US Global Investors Inc. (NASDAQ: GROW) Q4 2020 earnings call dated Sep. 11, 2020
Corporate Participants:
Holly Schoenfeldt — Public Relations Leader
Frank E. Holmes — CEO & CIO
Lisa Callicotte — CFO
Presentation:
Holly Schoenfeldt — Public Relations Leader
Good morning, and thank you for joining us today for our webcast announcing US Global Investors Results for Fiscal Year 2020. I’m Holly Schoenfeldt. Before we begin today’s presentation, I would like to ask for a brief moment of silence to remember the lives lost on September 11, 2001. [Operator Instructions]
The presenters for today’s program are Frank Holmes, US Global Investors’ CEO and Chief Investment Officer; Lisa Callicotte, Chief Financial Officer and myself, Holly Schoenfeldt, Marketing and Public Relations Manager.
During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don’t pertain to historical facts are subject to risks and uncertainties that may materially affect actual results. Please refer to our press release and corresponding Form 10-K filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today and US Global accepts no obligation to update them in the future.
On Slide Four, you will see a quick overview of US Global Investors. We are in an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, [Technical Issues]
Frank E. Holmes — CEO & CIO
[Technical Issues] following day non-stop.
So, let’s jump into this good news, where our strengths are, we strive to be a go-to-stock for exposure in emerging markets, resources, gold, digital. And it’s constantly sort of wave where we have found that our stock was highly correlated as a Company to our gold assets and gold resources in emerging markets. And then it was through our HIVE investments, so I’ll comment on the digital currencies. And now, it appears to be airlines because the JETS ETF, which I’ll talk about is our largest asset.
So we have a strong balance sheet, the reflection of cost structure and a monthly dividend and return on equity discipline. The next visual I want to thank Perritt, the Royce funds, who have been long-term loyal shareholders and Heartland Advisors, Bill Nasgovitz, recently came down in June, the business in San Antonio, and they have — a position in our Company, and Financial Investment Management Group, Paul Sutherland has been with us a long time and very loyal. So it’s great to see the midyear all along and BlackRock with their index funds in the asset management company business.
Let’s look at the next one, next page, for the past 11 years we have consistently been paying a dividend, a monthly dividend, the yield is look so tiny. But I can tell you it’s much higher than a money fund and it has the capacity to grow. So let’s talk on in the next one, next visual is the Board approved a repurchase of up to $2.75 million of outstanding common shares on the open market during the three months ended June 30, the Company repurchased 32,000 Class A shares using cash of a modest $39,000. We could just suspend this anytime that we deem necessary. But we maintain this position that we buy in down days, it’s an algorithm and for the best interest is always, it’s — only when you get a big move on the downside, the algorithm picks up the stock. So we’ve seen that, since the bottom in March, there has predominantly been drafts on the upside, it could — think — statistically either kurtosis or a skewing. And we’re seeing that the markets are definitely skewing to a bias on the upside.
This next visual shows you our quarterly assets under management. As you can see in the June quarter, our year-end quarter. But the second quarter of this year for 2020, the fourth quarter for our year-end, we had a big surge in those assets. And what’s interesting to share with everyone is that, says $1.2 billion for June 30th, since then we’ve gone through another $1 billion. So I think Lisa, we’re at $2.2 billion, approximately?
Yes, this is easy for anyone to calculate. I know some people just download every day from Bloomberg to take a look at the overall asset size and that relates to the next page because there are many investor — that we know off that I speak to et cetera. They have a simple success, you look at the total assets and they do a calculation. And so basically when you have ETFs, the average expense ratio, which is going to be revenue for us, is 60 basis points. So as $600,000 of revenue, our annualized basis of $50,000 a month comes in from having $100 million of assets.
And at the beginning of March, that’s basically with the to ETFs, we had would be close to that $100 million because they’re all getting beaten up with the Corona crisis. And that revenue coming to us was $600,000. With now with over $2 billion in assets, and if we go to the lower source of revenue, our revenues up to $12 million on a run rate. Now, this is very volatile, just to recognize that airlines industry is volatile, gold assets are volatile. So these numbers are volatile. But to give you the magnitude is that revenue for the advisor is up about for ETF business is up about 20 fold from the lows, and this is totally unexpected. What I’m going to try to walk through unprecedented factors have taken place. And we just thank god every day that investors discovered JETS and GOAU, we’ve always appreciate the thesis like gold is important asset class and finally gone through $100 million.
But the fact that this audience of a big ecosystem of investors and traders came into just right at the bottom. So I won’t talk a little bit more of that throughout this presentation. The next is the balance sheet strength, the balance sheet gets whipped around because of investments that we’ve tried to make long-term. But at least of comment, your questions, come on. And since a year ago, mark to market interpretation, every quarter, long-term investments always going to be mark to market and that’s really increasing our volatility for our earnings statement.
The next page is showing that the earnings per share for the last four fiscal years. And as you can see, 2019 and 2020 in particular, going into this predominantly from a lot of investments and it’s nice to see some of these investments are — have really improved dramatically this summer in our Company. And they’re public, we let people know investors that we’ve made investments of Thunderbird Entertainment Group, which is fantastic company, winning Emmys, revenue growth is spectacular cash flow and is so inexpensive and is finally been sort of recognized for it’s great positioning, especially during this locked down, more and more people need Content Entertainment, and this is a company doing over $120 million in revenue and they started to what the whole policy is to also to look for dividends as a way to capture the hearts of investors, and the discipline internally for financial companies.
The next visual shows you that the earnings per share on a quarterly basis, which is a shocker that we would have during COVID, go from losing money basically to our profits going up. And a lot of that has to do with the the asset growth in JETS and GOAU. We’ve also been making changes, which has been a really enduring experience on trying to — in the mutual fund world in the ETF, we’re looking at the only fund like JETS, and the only product out there and see only — it was the first of our smart-beta 2, then call it as sports stock picking factors we used an portfolio, unique portfolio structure that recalibrates every quarter, we said we needed to have a product, which was no one else has one and we started this process of converting the homes fund into luxury, the Mega trends changes name to USLUX, this provides investors access to companies around the world that are involved in the design, manufacture, sale products and services, that are not considered to be essential, but are highly desired with our culture of society, and it’s interesting the largest holding there has been Tesla and Nike shows up. So it’s interesting to me there is a lot of consumer discretionary stocks and staple stocks — in this particular fund.
So the next visuals, which I’m try to walk you through that have type of rethink luxury during the pandemic. And so many investments like Home Depot have had a spectacular run, lows this competition and lows itself is, showing up in the IBD-50, as being a high growth stock. Everyone stuck at home, all of a sudden started noticing renovations needs to be done and those have had access to capital, a higher end real families, they really starting to spend a lot of money, contract workers working on homes were allowed to work through this pandemic. So the homes — with the Home Depot, parking lot and rate across our building is lows, and both those parking lots were parked. So it just gives you an idea, the activity and that’s what we’re thinking up. But I hope that this particular product, I think will — is unique is the only place where you’re going to be able to buy high luxury-goods as a product, unless you go to Europe, which you can do.
But the real exciting growth here is JETS, JETS ETF, it’s just spectacular growth in assets and this is another visual showing that — that in early March, Bloomberg did an interview with Eric Balchunas, and it was the cheapest ETFs in the world or Nigeria coal and JETS, and the understood why no one wants to buy coal ETF or Nigeria as being a country risk, but what about JETS. And for me, it was really fascinating to see the ecosystem of JETS attracting tactical traders, all the millennial you could think us Robinhood and online at Schwab and TD Waterhouse and Scottrade et cetera.
And you also starting to see those who are shorting, they were sorting American Airlines, because they have the highest debt to equity ratio, but they want to try and mitigate that risk. So, then we’re going along JETS, and I thought — to me, that was most fascinating to watch and the see different reasons and different people making decisions, but the airline industry had followed by 50%, and the thought process early in the game was that the government will do everything to support this part of the economy because something like 9% of jobs in America are directly or indirectly related to the airline industry. And they did, and so it’s now becoming a new — sentiment factor, but we’re thrilled to share with you that the JETS ETF, the quant approach to smart beta 2.0 has outperformed the bogie when we created this product was to beat the New York Stock Exchange Arca Global Airline Index, and we spent thousands of hours working on seeing these airlines did during crisis or bankruptcies et cetera. What factors work the best and and then we’ve created a product that was both structurally unique from waiting that related to how many people being flown across the country to also the factors that are best picking Airline stocks.
And even after fees JETS has outperform the New York Stock Exchange, which has Northeast Arca Global Airline Index. So this concept of us smart-beta or an quant approach does work, that’s what’s important for investors. But there is no past performance, no guarantee of future results. But we didn’t know from our back testing had a high probability working touchwood. So over five years old and has done exactly what we thought it would do.
The next visual is important for anyone that’s been trading the airlines, understand there is now our biggest asset class is in mid-March. The TSA started to publishing the number of people they cleared the border commercial flight in the US and also people lending from abroad. And I thought it was really interesting that a year ago, it was on average 2.7 million people were traveling in America, domestically was about 2 million people, the TSA was clearing. And then it collapsed in April to just under 90,000 people a day now.
Now when this data point start being published, almost, all of a sudden quant funds started coming in and that’s another important part, as you can see, the 50-day moving average and every time it makes a new high of the daily and number of people that JETS airline sentiment drives higher. So there two things driving the sentiment and the volatility of the airlines industry. One is a vaccine. Any positive news about vaccine and the airlines all of a sudden surge; and two is just the number of people that are clearing to travel. And last week on Friday, a week ago was a new record high since the March, since the April lows. I think was April 14 and we almost got to a 1 million people we’re cleared to fly. And I think that — when we get to that 1 million people daily are flying, that will be part of the service has taken place. And that will, you will see higher prices.
Now here is Eric Balchunas and as he said an exchange-traded upon the track airlines become the hottest theme in ETF’s history, with bargain hunting day traders or sites as Robinhooders, taking the other side of the trade with Warren Buffett’s, who recently sold stocks his stocks. He says that the ETF has added $635 million over 45 straight days. Eric was tweeting about this spectacular growth in March and April and May on a regular basis because of this unprecedented growth that was taking place.
And one of the things that we noticed, as you can see, going on the next visual is as he says, as you could state JETS, as you know, I couldn’t stay away forever is getting hot again in August with $200 million in six month out of six with over $200 million three years and oblivion, getting boost for rebound returns. It’s now of 26%, since Buffet sold, and acceptance on wirehouse platforms continues to growth, and that’s the next visual, that’s very, very important for us, the barriers to entry to getting on these platforms becomes more and more difficult every year, used to be $50 million and then it was $100 million then it was $200 million each platform wirehouse platform is different, and when you go to a $1 billion basically quantify for all of them.
And what the wirehouses that to be so careful off is that Robinhood and E TRADE Interactive Brokers allowing people to trade these. So a lot of our clients will just always an open account of these other platforms, and what’s interesting is for me, I’ll talk about more Robinhood, Robinhood allow you, there is a service largely look at the data of how many people are buying into your ETF. And there’s so much negativity in all these millennials become a day traders, what I share with you is that, if you look before the airlines took off in June, the millennials basically through — Robinhood had add — I think it was 25,000 of accounts had bought JETS. So that means this huge surge off the bottom, which is I think up 50% from its lows is basically saying they made money and they made good money.
And so when I read all the negative stuff about how bad it is, I see the opposite side of this trade where they came in and a lot of these retail accounts made a lot of money. But we’re happy for them and we’re happy for the industry. But most important is so good to have new investors coming in and price discovery. The last time I saw such a huge retail influx was in the 1990s going into mutual funds. So now ETFs have been captured, it was imagination. This is another growth point. Understand the DNA volatility, this impact growth. As a shareholder growing — understand that the fact that we own airline stocks, that we own gold and gold stocks and investments in high — it does give us greater volatility.
And the S&P’s volatility is about the same as Boyhood, over one day and 10 days, but Bitcoin is five times greater, and gold stocks are three times greater, and oil is five times greaterr. But oil is the biggest expense, the airline industry. And that’s a reason why you get this group of investors that go along the airlines, when oils falling and take profits are short when oil is rising. So because oil is a largest cost structure when looking at the airline industry. So this DNA volatility for oil shows up in oil stocks. I’m sorry — another oil stocks, it shows up airline stocks as a cause factor.
The next visual is talking about gold, the inverse relationship between gold and real interest rates. I’m just shocked this morning that Europe’s currency is stronger than the US because the highest concentration of negative real rates around the world is in Europe, the US is still negative, but nothing compared to with Europe is, they’re below zero of raising money, just shocked me. But this is really driving a lot of interest in gold and flows in the gold into the GLD have unprecedented, and there’s some rational reasons. I still see these talking heads, talk negatively about gold and asset class fund and they just don’t like to hear that long-term gold is up three times greater than the S&P 500.
So Ray Dalio showed their brilliance by always having a 7% to 15% waiting. He is always in an out of the space, but he is always exposure to gold. And if gold is far outperformed the S&P 500, there’s no doubt as to his alpha equation. And he is now Ray Dalio’s Bridgewater, the largest hedge fund in the world.
And I remember when I first started talking about this in Vancouver when the golden cross for — that is the 50-day crossed above the 200-day moving average, which is usually a very positive technical sign of trends, a long-term trend for gold that mostly were bearish. And we saw this in the first part of 2019, except for very smart hedge funds we’re regularly talking about why gold is appealing to the fundamental reasons, what was driving this move in gold. But as you can see here, you can have big downdraft. Gold could easily pull back the 200-day moving average short-term, like it did back in April and then surge right back up. And I believe that we’re in the secular bull market.
But I also believe more so than ever, as you go the next visual, is that we’re in a secular bull market for gold stocks. And gold stocks, for the first time, showing free cash flow yields as an industry was the end of March when the S&P went negative free cash flow yield. And investors, journalists really like stocks that have a high free cash flow yield. And this quarter for gold stocks end of September, we’ll have a record free cash flow yield.
So with that during this summer, Berkshire Hathaway took a $565 million of position in Barrick Gold was sort of a big shocker, because Buffett has always been negative on gold, but he bought a gold producer with free cash flow. But the Oracle of Omaha hasn’t always been right. As he quote, I was too dumb to realize, I did not think Bezos could succeed on the scale he has. And Bezos continues to impress everyone with the scale that they’ve grown and a lot of that’s using AI to make decisions.
We’re also seeing AI being used for Apple stores of how they’re opening such stores based on how bad the coronaviruses in the area where their stores are. So it’s a new world that we live in. And quantamentals — a quantamental investing, which drives our ETF structure for both GOAU and with JETS is, as I’m so happy that, we’re in that feel of using the quant approach. On CNBC Asia, there’s a very long interview recently why gold could reach $4,000. If you just look at the money printing presses of the Federal Reserve and the EU, they’re expensive, their balance sheet would have been 2008, 2009 that three years later, the price of gold went from $800 to $1,900. So we usually apply this similar math suggest that gold could go to 4,000 in three years.
So it’s me saying that it’s not outlandish because of the unprecedent money printing and zero interest rates and we’re seeing real estate in Americas up 10% year-over-year. We’re seeing interest in Toronto saying this is going up 17%. So I think that negative real interest rates is relating at high-end of gold and we’re so thrilled that our gold miners at GOAU crosses above the $100 million milestone that it starts to throw off free cash flow for us.
So where’s it GOAU available? It’s on the wirehouse platforms, Oppenheimer, Janney RBC and Stifel. Online brokerage firms, Robinhood, E-Trade, Interactive Brokers, and RIAs, Raymond James, LPL, Cetera, Advisor Group, Commonwealth, Schwab, Fidelity/National Financial, TD Waterhouse and Pershing. Now let’s hop to one of our other investments. We couldn’t launch an ETF in the space, so we became the largest crypto minor investor and we launched HIVE Gold. It was basically with other friends I have in Vancouver, HIVE Blockchain Technology, and it became the first institutional and retail mining Bitcoin and Ethereum.
And this visual is here, we come back to look at it, shows you that sentiment has been driving a lot of it. The crypto bear winter bottom when JPMorgan stopped talking negatively about the industry, because in February of 2019, they’ve launched their own coin. So we’re in a bottom in flux there. And I think that we’re going to see this volatility. As Bitcoin continues to rise, it did go through a halving last quarter of our year and that has had a big impact. And we’re seeing that Bitcoin is increasing and we’re seeing presentations being made at policies in Europe. Europe is looking at coming up with a crypto digital currency.
So I think that we’re early on that space. And what drives our biggest investment is in HIVE Blockchain is Ethereum transaction fees shoot up because of a new form of DeFi financing is extremely volatile. That’s all I can tell you this whole space with a bore you within, where HIVE Blockchain allows us to mine virgin coins untainted, no AML or KYC risks or issues. We mined these coins. They’re brand-new spic-and-span clean coins and then we sell them.
We mine them in the cloud. We get green energy from Sweden. We get green energy in Iceland and in Quebec, Canada. We mine them in the cloud, and they go to our wallets [Indecipherable] and we sell them and we keep a portion in HIVE’s balance sheet. And the other part, we use a quant approach and we take profits to pay our electricity bills. But HIVE clearly is the leader in this space. HIVE is a big — biggest Ethereum producer.
So these recent surges in revenue, to give you an idea of the run rate we have is so easy to figure out at the end of March and that top line could be just under $30 million. And it exploded to a high now is corrected. But you can see it all of a sudden run to a run rate of $100 million, now it’s back to $60 million, but still in the quarter has doubled. So these — the revenue from this business model is very volatile. The stocks are volatile that shows up in high — in US Global’s investments as that volatility. So I — this is just some other facts for you to understand the Ethereum miners generated extra fee revenue because of a new development called DeFi.
And HIVE itself, on the next visual, is showing that its outperformance competition, both in price and liquidity. HIVE, the next visual is showing you is correlated 70% of this time with the cryptocurrencies. And then the next visual is just showing you for your own information just go back and look at sort of the press releases and where we are, as we’re building out operations in Quebec. We’re seeing lots of wonderful opportunities to be shown to us, and we’re updating our facilities. I’ve finally got control of Iceland and we’re expanding the operations there, upgrading and expanding. So it’s a very exciting position for HIVE.
Now, as we try to wrap down to sort of key investments, as Thunderbird moves on to growing its revenue cash flow, I shared this with — earlier with Emmys. As you can see the stock did sell-off going into April. Their big business is Amazon and Netflix, in particular.
So when Netflix is producing content, a lot of this content for animation is done by Thunderbird. And so their top line revenue and their cash flow has been exploding. And really now I think it’s just waking up about how unique the stock is. And I think there’s above where the — financing with an IPO is at $2, it’s a wonderful CAGR growth in both revenue cash flow and earnings.
And so I think you want to stay tuned to Thunderbird relative to its peers is extremely undervalued on a revenue multiple or cash flow multiple. And this is another showing, congratulations to Thunderbird. I’m on the Board of Thunderbird. We have an important investment at Thunderbird, but they won many awards for — in Canadian sitcom to the famous Highway Thru Hell documentary, you can watch these on weather stations in particular.
And now I’m going to turn it over to the brains of the organization on just a broad here and Lisa Callicotte, our CFO, who is going to address the financial metrics. But I want to make sure, I give you an understanding of the fundamental factors driving, which she is going to talk about. Lisa?
Lisa Callicotte — CFO
Thank you, Frank. Good morning. Now, I’ll summarize the results of operations for our fiscal year 2020. Beginning on Page 43, we recorded total operating revenues of $4.5 million for the year, which is an increase of $1 million, or 29% from the $3.5 million in fiscal year 2019. The increase was primarily due to an increase in assets under management, primarily in our JETS ETF is inflows. Operating expenses for the year were $6.9 million, an increase of $663,000, or 11%, primarily attributable to an increase in general and administrative expenses related to our JETS ETFs, somewhat offset by a decrease in employee compensation and benefits. We see our operating loss for fiscal year 2020 is $2.4 million, which is an improvement from prior year loss of $2.8 million.
On Slide 44, we see that other income was a loss of $2.2 million in the fiscal year. In prior year, it was a loss of $1.5 million. Investment income decreased $629,000 compared to the fiscal year 2019, primarily due to higher impairment losses and securities and increases in foreign security losses. Net income attributable to USGI after taxes for the year was $4.7 million, or a loss of $0.31 per year, which decreased $1.3 million compared to the net loss of $3.4 million, or a loss of $0.22 per share in fiscal year 2019. But as noted on our previous slide, our earnings per share was positive in the fourth quarter of our fiscal year 2020, and it was mainly due to unrealized gains and securities.
Moving to Slide 46, we see we still have a strong balance sheet, which includes approximately $13.4 million in cash and unrestricted securities that combined to make up 71% of our total assets. Slide 47 notes our liabilities. While on Slide 48, you can see our stockholders’ equity detail. The company has a net working capital of $8.5 million and a current ratio of 5.2 to 1.
With that, I’ll turn it over to Holly.
Holly Schoenfeldt — Public Relations Leader
Thank you, Lisa. So as you can see on Slide 50, a majority of our mutual fund assets are in emerging markets and natural resources, while 29% are in domestic equities and fixed income. And as for distribution, more than three quarters of assets come from retail investors, with 18% coming from institutional investors. Our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources and emerging markets, as well as our exchange-traded funds. That company and our funds continue to receive an invaluable amount of viral publicity gained through media interviews.
Frank Holmes often shares his insights with financial outlets like Fox Business Television, Bloomberg Radio and Kitco News, just to name a few. We continue to receive recommendations by influential financial newsletter writers as well, along with sharing and syndication of our award-winning original content by third-party publishers. The newsletters have a loyal following and received millions of visitors each month.
Frank Holmes’ CEO blog Frank Talk continues to grow in popularity. His commentary is often featured by prominent publications, including Forbes, Seeking Alpha, Kitco and Equities.com, with millions of monthly visitors. Kitco News, the biggest gold website in the world, with an audience of over 30 million monthly visitors, in partnership with the street.com, continues to feature the Gold Game Film Show with Frank Holmes Gold Market Analysis. Since the show’s beginning, 186 episodes have aired.
At quarter-end, we like to look at the most visited Frank Talk Blog post published over the past year. On this slide, you will see that the most visited articles so far in 2020 are as follows: number one, Explore the World’s 10 Busiest Airport; number two, Is The Gold Rally Overdone? Here’s What History Says May Come Next; and number three, These US Companies Have The Highest Debt-To-Equity Ratios Right Now. You can sign up for free on our homepage, usfunds.com.
We also keep a close eye on our top referring websites as they drive enormous amounts of traffic back to usfunds.com. So currently, as you see here, these include 321gold.com, Kitco News and ETF Trends. All of this coverage helps us leverage our brand by reaching millions of readers, viewers and potential investors. Our website usfunds.com was visited over 411,000 times from June 2019 to June 2020 by curious investors from all over the world.
US Global is also well-known for timely, balanced and positive market insights and our thought leadership. The company has been awarded numerous Star Awards by the Investment Management Education Alliance over the years for excellence in Investor Education, and our total now stands at 88 Star Awards. Our subscriber base continues to grow organically and we currently have over 50,000 curious investors subscribed to our investment newsletters and the Frank Talk Blog. Investors can sign up at usfunds.com and join the subscribers who receive the award-winning investor alert, e-newsletter, as well as Frank Talk.
We also continue to see a large following across all of our social media platforms. So I encourage you all to check us out not only on Facebook and Instagram, but also on Pinterest, Twitter and YouTube. And speaking of YouTube, our marketing team has really ramped up production of our video content. We cover things ranging from gold to airlines to even investing basics. So you can go to usfunds.com and use the YouTube icon that’s in the top right corner to visit our YouTube page and subscribe.
Lastly, as the pandemic has changed the norm for many industries, including our own, we have continued to share our thought leadership, but simply in a new format. So Frank Holmes was honored to present again this year to the LBMA last month. And just next week, he will give a presentation to the Denver Gold Forum, too. These virtual presentations allow us to continue educating our loyal audience of investors, advisors and shareholders.
And as you can see on this slide, here’s just a quick snapshot of some of the virtual conferences we’ve been a part of so far in 2020 and we expect this to continue for quite sometime. And we really hope you’ll join us when you can. And as we wrap up today’s presentation, we would like to open it up to questions. And just as a reminder, you can enter the questions in the control panel on your screen and you can also submit questions directly to us anytime by emailing info@usfunds.com, and we will be following up with all questions within a few days.
Just to start, I have a question for Frank. And it says, “When do you see airlines fully recovering?
Frank E. Holmes — CEO & CIO
Well, I think that we have to get, like I said earlier, to a million people a day flying that will be the tipping point sense psychologically. We are seeing a lot of airlines all of a sudden cutting back on the number of employees. They try to maintain them, because I was told that, that the money was given by the government was to keep them employed, so they didn’t have to rehire them, because when we hire them, they have to retrain them from day one and it’s such a regulated world to FAA. So it’s better to keep everyone being paid, even though they weren’t flying. So they could turn on a dime.
What’s interesting on this cycle is that, when we look at 9/11 with a world just shutdown in flying also, but it was a much shorter time period, like a week. Six months later, the airline industry was up 80% and then a couple of years after 2003, SARS broke out in Asia. And after it bottomed six months later, the airlines in Asia were up 120%. And we look at the financial crisis of 2008, 2009, that bottomed six months, there was up 80%.
So the thought process for a lot of speculators is that, the airlines can surge between 80% and 120%. I don’t think it’s going to happen as fast over six months. I think is probably going to take 12 months from its lows. But I have recently flown and the plane spotless. It’s almost like the fumigating that takes place every flight is a game changer for me to witness the seats of spacing on Delta.
The airport in both Park City — sorry, in Salt Lake City and in San Antonio was quiet. There are a fair amount of people, but still very quite. This is same and very, very clean. Going through the TSA as a brand-new experience with all the cover and protections taking place. And we’re going to see, like we’ve seen over Turkey in istanbul, it’s a public company, which we owned one of our — which we’ve owned in our ETF and also in our Eastern European Fund. They are the most advanced in using heat maps and using UV that has created to clean all credit cards or passports.
So you go to use your credit card or your driver’s license or your passport at it, it goes through a scanning process from your hands with UV and destroys the viruses. I think that we’re going to see more and more technology that way. Taking people’s temperatures is something else they’re doing in different locations. So we’re going to have a much cleaner world. That’s one thing I do see and know. And I think that they’re going to use AI going forward to shutdown areas, run the shutdown whole country, and weaponize the political election years, et cetera. And this year is not just an election in US, because we live in the US, we feel it more than ever, but there’s many elections around the world.
And so this whole coronavirus thing has become a weaponized for political winning. And so that I think is disturbing in many ways, but that’s the reality of it, and we’re going to get through that run the shutdown a country. They’re going to, like Apple Stores do. They’ll just shutdown a store. They may have canonicity, but they’re going to shutdown one, because most of the traffic is from a facility, where there are lots of people pop things and they’re getting to coronavirus. And I think we’re going to see that the data is going to improve.
We notice here in San Antonio, that everyone within 150-mile radius that gets the coronavirus are sent for San Antonio’s hospitals and you get retested again. So now we get double testing. If friends of mine have had to go to Houston for MD Anderson and MD Anderson would not accept the coronavirus testing done here. They had to go down there to get tested wait 24 hours before they could go into get medical treatment.
So we’re seeing data, it’s just being replicated now. How much is really reflecting on that? I think a lot of this stuff will get cleaned up after the election in the US this year. It doesn’t matter who wins. It’s going to be that this is no longer a factor, that will help the airlines. This is a very important part of the sentiments drive. And I think the people flying today are going to get benefits and it’s not going to be till April of next year, where they’re going to start charging for exchange fees, for changing your seats or changing your tickets, they’re going to do everything to get you to fly.
Holly Schoenfeldt — Public Relations Leader
Great. Thank you. Lisa, I have a question for you as well. Can you discuss more detail about the $0.10 earnings per share and how much was related to the increase in just assets?
Lisa Callicotte — CFO
Yes. So the $0.10 per share was mainly due to our increase in unrealized gains in our securities. But we’ve been talking about that a few years ago. We were required to implement accounting standard that made us record all of our unrealized gains and losses through income, where before our long-term investments were being recorded through equity, and only an income when we realized them.
So we’ve been talking about how that’s really caused our income to be volatile, because quarterly, we are recording that all through our income statement. And for the quarter ending June 30, we saw an increase in the investments that we are in, and that was the main contributor to the $0.10 per share that we recorded for June 30 a quarter. But the — as far as where JETS AUM comes in, that really hit our revenue line item. And so we saw a significant increase in our revenue in the quarter ending June 30. Now, how it works for us is that, we do get those 60 bps that Frank had talked about earlier, but we also pay all of the expenses related to the ETF.
So with that, some of the expenses are based on AUM and will increase as AUM increases, plus we have some distribution costs that are related to inflows. And as you know, we had significant inflows during that quarter. So that did increase our expenses. But some of those distribution costs are like one-time costs, so we were seeing that. But in the fourth quarter, our net operating loss actually improved from the quarter before. The quarter ending March 30, we had a operating loss of $979,000. And there was a 75% improvement of that due to this increase in revenue and AUM to a loss of $245,000 in the fourth quarter. So kind of looking into the future, we do expect that having a higher AUM for an entire quarter is going to increase our revenue and it’s only going to be somewhat offset by these higher expenses.
Frank E. Holmes — CEO & CIO
But there’s a much bigger front-end expenses in the first — going through the first-half of $1 billion.
Lisa Callicotte — CFO
Definitely, yes.
Frank E. Holmes — CEO & CIO
And since then it’s totally changed, the profit margins expand — substantially from having $500 million. Do you read that?
Lisa Callicotte — CFO
I read.
Holly Schoenfeldt — Public Relations Leader
Great. Thank you, Lisa. Frank, another question for you really quick. Do you think that GOAU ETF could take off an AUM, just like JETS did this year?
Frank E. Holmes — CEO & CIO
It’s much more competitive, because people that want to speculate by the triple ball, triple bear leveraged ETFs on GDX, GDXJ and the 30% of the assets and those large — much larger ETFs are market-cap weighted funds. And so you’ll see that more speculative. I think what’s going to happen is that the steady-eddie persons doing asset allocation is just not going to buy — they know money is going into good stocks or bad stocks when you buy just a big index. I think that what we’re seeing is that people are shifting out and going into GOAU, because each quarter we throw out. We can get rid of all the weeds in the garden every quarter.
So any company that impairs or hurts the revenue last quarter report cards and cash flow last quarter report cards drops in their cash flow returns on invested capital against their peers. We don’t want to — we just have to be very — it is a much smaller portfolio, rather than having 70 names in an ETF gold index. We have 28, and we have the highest concentration in royalty companies. So we recently had money come from a family office overseas. And it’s all because of our exposure for royalty companies that they really like that model and by buying GOAU, you’re really getting exposure to a superior business model.
Holly Schoenfeldt — Public Relations Leader
Okay. Is there anything else you’d like to add before we wrap up?
Frank E. Holmes — CEO & CIO
Yes. I think that overall, the mutual funds themselves continued just as an industry, not experienced any great growth. We’re hoping that repositioning luxuries being the only luxury product that we’ll be able to grow without, because I also think it’s going to continue to be a unique industry like the Cosmos of the world versus the Dollar Store and higher-end from Louis Vuitton to Tesla to Ferrari. These these type of companies are unique in their growth and the resiliency. But it doesn’t take away from the volatility.
But I think being the only space — player in that space that a year from now, we should be able to experience some growth in that. And we’re working on other ideas for ETFs where we are the dominant person, and there’s no one else in the space. It’s really important when you try to come up with GOAU, actually, we’ve got $400 million in so many other ETFs out there. I’m happy about that. It’s just continuously slugging. What investors who realize is that, the timeline it takes to have JETS, it took five years. We did over 20 webcasts. These webcasts are costing us from our own and other partnerships we have, 100 grand a year in just buying that space and time, excluding the marketing efforts we put into them. And it is five years.
When we launched Eastern European fund, it quickly went to $12 million. Russia defaulted on the sovereign debt unheard off. All of a sudden it was $4 million, and it stayed there for four years until the bottom of 2001. And then in March to October, $1 billion of assets. So you get these — you just have to have their vision. At the same time the persistence in building the brand like JETS did and now GOAU, GO GOLD is — will continue, I think, to do well for asset allocators. And I think it’s just a less volatile ETF in the gold equity space than the other ones that are out there.
Holly Schoenfeldt — Public Relations Leader
[Operator Closing Remarks]