Horizon Kinetics Holding Corp (HKHC) stock intrinsic value fair value estimate & owner earnings analysis

Horizon Kinetics Holding Corporation is a New York-based investment manager run by Murray Stahl and Steven Bregman, with about $9.6 billion of client assets at the end of 2025 spread across Kinetics mutual funds, ETFs, separately managed accounts and private partnerships (the Polestar funds, Horizon Multi-Strategy and Horizon Kinetics Equity Opportunities). It became a public company in 2024 by merging into the former Scott's Liquid Gold, whose consumer-products business was later sold, so only the 2024 and 2025 annual results and the first half of 2026 describe the business as it exists today. How we measured earnings. The reported statements are hard to read because the company consolidates private funds it manages: about $1.6 billion of fund assets owned mostly by outside investors sit on the balance sheet, their trading runs through the cash-flow statement, and the fees Horizon Kinetics earns from those funds ($7.6 million of management fees and $0.5 million of incentive fees in 2025; $7.9 million and $48.1 million in 2024) are removed from reported revenue. We rebuilt the earnings of the business shareholders actually own: fee revenue including those eliminated fund fees, less cash operating costs (pay, distribution, overhead), less capital spending, taxed at a normalized 30% because the company only became a taxable corporation in July 2024. On that basis owner earnings were about $31.5 million ($1.73 a share) in 2024, a year when Texas Pacific Land stock more than doubled and generated large incentive fees, and $15.9 million ($0.85 a share) in 2025, when TPL fell 22% and incentive fees nearly disappeared. There is no stock-based pay. Gains and losses on the company's own investments are left out of earnings and valued separately below. Two parts to the value. First, the fee business. Management fees are steady relative to assets (about $72 million reported in 2025 plus the fund fees above; $37.0 million in the first half of 2026 versus $37.7 million a year earlier, with mutual-fund fees down 14% and ETF fees up 32%). On today's assets they produce roughly $21 million a year before tax. Incentive fees are lumpy: $49.8 million in 2024, $0.7 million in 2025 and $18.1 million in the first half of 2026. Our normal level treats them as averaging about $20 million a year before the roughly one-third paid out to staff and marketers, which is what the $68.6 million earned from 2024 to mid-2026 works out to once spread over a span that includes a weak year. That gives a normal owner-earnings level of about $23.7 million, or $1.27 a share. 2025 earnings fell 51% from 2024; we start 2026 at the normal level rather than at 2025's depressed figure because the June 2026 quarterly report already shows $18.1 million of incentive fees earned in the first half and flat management fees. Second, the investment book: at June 30, 2026 the company held about $34 million of cash (we keep $10 million for operations), $105 million of directly held securities (TPL alone $75.8 million), $30 million of other investments, $8 million of bitcoin, and a $235 million share of its own consolidated private funds. Net of the $85 million deferred tax that would be due if the gains were realized, that book is worth about $317 million, or $17.04 a share. The company has no borrowings; its new office lease is an operating cost already counted in earnings. Base case ($29.00 a share). Fee earnings hold at about $23.7 million a year for ten years on today's assets, with no credit for asset growth, new products or better markets, then fade to zero over the following ten years because the franchise is built around its founders and a concentrated investment style. That stream is worth about $223 million ($11.96 a share) at a 6% discount rate. Add the investment book at $317 million ($17.04). The business owes nothing to lenders, so equity value equals business value: about $540 million. Bear case ($14.21 a share). TPL repeats a drop like 2023's 37% (it is about 65% of client assets) and crypto holdings (14% of client assets) fall with it. Client assets shrink by a quarter or more, the mutual-fund outflows visible in 2026 continue, incentive fees stop because funds sit below their high-water marks, and pre-tax fee earnings fall back toward 2024's recurring level of about $10 million. Earnings of about $7 million a year last ten years and then fade out over five, worth about $59 million ($3.14). The investment book, concentrated in the same TPL and bitcoin exposure, is cut 35% to about $206 million ($11.07). With no debt, the total is about $265 million. Bull case ($33.52 a share). Management fees stay near today's level and incentive fees continue at the pace actually earned from 2024 to mid-2026 (about $27 million a year gross), lifting after-tax owner earnings to about $27.9 million ($1.50 a share). The firm's 30-year operating record and its second generation of portfolio managers carry the earnings ten years at that level and then fade over twenty. That stream is worth about $307 million ($16.48); the investment book adds $17.04 with no assumed price gains. No debt, so about $625 million in total. What could make this wrong. Almost everything here moves with one stock, Texas Pacific Land, on whose board Mr. Stahl sits: it drives client assets, incentive fees and the company's own investment book at the same time, so good and bad outcomes are correlated rather than offsetting. The investment book is marked to June 30, 2026 and will have moved since. Key-person dependence on the founders is real. We could not fully reconcile the consolidated cash-flow statement to the company's own cash because fund and company flows are combined, which is why earnings were rebuilt from the income statement; the company's own cash rose from $14.4 million to $36.9 million during 2025 while it paid $6.3 million of dividends and $9.2 million of taxes on 2024 income. An earlier estimate of ours (base $12) left out the company's roughly $220-235 million share of its own private funds and the fund fees removed from reported revenue; including them is the main reason the estimate is higher. Margin-of-safety price. With a wide gap between the bear ($14.21) and base ($29.00) cases and a single-stock concentration that hits earnings and assets together, the margin-of-safety price is $16. From that price the base case implies about 20% a year if the shares reach base-case value within roughly three and a half years including the current dividend of about $0.50 a share, while the bear case implies a loss of about 11%.