U S GLOBAL INVESTORS INC (GROW) stock intrinsic value fair value estimate & owner earnings analysis

U.S. Global Investors is a small San Antonio investment manager. It earns fees from a family of mutual funds (USGIF, about $468 million of assets at June 30, 2026, mostly gold, natural resources and related equity funds) and from four U.S. exchange-traded funds plus one European ETF (about $1.2 billion in the U.S. funds, led by the U.S. Global Jets airline ETF and a cargo ETF). It also holds a pool of its own cash and securities, which is where most of the value sits. The company is controlled by its CEO, Frank Holmes, who holds 99.81 percent of the class C voting shares; outside shareholders cannot force changes in how cash is spent, and he is also executive chairman of HIVE Digital Technologies, a company the firm has invested in. The fee business is cyclical and has been loss-making in most years. Operating revenue was $4.5 million in fiscal 2020, jumped to $21.7 million and $24.7 million in fiscal 2021 and 2022 on the airline ETF boom, then fell to $15.1 million, $11.0 million and $8.5 million before recovering to $10.3 million in fiscal 2026 (year ended June 2026). Costs have stayed near $11 million (fiscal 2026: $10.85 million), so profit or loss is simply revenue minus roughly $10.5 million. In fiscal 2026 the operating loss narrowed to $0.6 million from $3.0 million, helped by a 33 percent rise in USGIF assets and 24 percent in ETF assets, almost all from market appreciation. About half of operating revenue (the airline, travel and cargo ETFs: $5.0 million versus $6.0 million a year earlier) comes from one thematic group of funds, and USGIF advisory contracts are renewed annually (current term through September 2026; the ETF agreements run through July 2027). Our cash-earnings measure, which strips out working-capital swings and one-time tax refunds, was about -$0.05 million in fiscal 2026 and has been: $0.26, $0.10, $0.01 and -$0.004 per share over fiscal 2023-2026. We look at that post-boom window (the 2021-22 boom years are not representative), and its median is about $0.06 per share, roughly $0.7 million. That figure includes about $1.5 million a year of dividends and interest from the portfolio, so we value the advisory business without that income and add the portfolio at its carrying value, to avoid counting the same dollars twice. For fiscal 2026 the trailing change in cash earnings was a small decline; we assume no improvement in the first year of the base case. What the company owns and owes. Cash is $24.3 million (about $1.98 per share) before $1.0 million of restricted cash that backs an unused credit line. Beyond cash, the company holds $11.7 million of trading securities (largely its own funds), $1.0 million of held-to-maturity debt and $4.7 million of other investments without quoted prices. We set aside $2.0 million of cash as operating float. Borrowings are negligible ($75,000 of notes and a $73,000 finance lease); we also deduct an $855,000 reserve for uncertain tax positions and $279,000 of declared dividends. The credit line is unused, expires May 2028 and covenants are met, so no maturity materially affects any case. About 12.3 million shares are outstanding (the company bought back roughly 700,000 shares in fiscal 2026). Base case: $3.01 per share. The advisory business runs at roughly breakeven to a small loss, about $0.2 million a year, for ten years; at June 2026 asset levels and current fee rates revenue would be about $11 million against costs of about $10.5 million, but the airline funds' record argues against assuming the better end. No growth is credited: market gains, new funds, flows into JETS and performance fees are left out because none is secured or a repeatable process. The advisory business is worth about -$1.5 million, the liquid investments about $39.7 million, and debt-like obligations are $1.3 million, leaving about $37.0 million. Bear case: $0.84 per share. Using the 2022-2025 collapse in the airline funds (revenue down 66 percent in three years) as the template, assets fall about 42 percent from the June 2026 level, revenue drops to about $6.5 million (still above the $4.5 million of fiscal 2020), and costs are trimmed only about 10 percent, as they were in the last downturn when cost cuts lagged revenue badly. The business burns $1.5 million in year one and about $2.9 million a year for the next nine years, worth about -$20.0 million. The securities portfolio, which is concentrated in gold, resource and airline funds and in related-party positions, is marked down 45 percent and the unquoted investments by 60 percent (a gold and resource-equity downturn of the 2011-2015 kind). Investments are then worth $31.6 million, obligations $1.3 million, leaving about $10.3 million. No value is credited after year ten. Bull case: $3.83 per share. Revenue holds at the June 2026 run-rate of about $11.2 million and costs keep declining about 2 percent a year for five years (as they did from $11.5 million to $10.85 million over fiscal 2023-2026), lifting the advisory profit from about $0.9 million to $1.7 million a year. After tax that business is worth about $8.7 million; added to $39.7 million of investments less $1.3 million of obligations gives about $47.2 million. We credit nothing after year ten, because the firm has lost money in most of its years and there is no evidence of lasting profit beyond that. What changed since the earlier analysis. The previous estimates (bear $1.90, base $3.55, bull $4.95) were built on a different basis and are not comparable. The business itself improved in fiscal 2026: the operating loss shrank by about $2.4 million, assets under management rose and the share count fell. Items we could not fully reconcile: the company recorded about $1.0 million of current tax expense in fiscal 2026 despite net realized investment losses, and the receivables line in the cash flow statement includes about $1.0 million of tax refund; we treated the refund as a one-time working-capital item. Margin-of-safety price: $1.40. We are not confident in the earnings level; it depends on gold and airline stock markets that the company does not control. We are fairly confident in the cash, which alone is $1.98 per share and has no meaningful debt against it. The worst plausible outcome is a decade-long fee collapse like the bear case, which the balance sheet survives (no maturities, no covenant pressure) but which loses roughly 40 percent from this price. If we are wrong about the unquoted investments (worth half of book would cost about $0.19 per share) or about the operating burn (each extra $1 million a year for ten years costs about $0.60 per share), the value is still above this price in all but the severe case. The price assumes a holding period of about four years; the company pays a $0.09 per share annual dividend and buys back stock. From $1.40, the base case path to roughly $3 per share plus dividends implies about 25 percent a year, which leaves room for the risks above.