Accounting Guidance | Recently Adopted Accounting Guidance In August 2018, FASB issued Accounting Standards Update ("ASU") No. 2018-13, “Fair Value Measurements.” This update makes certain revisions to existing disclosure requirements for fair value measurement. ASU No. 2018-13 does not change fair value measurements already required or permitted by existing standards. ASU No. 2018-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020, without any impact on the Company’s consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Revenue under contracts with clients | Revenue earned for the years ended December 31, 2020, 2019 and 2018 under contracts with clients include: Year Ended December 31, 2020 Investment advisory Mutual fund Total revenue Proprietary funds $ 88,103,499 $ 7,262,488 $ 95,365,987 Sub-advised funds and separately managed accounts 31,021,731 — 31,021,731 $ 119,125,230 $ 7,262,488 $ 126,387,718 Year Ended December 31, 2019 Investment advisory Mutual fund 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 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 |
Assets under management (AUM) subject to variable rate fees and the variable rate fees | The table below shows AUM subject to performance-based fees and the amount of performance-based fees that would be recognized based upon investment results as of December 31, 2020: As of December 31, 2020 AUM subject to performance-based fees Unearned performance-based fees Contractual Period Ending: Quarter Ending September 30, 2021 $ 339,721,553 $ 9,228,080 Quarter Ending December 31, 2021 60,887,198 — Total $ 400,608,751 $ 9,228,080 |
Mutual fund administration gross and net revenue | Mutual fund administration gross and net revenue are summarized below: Year Ended December 31, 2020 2019 2018 Mutual fund administration: Administration revenue, gross $ 22,296,535 $ 22,569,946 $ 24,463,538 Fund related expense (15,048,850) (13,989,139) (14,183,370) Revenue, net of related expenses 7,247,685 8,580,807 10,280,168 DHCM C-Share financing: Broker commission advance repayments 245,594 240,459 332,680 Broker commission amortization (230,791) (206,295) (302,905) Financing activity, net 14,803 34,164 29,775 Mutual fund administration revenue, net $ 7,262,488 $ 8,614,971 $ 10,309,943 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of market value of investments | The following table summarizes the carrying value of the Company's investments as of December 31, 2020 and 2019: As of December 31, 2020 2019 Fair value investments: Securities held in Consolidated Funds (a) $ 33,233,307 $ 36,248,360 Company-sponsored investments 95,167,829 42,039,044 Company-sponsored equity method investments — 61,149,774 Total Investments $ 128,401,136 $ 139,437,178 (a) Of the securities held in the Consolidated Funds as of December 31, 2020, the Company directly held $23.6 million and non-controlling shareholders held $9.6 million. Of the securities held in the Consolidated Funds as of December 31, 2019, the Company directly held $21.1 million and non-controlling shareholders held $15.1 million. |
Investment Income | The components of net investment income (loss) are as follows: For the Year Ended December 31, 2020 2019 2018 Realized gains (losses) $ (1,488,059) $ 9,056,152 $ 2,143,695 Unrealized gains (losses) 5,348,243 15,086,747 (16,067,048) Dividend income 2,824,542 5,350,146 2,814,026 Interest income — 987,240 4,857,261 Other investment income (loss) (99,877) 27,090 (20,612) Investment income (loss), net $ 6,584,849 $ 30,507,375 $ (6,272,678) |
Equity Method Investments | The following table includes the condensed summary financial information from the Company’s equity method investments as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019, and 2018: As of December 31, 2020 2019 Total assets $ — $ 237,073,628 Total liabilities — 38,453,935 Net assets — 198,619,693 DHCM’s portion of net assets $ — $ 61,149,774 For the Year Ended December 31, 2020 2019 2018 Investment income $ 4,246,021 $ 5,346,588 $ 1,154,007 Expenses 1,114,278 1,551,291 978,322 Net realized gains (losses) (1,577,639) 6,390,727 1,918,661 Net change in unrealized appreciation (depreciation) 2,289,667 14,805,837 (10,229,319) Net income (loss) 3,843,771 24,991,861 (8,134,973) DHCM’s portion of net income (loss) $ 1,807,279 $ 8,301,571 $ (2,400,467) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 and 2019: December 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents $ 94,698,816 $ — $ — $ 94,698,816 Fair value investments Securities held in Consolidated Funds (a) 17,641,668 15,591,639 — 33,233,307 Company-sponsored investments 95,167,829 — — 95,167,829 December 31, 2019 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 (a) Of the securities held in the Consolidated Funds as of December 31, 2020, the Company directly held $23.6 million and non-controlling shareholders held $9.6 million. Of the securities held in the Consolidated Funds as of December 31, 2019, the Company directly held $21.1 million and non-controlling shareholders held $15.1 million. |
Compensation Plans (Tables)
Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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 year ended December 31, 2020: Shares Weighted-Average Outstanding Restricted Stock as of December 31, 2019 227,844 $ 175.49 Grants issued 22,099 115.32 Grants vested (50,600) 160.79 Grants forfeited (15,625) 185.90 Outstanding Restricted Stock as of December 31, 2020 183,718 $ 173.80 |
Expense recognition of deferred compensation | The recognition of compensation expense related to deferred compensation over the remaining vesting periods is as follows: 2021 2022 2023 2024 2025 Thereafter Total $ 5,332,145 $ 4,375,573 $ 2,406,727 $ 1,308,272 $ 535,508 $ 789,893 $ 14,748,118 |
Schedule of Grants Issued and Grant Date Fair Value | The following table represents shares issued as part of the Company’s incentive compensation program during the years ended December 31, 2020, 2019, and 2018: Shares Issued Grant Date Value December 31, 2020 23,640 $ 3,396,359 December 31, 2019 24,048 3,655,296 December 31, 2018 20,153 $ 4,109,197 |
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, 2020, 2019 and 2018: Shares Issued Company Contribution December 31, 2020 20,976 $ 2,511,746 December 31, 2019 17,651 2,496,936 December 31, 2018 11,967 $ 2,231,735 |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020, 2019 and 2018: For the year ended December 31, 2020 2019 2018 $ 947,398 $ 971,203 $ 970,143 |
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 2021 2022 2023 2024 2025 Thereafter $ 2,652,760 $ 624,179 $ 624,179 $ 624,179 $ 624,179 $ 156,044 $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Summary of consolidated provision for income taxes | The provision for income taxes consists of: As of December 31, 2020 2019 2018 Current federal income tax provision $ 9,633,927 $ 13,952,230 $ 15,731,258 Current state and local income tax provision 2,374,534 3,656,997 8,560,479 Deferred income tax expense (benefit) 1,949,407 1,079,247 (5,622,396) Provision for income taxes $ 13,957,868 $ 18,688,474 $ 18,669,341 |
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: 2020 2019 2018 Income tax computed at statutory rate $ 10,945,831 $ 16,472,987 $ 13,646,583 Expense (benefit) attributable to redeemable noncontrolling interests (a) 104,035 (1,007,012) 222,624 State and local income taxes, net of federal benefit 1,875,882 2,835,215 2,993,730 Internal revenue code section 162 limitations 632,705 625,009 400,060 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) Excess tax deficit (benefit) on vesting of restricted stock 612,930 (70,878) (667,697) Income tax benefit from dividends paid on restricted stock (455,283) (431,192) (340,200) Interest and penalties 1,460 101,010 786,711 Other 240,308 210,532 (437,519) Income tax expense $ 13,957,868 $ 18,688,474 $ 18,669,341 (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 additional state and local tax that the Company expects to pay in future tax periods. |
Summary of deferred tax assets and liabilities | Net deferred tax assets consisted of the following as of December 31, 2020 and 2019: 2020 2019 Stock-based compensation $ 3,500,026 $ 4,571,430 Accrued compensation 9,026,113 8,496,929 Unrealized gains (3,145,177) (2,150,699) Property and equipment (963,610) (553,265) Other assets and liabilities 20,094 22,458 Net deferred tax assets $ 8,437,446 $ 10,386,853 |
Reconciliation of uncertain tax positions | The amount of uncertain tax positions as of December 31, 2020, 2019, and 2018, 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: 2020 2019 2018 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, 2020 | |
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, 2020 2019 2018 Net Income $ 38,165,138 $ 59,754,319 $ 46,314,388 Less: Net loss (income) attributable to redeemable noncontrolling interest 495,407 (4,795,295) 1,061,441 Net income attributable to common shareholders $ 38,660,545 $ 54,959,024 $ 47,375,829 Weighted average number of outstanding shares 3,214,564 3,436,574 3,512,470 Dilutive impact of restricted stock units — 67 2,058 Weighted average number of outstanding shares - Diluted 3,214,564 3,436,641 3,514,528 Earnings per share attributable to common shareholders Basic $ 12.03 $ 15.99 $ 13.49 Diluted $ 12.03 $ 15.99 $ 13.48 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ / shares in Units, $ in Millions | Feb. 25, 2021$ / shares | Feb. 02, 2021USD ($)payment |
Subsequent Event [Line Items] | ||
Dividend declared (in dollars per share) | $ / shares | $ 1 | |
Acquired Funds | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||
Subsequent Event [Line Items] | ||
Consideration received | $ 9 | |
Number of additional payments | payment | 2 | |
Additional payment amount | $ 13 | |
Term of additional payment | 1 year |
Significant Accounting Polici_4
Significant Accounting Policies - Revenue From Contracts with Customers (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 126,387,718 | $ 136,624,380 | $ 145,627,748 |
Investment advisory | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 119,125,230 | 128,009,409 | 135,317,805 |
Mutual fund administration revenue, net | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 7,262,488 | 8,614,971 | 10,309,943 |
Proprietary funds | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 95,365,987 | 105,942,281 | 115,538,920 |
Proprietary funds | Investment advisory | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 88,103,499 | 97,327,310 | 105,228,977 |
Proprietary funds | Mutual fund administration revenue, net | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 7,262,488 | 8,614,971 | 10,309,943 |
Sub-advised funds and separately managed accounts | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 31,021,731 | 30,682,099 | 30,088,828 |
Sub-advised funds and separately managed accounts | Investment advisory | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 31,021,731 | 30,682,099 | 30,088,828 |
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, 2020USD ($) | |
Quarter Ending September 30, 2021 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to performance-based fees | $ 339,721,553 |
Unearned performance-based fees | 9,228,080 |
Quarter Ending December 31, 2021 | |
Principal Transaction Revenue [Line Items] | |
AUM subject to performance-based fees | 60,887,198 |
Unearned performance-based fees | 0 |
Total | |
Principal Transaction Revenue [Line Items] | |
AUM subject to performance-based fees | 400,608,751 |
Unearned performance-based fees | $ 9,228,080 |
Significant Accounting Polici_6
Significant Accounting Policies - Mutual Fund Administration Revenue (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue from External Customer [Line Items] | |||
Total revenue | $ 126,387,718 | $ 136,624,380 | $ 145,627,748 |
Administration revenue, gross | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 22,296,535 | 22,569,946 | 24,463,538 |
Fund related expense | |||
Revenue from External Customer [Line Items] | |||
Expenses | (15,048,850) | (13,989,139) | (14,183,370) |
Revenue, net of related expenses | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 7,247,685 | 8,580,807 | 10,280,168 |
Broker Commission | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 245,594 | 240,459 | 332,680 |
Expenses | (230,791) | (206,295) | (302,905) |
Financing activity, net | |||
Revenue from External Customer [Line Items] | |||
Total revenue | 14,803 | 34,164 | 29,775 |
Mutual fund administration revenue, net | |||
Revenue from External Customer [Line Items] | |||
Total revenue | $ 7,262,488 | $ 8,614,971 | $ 10,309,943 |
Significant Accounting Polici_7
Significant Accounting Policies - Textual (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($)Segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Business Organization And Significant Accounting Policies [Line Items] | |||
Number of business segment | Segment | 1 | ||
Allowance for doubtful accounts | $ 0 | $ 0 | |
Accounts receivable, related parties | 10,500,000 | 10,700,000 | |
Accumulated depreciation | $ 7,400,000 | 6,400,000 | |
Client performance period | 5 years | ||
Revenue | $ 126,387,718 | 136,624,380 | $ 145,627,748 |
Advance commissions amortization period | 12 months | ||
UMA Program [Member] | |||
Business Organization And Significant Accounting Policies [Line Items] | |||
Revenue | $ 2,700,000 | ||
Variable rate fees | |||
Business Organization And Significant Accounting Policies [Line Items] | |||
Revenue | 500,000 | 1,300,000 | 1,400,000 |
Mutual fund administration revenue, net | |||
Business Organization And Significant Accounting Policies [Line Items] | |||
Revenue | $ 7,262,488 | $ 8,614,971 | $ 10,309,943 |
Investments - Summary of Market
Investments - Summary of Market Value of Investments (Detail) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Investment Holdings [Line Items] | ||
Company sponsored equity method investments | $ 0 | $ 61,149,774 |
Total Investments | 128,401,136 | 139,437,178 |
Securities held in Consolidated Funds | ||
Investment Holdings [Line Items] | ||
Fair value investments | 33,233,307 | 36,248,360 |
Securities held in Consolidated Funds | Parent | ||
Investment Holdings [Line Items] | ||
Fair value investments | 23,600,000 | |
Securities held in Consolidated Funds | Redeemable Noncontrolling Interest | ||
Investment Holdings [Line Items] | ||
Fair value investments | 9,600,000 | 15,100,000 |
Company sponsored investments | ||
Investment Holdings [Line Items] | ||
Fair value investments | 95,167,829 | 42,039,044 |
Fair value investments | $ 95,167,829 | $ 42,039,044 |
Investments - Equity Method Inv
Investments - Equity Method Investments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | |||
Assets | $ 263,097,341 | $ 272,663,950 | |
Liabilities | 69,644,255 | 65,629,445 | |
Company sponsored equity method investments | 0 | 61,149,774 | |
Investment income (loss), net | 6,584,849 | 30,507,375 | $ (6,272,678) |
Realized gains | (1,488,059) | 9,056,152 | 2,143,695 |
Unrealized gains (losses) | 5,348,243 | 15,086,747 | (16,067,048) |
DHCM’s portion of net income (loss) | 1,807,279 | 8,301,571 | (2,400,467) |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | |||
Schedule of Equity Method Investments [Line Items] | |||
Assets | 0 | 237,073,628 | |
Liabilities | 0 | 38,453,935 | |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 0 | 198,619,693 | |
Investment income (loss), net | 4,246,021 | 5,346,588 | 1,154,007 |
Other Cost and Expense, Operating | 1,114,278 | 1,551,291 | 978,322 |
Realized gains | (1,577,639) | 6,390,727 | 1,918,661 |
Unrealized gains (losses) | 2,289,667 | 14,805,837 | (10,229,319) |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ 3,843,771 | $ 24,991,861 | $ (8,134,973) |
Investments - Investment Income
Investments - Investment Income (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |||
Realized gains | $ (1,488,059) | $ 9,056,152 | $ 2,143,695 |
Unrealized gains (losses) | 5,348,243 | 15,086,747 | (16,067,048) |
Dividends | 2,824,542 | 5,350,146 | 2,814,026 |
Interest | 0 | 987,240 | 4,857,261 |
Other investment income (loss) | (99,877) | 27,090 | (20,612) |
Net investment income (loss) | $ 6,584,849 | $ 30,507,375 | $ (6,272,678) |
Investments - Textual (Details)
Investments - Textual (Details) - Securities held in Consolidated Funds - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading Investments | $ 33,233,307 | $ 36,248,360 |
Parent | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading Investments | 23,600,000 | |
Redeemable Noncontrolling Interest | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading Investments | $ 9,600,000 | $ 15,100,000 |
Investments - Equity Investment
Investments - Equity Investment Ownership (Details) | Dec. 31, 2020 | Dec. 31, 2018 |
High Yield Fund | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Ownership Percentage | 28.00% | |
Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Ownership Percentage | 20.00% | |
Maximum | ||
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, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 94,698,816 | $ 90,144,943 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 94,698,816 | 90,144,943 |
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 | 33,233,307 | 36,248,360 |
Securities held in Consolidated Funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 17,641,668 | 19,238,197 |
Securities held in Consolidated Funds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 15,591,639 | 17,010,163 |
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 | 95,167,829 | 42,039,044 |
Company sponsored investments | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 95,167,829 | 42,039,044 |
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 | 23,600,000 | |
Redeemable Noncontrolling Interest | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | $ 9,600,000 | $ 15,100,000 |
Fair Value Measurements - Textu
Fair Value Measurements - Textual (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 94,698,816 | $ 90,144,943 |
Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 33,233,307 | 36,248,360 |
Parent | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 23,600,000 | |
Redeemable Noncontrolling Interest | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | 9,600,000 | 15,100,000 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 94,698,816 | 90,144,943 |
Level 1 | Securities held in Consolidated Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value investments | $ 17,641,668 | $ 19,238,197 |
Line Of Credit (Details)
Line Of Credit (Details) - The Credit Agreement - Line of Credit | 12 Months Ended |
Dec. 31, 2020USD ($) | |
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, 2020 | Dec. 31, 2019 |
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 Forwa
Compensation Plans - Roll Forward of Restricted Stock Grants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Shares | |||
Outstanding shares, Beginning Balance (in shares) | 211,575 | ||
Outstanding shares, Ending Balance (in shares) | 183,718 | 211,575 | |
Restricted Stock Units (RSUs) | |||
Shares | |||
Outstanding shares, Beginning Balance (in shares) | 227,844 | ||
Grants issued (in shares) | 22,099 | ||
Grants vested (in shares) | (50,600) | ||
Grants forfeited (in shares) | (15,625) | ||
Outstanding shares, Ending Balance (in shares) | 183,718 | 227,844 | |
Weighted-Average Grant Date Price per Share | |||
Beginning of the period (in dollars per share) | $ 175.49 | ||
Grants issued (in dollars per share) | 115.32 | $ 146.59 | $ 195 |
Grants vested (in dollars per share) | 160.79 | ||
Grants forfeited (in dollars per share) | 185.90 | ||
End of the period (in dollars per share) | $ 173.80 | $ 175.49 |
Compensation Plans - Summary of
Compensation Plans - Summary of Deferred Compensation Expense Recognition (Details) - Restricted Stock Units (RSUs) | Dec. 31, 2020USD ($) |
Expense recognition of deferred compensation | |
2020 | $ 5,332,145 |
2021 | 4,375,573 |
2022 | 2,406,727 |
2023 | 1,308,272 |
2024 | 535,508 |
Thereafter | 789,893 |
Total | $ 14,748,118 |
Compensation Plans - Schedule o
Compensation Plans - Schedule of Grants Issued and Grant Date Fair Value (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Grant Date Value | $ 3,396,359 | $ 3,655,296 | $ 4,109,197 |
Common Stock | |||
Shares Issued | 23,640 | 24,048 | 20,153 |
Grant Date Value | $ 3,396,359 | $ 3,655,296 | $ 4,109,197 |
Compensation Plans - 401(k) Pla
Compensation Plans - 401(k) Plan (Details) - 401K - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Issuance of common stock related to 401k plan match (in shares) | 20,976 | 17,651 | 11,967 |
Expenses attributable to the 401(k) Plan | $ 2,511,746 | $ 2,496,936 | $ 2,231,735 |
Compensation Plans - Textual (D
Compensation Plans - Textual (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
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 | $ 5,200,000 | $ 3,300,000 | $ 5,800,000 | ||
Deferred compensation equity | $ 14,748,118 | 20,331,890 | |||
Deferred compensation arrangement, fully vested employee elected deferral period | 5 years | ||||
Deferred compensation liability, current and noncurrent | $ 33,241,952 | $ 30,342,204 | |||
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) | 222,657 | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants issued (in dollars per share) | $ 115.32 | $ 146.59 | $ 195 |
Operating Leases - Textual (Det
Operating Leases - Textual (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2020USD ($)ft²Location | Dec. 31, 2019 | |
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 | |
Operating Lease, Right-of-Use Asset | 2.1 | |
Operating Lease, Liability | $ 2.5 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent |
Operating Leases - Summary of L
Operating Leases - Summary of Lease and Operating Expenses (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of total lease and operating expense | |||
Lease and operating expenses | $ 947,398 | $ 971,203 | $ 970,143 |
Operating Leases - Schedule of
Operating Leases - Schedule of Future Minimum Lease Payments (Details) | Dec. 31, 2020USD ($) |
Future minimum lease payments under the operating leases | |
Total | $ 2,652,760 |
2020 | 624,179 |
2021 | 624,179 |
2022 | 624,179 |
2023 | 624,179 |
2024 | 156,044 |
Thereafter | $ 0 |
Income Taxes - Summary of Conso
Income Taxes - Summary of Consolidated Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of consolidated Federal income tax return | |||
Current federal income tax provision | $ 9,633,927 | $ 13,952,230 | $ 15,731,258 |
Current state and local income tax provision | 2,374,534 | 3,656,997 | 8,560,479 |
Deferred income tax expense (benefit) | 1,949,407 | 1,079,247 | (5,622,396) |
Provision for income taxes | $ 13,957,868 | $ 18,688,474 | $ 18,669,341 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense to Federal Statutory Rate (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of reconciliation of income tax expense | |||
Income tax computed at statutory rate | $ 10,945,831 | $ 16,472,987 | $ 13,646,583 |
Expense (benefit) attributable to redeemable noncontrolling interests | 104,035 | (1,007,012) | 222,624 |
State and local income taxes, net of federal benefit | 1,875,882 | 2,835,215 | 2,993,730 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Amount | 632,705 | 625,009 | 400,060 |
Change in uncertain state and local tax positions, net of federal benefit | 0 | (47,197) | 2,982,337 |
Revaluation adjustment of net deferred tax assets | 0 | 0 | (917,288) |
Excess tax deficit (benefit) on vesting of restricted stock | 612,930 | (70,878) | (667,697) |
Income tax benefit from dividends paid on restricted stock | (455,283) | (431,192) | (340,200) |
Interest and penalties | 1,460 | 101,010 | 786,711 |
Other | 240,308 | 210,532 | (437,519) |
Provision for income taxes | $ 13,957,868 | $ 18,688,474 | $ 18,669,341 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Summary of Deferred tax assets and liabilities | ||
Stock-based compensation | $ 3,500,026 | $ 4,571,430 |
Accrued compensation | 9,026,113 | 8,496,929 |
Unrealized gains | (3,145,177) | (2,150,699) |
Property and equipment | (963,610) | (553,265) |
Other assets and liabilities | 20,094 | 22,458 |
Net deferred tax assets | $ 8,437,446 | $ 10,386,853 |
Income Taxes - Roll Forward of
Income Taxes - Roll Forward of Uncertain Tax Positions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Uncertain tax positions, beginning of the year | $ 0 | $ 2,982,337 | $ 0 |
Gross addition for tax positions of the current year | 0 | 0 | 0 |
Gross additions for tax positions of prior years | 0 | 0 | 2,982,337 |
Settlements during the period | 0 | (2,935,140) | 0 |
Changes in judgment/excess reserve | 0 | (47,197) | 0 |
Uncertain tax positions, end of year | $ 0 | $ 0 | $ 2,982,337 |
Income Taxes - Textual (Details
Income Taxes - Textual (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Deferred tax assets, valuation allowance | $ 0 | |||
Uncertain tax positions | 0 | $ 0 | $ 2,982,337 | $ 0 |
Interest and penalties expense | $ 1,460 | $ 101,010 | $ 786,711 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Computation for earnings per share | |||
Net Income | $ 38,165,138 | $ 59,754,319 | $ 46,314,388 |
Less: Net loss (income) attributable to redeemable noncontrolling interest | 495,407 | (4,795,295) | 1,061,441 |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 38,660,545 | $ 54,959,024 | $ 47,375,829 |
Weighted average number of outstanding shares | |||
Weighted average number of outstanding shares (in shares) | 3,214,564 | 3,436,574 | 3,512,470 |
Dilutive impact of restricted stock units (in shares) | 0 | 67 | 2,058 |
Weighted average number of outstanding shares - Diluted (in shares) | 3,214,564 | 3,436,641 | 3,514,528 |
Earnings per share attributable to common shareholders | |||
Basic (in dollars per share) | $ 12.03 | $ 15.99 | $ 13.49 |
Diluted (in dollars per share) | $ 12.03 | $ 15.99 | $ 13.48 |