The webinar will begin shortly. Please remain on the line. The broadcast is now starting. All attendees are in listen-only mode. My name is Mark Herndon, Chief Financial Officer of Horizon Kinetics. We are pleased to have you join us for today's call that will cover the results of our second quarter of 2026. Today's discussion of our second quarter will include comments from Steven Bregman and Peter Doyle, Horizon Kinetics' Co-Chief Executive Officers. I will also be available to answer applicable questions and moderate any questions that may arise. First, a reminder that today's presentation may include forward-looking statements. Reliance on forward-looking statements involve certain risks and uncertainties, including but not limited to uncertainty about the future security valuations or our performance. During the course of today's call, words such as expect, anticipate, believe, and intend may be used in our discussion of our goals or events of the future. Management cannot provide any assurance that future results will be as described in our forward-looking statements. Furthermore, the statements made on this call apply as of today. Information on this call should not be construed to be a recommendation to purchase or sell any security or investment fund. Opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable, or that future investment decisions will be profitable or equal to or exceed the past performance of the investments. We encourage you to read our filings with the SEC on our Form 10-K, as well as our other quarterly filings, which describe the risks and uncertainties associated with managing our business. The company does not assume any obligation to update any forward-looking statements made today. These filings can also be found at the OTC markets website, and our press releases or other information is at our corporate website at www.hkholdingco.com. If you would like to ask a question today, you'll need to be logged on to the GoToMeeting platform. Those of you who are on the telephone connection will be in listen-only mode. Again, for those of you that are on the GoToMeeting platform, you can submit the question via the chat function. Please direct those questions to the presenters, where I will summarize and relay as best I can so that we can address as many questions as possible. With that, I will now turn it over to one of our co-founders, Peter Doyle. Thank you, Mark. Good afternoon to everyone. If I was listening to this call and I was checking in on how Horizon Kinetics was doing, I would be concerned a little bit, I guess, about the stability of the firm and are we in good company and do we have good stewardship as a result of obviously Murray's passing. I think I have enough credibility, and I have spoken enough over the years that I will tell you in quite honest fashion, I tell my wife on a very regular basis that we have incredibly talented people here. From my perspective, the people that have stepped up over the last several months, it has just been extraordinary to watch. One of the more pleasant surprises is actually my Co-CEO, Steve Bregman, and the wisdom that he has imparted to the staff over the many months I have been just really pleased with. From that standpoint, I just feel very confident about what is likely to unfold for us in the future. Murray was great, and he had an ability to process data in a way that I do not think people really I think if you listen to me, you probably did understand that, but I do not think anyone is going to be able to replicate that. One of the more interesting aspects of what Murray was able to do is he was able to identify and understand systems. One of the systems that he really understood was the investment system and what we were up against. The three pillars of the Modern Portfolio Theory were really portfolio selection by Harry Markowitz, the Efficient-Market Hypothesis by Eugene Fama, and the Capital Asset Pricing Model by William Sharpe. Together, they actually dominate how money is allocated in the marketplace. None of them alone are actually unsensible. There is a certain logic to it, but collectively, they do not make a lot of sense. How do you exploit that system? That is really what we do here at Horizon Kinetics. Not only did Murray teach us how to fish, he also taught us where to fish. In the case of portfolio selection, it has to do with diversification, and it seems commonsensical that people should have diversified portfolios in the sense that you want to put all your eggs in one basket and something happens, you want to basically make sure that your money is not wiped out, the risk of ruin from an investment standpoint or a gambler standpoint. The problem is that if you take it to an extreme, and let us say you broadly diversify into the S&P 500, which a lot of people have done over the years, you are now making a decision to buy inferior type businesses. You are going to get some great businesses in there as well, but there is a whole collection of businesses that get a very poor rate of return on capital. From a logical standpoint, why would you want to do that? You wouldn't want to do that. One of the unique things that we do is we are willing to step away from that, and we want to own companies that have high returns on invested capital, companies that we think have a long product life cycle and will continue to flourish and get great returns and aren't necessarily included in any indices. Second thing, efficient markets. Markets are efficient, but they're not perfectly efficient. One of the things that affects the inefficiency or helps the inefficiency is the institutional imperatives or the corporate mandates that people have. There's a grading period for most investors, and that grading period is really an annual date, 12/31 of any given particular year. What we have found, you've heard Steve talk about it, you've heard me talk about it, James, Murray, et cetera. If you can lengthen your time horizon, you give yourself a tremendous advantage. There's such a thing as an equity yield curve, and I don't know if Murray came up with that or not, but he was talking about that for 40 some odd years. That time horizon allows you to find securities that are inefficiently priced, because most people have no interest in that. They're under scrutinized, they're unloved, because they fall outside of the artificial time horizon. Then this last thing is Capital Asset Pricing Model. It is basically telling you that risk is volatility, and there's a certain logic to that as well. A massive drawdown when you're 75 years old or 80 years old has devastating consequences. If you're 30, you can live through that and you can say, "I can accept a drawdown and I'll make it up because these companies are not going anywhere." If you measure risk in terms of price volatility, it doesn't really capture the true financial risk, but you should pay attention to it. All that being said, that's the underlying intellectual underpinnings of basically how money is managed, and we understand that, and we try to navigate around that. I think we've done a great job, and there's no reason to believe, if you're an investor here at Horizon Kinetics or a shareholder, that we're not going to continue to flourish. In fact, since Murray's passing, we've uncovered a number of different securities, and one of them in particular actually has already been through the plan to acquire it, to take it private. It was just a perfect example that we see things. I can tell you from James Davolos to Brandon Colavita, there's real analytical work going on here, and the idea generation and the idea flow is going to continue uninterrupted. No question about that. One of the things that people miss when they buy stocks is they think of them as pieces of paper. You can't get away from the fact that investors as a whole can't get out of their businesses, i.e., their stock holdings, any more than what the businesses earn over time. You want to find companies that have high returns, and you want companies that can get those high returns without the use of excessive leverage. You want those businesses to be able to defend themselves, have some niche business that they can basically compound over a long period of time. Then you want to leave it alone and let the companies do the heavy lifting for you. That has not changed one iota. It will not change in the future. We are seeing things. We are being brought opportunities from other strategic investors that have known us, our reputation, that we are able to see things now that we probably were not able to see 20, 25 years ago because we did not have the stature that we currently do. That is part of what I wanted to talk about. Second thing is just talking about the overall market. Corporate taxes, after-tax profits right now are running at about 12.4% of GDP, and historically that is 6%. A lot of that has been driven in the recent past by the high tech companies. You see how well they have done. That, in our opinion, was an anomaly, and you are seeing now that as a result of the development of AI, these companies that which were tremendous cash flow generators are now cash consuming companies. They no longer have free cash flow or very little in the way of free cash flow in the way they once did. It is not at all clear to us that they are going to get an adequate rate of return on that. Maybe some of them will, maybe they will not. But you are making a big bet. From where we stand today, just to put things in perspective and how you should look at it from a business standpoint as opposed to a stock certificate standpoint, the S&P 500 trailing earnings over the last 12 months were $2.31 trillion versus a market capitalization of roughly $69 trillion. That gives you an earnings yield of 3.35%. You tack on a dividend yield of 1.04%, and you are talking about a return of 4.39% buying in. When you compare that versus a 10-year Treasury, which is currently at 470, there is actually no margin of safety. Historically, a margin of safety is that you would want an earnings yield on equities of five percentage points above the 10-year Treasury. Today, you actually get earning below that. So long way of saying there is great reason to be cautious, but there are opportunities. There are inefficiencies in the market. When I look through our holdings, I understand why Murray and I understand why Steven and James are very optimistic about what is likely to unfold for us. We own great businesses at reasonable valuations, and if we are patient, we show fortitude, we have discipline, we are going to capture those business returns, and they are going to be, in my opinion, very pleasing to our investors and hence the shareholders of Horizon Kinetics because of our growing assets over the course of time. I am just going to talk just very briefly on the business operations. There has been some operational issues here at Horizon Kinetics that we have been addressing, and one of them is the marketing effort. We have some really excellent products, particularly in the ETF space. We really do not have the distribution that we need or desire. Starting roughly early September, maybe as early as September 6 or 7 we are doing a tremendous marketing effort to boost that and to grow those assets. We have willing and able portfolio managers that are happy to get out there, but we've been, I think, going after the wrong channels, and our focus is going to grow those businesses and our assets under management. With that, I will stop and see what Steven has to say, and then we'll open it up for questions, and we'll try to answer any questions that you might have. Okay. Hey, Peter. It's Steven. I'm going to start off where Peter did. He just had me thinking about a few things, and there might be a fair amount of overlap between what I'm talking about and what he's talking about. That's okay. When you listen to stereo music, you don't have exactly the same sound coming out of each speaker. It's a little different. The overlap provides some more information, and maybe something of beauty, I don't know. When Peter talked about, Murray had an unusual skill at understanding systems and how they work. I'll just put it in a more common phraseology. He understood gaming the system, right? He was the kind of guy, he'd walk into a new school or a schoolyard, and he starts to understand what's going on pretty quickly. What are people doing? It works for any kind of marketplace. If most people are doing a single thing, if you can even spot that they're doing that or observe it as opposed to just being part of it, you also begin to realize that if most people are doing something a certain way, they're changing the equation. Maybe you should see if you have a productive way of taking the other side of that. I don't think I spoke to you about this last time, Peter. If I did, someone can text me or something, tell me to stop. It makes me think of two anecdotes about Murray from the period when Peter and I probably first met him. Probably within the first year or two. Peter, if I'm saying anything incorrectly or I'm misstating something, just step in. One was the very first time I saw Murray. I wouldn't even have remembered his name because that's not the way my head works. But I think Peter might have been there for this, too. When we were not yet officers in the Private Bank/Bankers Trust Company in New York City, there was an annual, it was called a trust investment school, where some, I don't know, some association of banks that had trust companies would choose some of their young folks who look like they might have some potential, and they'd select a couple or a few from each of these banks that were part of this circle. They'd send them to a weekend offsite, trust investment school. They had various breakout sessions led by various experienced old hand portfolio managers and analysts and whatnot, and each one was about a different topic, about trust and administering trusts and about portfolio management techniques and research analysis and so forth and so on. I do not remember any of the presentations except for one. In this case, they had this guy who was a. I knew he worked at the Private Bank and Bankers Trust Company. I might have seen him once before. I do not know. All the other people are sitting in the audience, and he was talking to us, and it was Murray. He is saying, "I know all of you here want to be portfolio managers, and I know all of you, what you want in your heart of hearts is to beat the S&P 500. I will tell you how most people do it and how you will probably do it, which is you are going to try to work very hard and do a lot of research about all the different 500 stocks in the S&P 500, and you are going to try to pick the best one or two. There are lots of different ways of doing it, the fastest growing one at an appropriate valuation multiple, or the best cheapest one at a so forth and so on. It is a lot of work, and a lot of people are trying to do the same thing. Everybody is trying to do the same thing. You have to ask yourself maybe, probabilistically, how likely am I to be the one to identify the stock that will do the best and overweight that so I can beat the market by even just a little bit. If you beat it by 5 basis points, 5 one-hundredths of 1%, you will get a bonus. Your career will be advanced. Do not you think it would be easier just to find the worst stock in the S&P 500. The worst company where the sales are not going anywhere. They have got bad management. They have got too much debt. They might have trouble rolling over some of their lines of credit. They are being sued for malfeasance or for some product liability. Would not it be better just to not buy that one. Because all you need to do is beat the market by a basis point or two. Everybody sat there with their mouths open a little bit, as I did, at least figuratively, and said, "Wow, that seems so simple. Why did not I think of that." That was classic Murray. One other example, and here, Peter, I am not sure whether he actually did this or he was just talking about that he should do it. I do not actually remember. Murray ran something called the G Fund, called the Growth Fund. It was an internal fund at the bank for trust accounts, and it was supposed to be a growth fund, primarily technology-based. That was the idea. He did not buy technology stocks, even though that is what they hired him for. He bought what he liked. He talked about how his bonus was predicated on beating the S&P 500 and how when an organization sets up an incentive system like that, it actually creates behavior incentivized around it, which won't necessarily provide or be geared toward the outcomes that the institution wants. He said, for example, he said, "Right now," and he was talking to me or to Peter, I don't remember. But he said, "Yeah, right now," I don't know, it was September or November, somewhere late in the year. He said, "Right now, the G Fund is X percentage points ahead of the S&P 500. What I really should do is I should sell everything right now. I should sell everything right now, go to cash, and all I need is for the next three or four weeks to If the market's going to look a lot, maybe I can buy a call option or something." I don't know if he said that. "But I got to just stop right now and I'll start again on January 2nd." Now, if you do that, of course, it's a realized gain, and it's not sufficient for the clients and ultimately for the bank because maybe withdrawals come to handle the gains taxes and whatnot. But that's how he was incentivized. I just can't remember if he actually did it or not. Anyway, when you talk about systems and the S&P 500, as Peter was describing, it's a system, and it's a system that serves other functions other than just doing well on an investment basis. There are businesses attached to it. When Peter talks about indexation, Murray talked about things going to extremes, and people follow a rule system, and they're in a rule set, and they just stop paying attention. The S&P 500 originally was supposed to be, and it was, a diversified exposure to the economy at large. That's really systemic. You want exposure to the growth of the economy over time and the productive capacity and growth prospects of the U.S. as embodied in its largest publicly traded corporations. Back when the S&P 500 index was created, when we had the first index created by John Bogle, it really was fairly well diversified relatively representatively across the different industry sectors. There were some glaring absences, but there's nothing you could do about it. Real estate. Really wasn't much real estate in the S&P 500 because most real estate is privately held. Otherwise, it was fairly representative across energy and pharmaceuticals and mining and auto production and so forth. Anyway, I was struck by a If that's the case, and that's how it's presented. Well, if you think about the S&P 500 today, with respect to its representing the GDP profile of the U.S., you would think that only 3% of U.S. GDP comes from the energy sector. This oil and gas exploration and refining and storage and transportation and pipelines and all of that. That's it. Consumer staples, think about it. It's food and staples like retailing, like Costco and Walmart, drugstores, food products companies themselves, like General Mills, beverages, beverage companies, household products like Procter & Gamble and personal products. So on and on and on. Well, according to S&P 500, only about 5% of U.S. GDP comes from those activities, and only 6% comes from consumer discretionary companies. Do we need to say more than automobiles, household furniture, electronics, apparel, hotels and restaurants, media and entertainment, retailing, and more and more and more. But apparently, 49% of the total productive capacity, as expressed in GDP of the United States, is apparently in information technology. Does that really come, the entire U.S. economic output, 49% of it really come from the services of Meta and Google and NVIDIA and their cohorts? Anyway, that's kind of an interesting anomaly. We like to take the other side of it. We're not planning to take the other side of it. There are things we find that we think are interesting, as for investment purposes, which is a function not of the semantics of a sector or whatnot, but we find something interesting for investment basics and valuation. We have something called the Inflation Beneficiaries ETF, which we started five odd years ago because we talked about it, we written about it repeatedly, that there was an anomalous period for 20 odd years of more disinflationary forces. All sorts of reasons why the forces that created, or supported disinflationary environment had run their course, and that we're probably going into a period, let's just assume we're correct, like a long period, not just a few years, maybe a generation, of rising and high inflation, both commodity-based and probably monetary-based also. Well, we have Inflation Beneficiaries ETF, companies that are natural beneficiaries in what we think are some elegant and effective ways to benefit from that, and that have certain characteristics because of their business models that make them not value traps. That they're inherently profitable and growing and have high returns on invested capital, as Peter was referring to anyway. By the way, I hope you'll forgive me for talking a lot about investments, but really, that's what we do. If we don't have independent and productive investment research, ultimately, our firm will kind of wind down like an old clock. It might take a very, very long time. It could take 20 years because of what we already own in our portfolios. Anyway, Peter probably said this in our last quarterly meeting, is that we just, and he may be exaggerating touch, but not really. I think I can definitely argue that it would be true. If we just didn't touch any of our portfolios for the next five years, just close the door on that for a while, we'd probably do just fine. Although, now we're finding a lot of interesting things, in part because of what the market is doing. It's creating opportunities for us. We're taking the other side. Anyway, the Inflation Beneficiaries ETF, if we took the sum total of all the holdings in that ETF, which James Davolos for us, that are also in the S&P 500, they would amount to a grand total of about 0.6% weight in the S&P 500. So that's just how different we are positioned effectively, not that we try to be that way, than the S&P 500. It also says something about just how imbalanced the S&P 500 is. It's totally not prepared for either to benefit from companies that will do well in an inflationary environment, and perhaps more to the point for people who are invested that way. Most of the companies in the S&P 500, if not most, their operations, their profitability, their margins, and so forth, will actually be subject to diminishment because of higher input costs or inflation. That's one thing I can say. As far as the hyperscalers and the IT companies and the Mag Seven go, Peter referred to their business models, that for which people are paying lots and lots of money and have over time, high valuations. Their business models are fundamentally changing. They've never been this way before. They're actually becoming different businesses. I was taken by some headlines a few weeks ago saying the Mag Seven stocks are trading at the cheapest valuation in more than a decade. Why? They're saying that because of some recent declines. They were trading at a P/E of under 25, as opposed to the P/E of 30 of a year ago. I don't know what the P/E exactly means yet, so you have to analyze it. We decided to look at the free cash flow. It turns out that it was tough to actually get a valuation based on free cash flow because two of those companies, actually, the most recent quarter, had negative free cash flow. One of those companies trades at 700x free cash flow. If I gave the two companies that don't even have free cash flow a benefit of the doubt and just called it an infinitely high number, but just called it an even 100x, we could have a seven-company average. Basically, that group trades at 150 times run rate free cash flow based on the most recent reporting period. We know they're going to spend even more. When we calculate things, we don't just have a database do it for us or ask Claude, because we have to make our own judgments and decisions about things. One thing I usually, and Peter would do, is we would exclude. That's not done. We exclude from a cash flow calculation, instead of adding back to net income. Of course, there are expenses you take away, like capital expenditures, but instead of adding back non-cash compensation expense, which is the standard way of doing it, we don't add that back. It's because if you think it through, that's employee compensation. That adds up to a lot of money. If the companies didn't pay that stock to employees, you would think that the employees would ask for more cash instead. One way or another, it becomes an expense. You'll find also that even when you think of it as just a non-cash item, it isn't really. At the moment it is, because they issue stock or stock grants instead of cash. At some point later, you'll find out that these companies, because they don't want too much dilution, they don't want dilution that's shown in statements. They'll say they're buying back a lot of shares. They might spend hundreds and hundreds of millions of dollars, $1 billion buying back shares. You will find that a lot of it is just repurchasing the stock they issued as non-cash compensation. On a run rate basis across the Mag Seven, it amounted to $108 billion for the most recent quarter, if we just do it on that basis. We are not invested in those things. Again, if we take this idea of taking the other side of it, we are very much invested in the benefits, the financial benefits you can have from playing, if you want to use that term, slightly derogatory term, but playing the whole technology and the data center boom. Because as people who follow us know, we are positioned where we think are the limiting factor and necessary resources that the AI companies, the hyperscalers need in order to build their data centers, which is the appropriate package in the appropriate location of land, in order to do this, that is remote from a population center, and water that is not taken from local populations or from farmers, and it is not otherwise utilizable because it is brackish or whatnot for other purposes, and access to natural gas and so forth and so on. The companies we own are going to be natural beneficiaries of that, irrespective of exactly how profitable or not AI data center management is. For those of you, not everybody pays attention to everything, we cannot either. Just this past week, there is a company called I will not tell you the company, but a data center contract was signed somewhere in Texas. We have a company that does this kind of thing. This company decided that it was going to hand over the Well, let me back up a second. It has the package. It has the package of land and water and access to natural gas, and it is all that stuff. It has all the permitting it needs from the state government. It decided that it would hand over the substantial most of the capital expenditure, and planning and building of a data center on some of its land to another company. All it would do is charge that company rent, kind of like a net lease. That company will also be responsible for paying for water and natural gas, which would presumably charge to whatever AI company wants to use the data center it is going to build. It turns out that just a simple base rental revenue would amount to something like about $2 billion a year if you were to scale it to, just for ease of calculation, 1 GW of power. That is an extraordinary amount of revenue. I suppose one can also do different kinds of exercises and reduce that to, well, how many acres was that going to take up? So you can reduce the revenue to an acre basis. You can do stuff like that. In the case of a company like Texas Pacific Land Corporation or LandBridge, for instance, they would have a different kind of contractual and business arrangement because they can provide water, for instance. They can sell that separately. For companies like them, like a TPL, water would actually be, believe it or not, if you haven't studied this, a larger source of revenue for them in not that distant future than oil and natural gas. It is kind of remarkable. You can generate hundreds of millions. Well, maybe 25. If you are going to have enough data centers in a given property, you can generate scores and scores and ultimately hundreds of millions of dollars in revenues just from the water. What else can I say? We take the other side of things, not just to do it reflexively, but because we deliberately, when we started, we told ourselves we are going to follow our analysis irrespective of whether it is what is expected of us or is generally expected, or whether it is diversified in the way that other people talk about diversification. We think we are pretty well-diversified. We just look at diversification in a functional sense, not in a semantic sense. Something that caught my eye just recently is that if you look at how the papers or the magazines and whatnot provide the news, the reactions from our perspective are the wrong ones. We could be wrong, but this is our reasoning. Just this week, there is an article that Texas Governor Greg Abbott, and this is how it is described in this article. He went from being one of the biggest boosters of data centers in the country to becoming only the second governor after New York, I think, to oppose a data center moratorium. He directed the Public Utility Commission of Texas to weigh hundreds of gigawatts of prospective power demand from the Texas grid, 90% of which is for data centers. He asked the regulation to conduct a comprehensive audit of all those proposed centers that want to connect to the grid because it is a problem, and people are angry about noise mitigation, and water needs, and so forth. Bloomberg estimated in this article that the Texas data center moratorium puts 20% of planned data centers in the U.S. at risk of delay. The article goes on to basically suggest that maybe this whole thing is at risk. What they are looking at, you see, is they mention companies that might be affected negatively, such as Sempra, a big utility company that has $8 billion worth of potential investment opportunities tied to a certain transmission project that might not be allowed. They take a look at American Electric Power and one of its issues. So they are looking at the world through the prism of indexed companies in the S&P 500. But you know what? That has very little direct negative to do with companies that will set up their own electric power generating facilities behind the grid, so to speak, meaning having nothing to do with the electric grid in Texas. They do not need to be reviewed. They are not going to be reviewed. In an indirect way, that might simply push more hyperscalers to focus on building or renting their own off-the-grid or behind-the-grid facilities, which would be a benefit to the kinds of companies we have. That is what we endeavor to do. Not because we want to do things differently, but because by doing things that where other people are flowing, they are adding. The iron laws apply to math. What most people are doing changes the price, and it probably cannot be a great price if everybody else is doing it. We think we find better ways to do it. Last couple of I do not want to bore everybody. James Davolos this week was in Europe, being introduced to a bunch of people who were kind of sort of interested in the Inflation Beneficiaries ETF. They do not really have something like what we have. What he told me in a brief 30-second catch-up was that nobody looked askance at him. They had been there, I think, a year or two ago, and there was not so much interest. But he said pretty much every single meeting, people had a visible interest in what we were providing for them. So Peter is right. There is a lot we can do with a lot of strategies that are not otherwise available. That would include our two different Japan strategies, which give you specific functional access to the local market, what companies are doing locally, companies that are below the mega cap, global multinational companies which are not really direct exposure to China. It is only semantic exposure to China. We have an Asian strategy that has the same approach. We think we have got some better mousetraps. With proper marketing, looking at different channels and taking a renewed approach toward it, I think we can do a lot. So I will stop there. I can go on. That is it. Okay. All right. Well, thank you for that, Steven. Thank you, Peter. We are going to turn back now to talk a little bit about our second quarter, just so you can get a perspective on where we have come as a company. I can say again, that the company continues to perform favorably for our HKHC shareholders and our clients. For the second quarter of 2026, the company recorded GAAP management and advisory revenues of $18.8 million, essentially unchanged or flat as compared to 2025's second quarter. Our operating income was $3 million, which was down 19% from the prior year. These results included a 30% revenue increase from our group of ETFs, led by Inflation Beneficiaries ETF or INFL, and an 8.6% revenue increase from our separately managed accounts. Unfortunately, these results were offset by a 17% decrease in revenues from our mutual funds. Company's operating expenses were $16.1 million for the second quarter, a 5.5% increase. This increase included the impact of severance and other general compensation increases in 2026, as well as higher rent and occupancy costs as we moved two locations during the second quarter. These moves have been planned for a long period of time. That includes certain overlapping expenses that you would have associated with any move of location. We moved from one New York office to another, so you are just going to get a little bit of an overlap there. We still expect to see a bit more of that impact in the third quarter. At that time, we will have a full quarter's worth of rent at both of these new locations. The company's investment results in our Consolidated Investment Products, or CIPs, as you will see termed in our 10-Q, resulted in losses in the other income expense section. The company reported a quarterly net loss of approximately $113 million. However, $95 million of that related to the redeemable non-controlling interest held at those CIPs which resulted in a net loss attributable to the HKHC shareholder of $18.4 million or a loss of $0.99 per share. The company's AUM was $10.8 billion as of June 30th, which is up from $9.6 billion at December 31st, 2025, but down from the first quarter's $11.4 billion. These swings in AUM were driven significantly by the changes in the fair value of Texas Pacific Land, TPL, which was down 7.8% for the quarter, and our holdings related to various Bitcoin-related securities, principally Grayscale Bitcoin Trust, which was down 13.7% in the quarter. Both TPL and our Bitcoin-related holdings are significant positions held throughout a variety of the CIPs and SMAs at the company. I will note also that TPL remained up 52% for the year-to-date period. While these changes impacted our AUM for the quarter, periodic changes in the fair value of TPL are not necessarily unusual. That was a deeper dive topic Steven addressed recently in our second quarter commentary for clients. Always a recommended listen for those interested in their investing approach for our clients in the firm. I would also like to take a minute to remind you of our year-to-date results, which included GAAP management and advisory fees of $37 million, down 1.8%. Importantly, the first quarter's performance incentive fees of $18.1 million. As we discussed in our first quarter, in our primary GAAP presentation, these incentive fees, which are paid from our Consolidated Investment Products, are part of the determination of the allocation of net income attributable to redeemable non-controlling interest. I realize that is a bit of a mouthful, so we try to simplify that presentation for you with a supplemental advisor-only presentation in the press release, which presents these fees as part of management advisory fee revenue. In that presentation, management advisory fee revenues for the six months ending June 30th were $59.0 million. That is compared to $41.7 million in the prior year. These first quarter incentive fees were the result of certain trading restrictions expiring that were associated with our clients' investments in Miami International Holdings or MIAX. We also incurred various incremental commissions during the first quarter, bonuses and other costs of $6.1 million associated with that incentive fee. As we discussed that in the first quarter calls, the overall resolution of those incentive fees is obviously a significant net positive for our year-to-date results. I will also note for you, as of June 30, we have calculated and disclosed in our MD&A approximately $8.3 million of unearned incentive fees related to a variety of our private funds. This value is subject to change, and it is based on market prices and also includes amounts associated with investments that may have additional liquidity restrictions similar to what we have experienced with MIAX. As a result, our consistent operating income from the core asset management business and the investment gains in the first quarter, our GAAP net income for the six-month period ended June 30, 2026, was $54.2 million, or $2.91 per share. From a balance sheet perspective, the company continues to maintain substantial liquidity. There is cash of $34.3 million. The company also has an investment portfolio of $105 million, digital assets of $8.3 million, and approximately $263 million of interest in various private funds, some of which are consolidated, and various other private investments. Recently, the board of directors declared a $0.13 per share dividend to be paid on September 10, 2026, to shareholders of record as of August 26, 2026. This will bring our trailing 12-month dividend declarations to $0.484 per share. I will note also that the company continues to have no third-party debt. Our long-term liabilities are limited to the various long-term office spaces. You may have noticed an increase in our overall operating lease liability of nearly $18 million from year-end as we commenced the use of the two locations I mentioned earlier, where we had recently signed long-term leases. While this is a substantial increase in our balance sheet liability and the related right-of-use assets, these represent typical office leases that are under long-term arrangements. This year will include some duplicative costs, as I mentioned, related to the office moves, but overall operating expense of the new facility within New York is not substantially different from our prior long-term lease that will terminate in early next year. I should once again emphasize that our GAAP net income or loss will often be impacted by swings in unrealized gains and losses associated with certain investments, including digital assets. We would expect from time to time that our results will be impacted by incentive fees, like we have recently seen during the first quarter of this year or the fourth quarter of 2024. While we cannot expect that kind of results that occurred at the end of 2024 every year, we will expect to see some volatility from quarter- to- quarter and year to year due to the incentives and/or other unrealized gains or losses in our overall results. With that, we are going to turn it back, and we are going to go to some Q&A with Peter and Steve to discuss some questions that have been provided. I would like to take a minute to also repeat that if you would like to ask a question, you should be logged into the GoToMeeting platform. Those of you on the telephone connection will be in listen-only mode. Again, if you are on the GoToMeeting platform, you can submit the questions via the chat function and just direct that question to the presenters, where I will summarize and relay as best I can. Can I ask a question first, Steve? Of course, yes. It can work. I do not mean to put you on the spot. Okay. I am perfectly okay if you say, "You know what? I do not actually have it prepared this way, but I will get back to you." I am listening to this. There is a lot of data that you just gave, and I am sure I have seen it somewhere. Even as I look for, like, for cash flow statement or the income statement, as you mentioned, so we earn $54 million, even net of the eliminations as a consolidated investment product, which are not really. I see that in there are still big movements for the changes in security valuations, just the way GAAP accounting works. Is there a schedule or do you know a number? If not, well, maybe we will produce one if in-house counsel allows. Do we have a schedule that would show a simplified kind of cash flow statement of what we actually earned? Forget Bitcoin going up and down or TPL going up and down or whatnot. But just like someone asked a simple question, what was our cash earnings? Do we have actual earnings? Yeah. The way I would think about that, and I will tell you, I do not have a simple schedule to put to you right at the moment, because this is a relatively complex set of financial statements. The way I look at it is to look actually on the income statement. There is a line item called operating income. I will even go one step further. If you look at the press release, the press release will have two presentations. It has our GAAP presentation, which is the same as what you see in the 10-K, and then it has a supplementary schedule that recasts it effectively for various eliminations of things that we remove because of the consolidation process. The supplemental presentation makes it easier to see revenues that we would retain from our consolidated investment product. The operating income line item there pretty much is the cash that is generated from the operations of the company. It is not purely a cash flow statement. There still are accrual differences and timing differences within the revenues and expenses. But I think for me, that is a good starting point for the cash generated by the asset management business. And then the caveat that I would have for that is, the other things related to the company that you would think about would be fixed asset acquisitions, purchases, which with the exception of this year, relative to office space build-outs, is typically pretty minimal. And then, of course, we pay a dividend out of that operating income activity. Outside of that, the operating income line is really the driver of the cash flows of the asset management operating company business. Does that help a bit? Yeah. It would be nice to be able to provide. We have to work on it. You can see there is a lot of complexity there, and there is trade-offs for everything. Every time one wants to do one thing with good intention, one has to trade off something else. What do you reflect? What do you not? But it would be nice one day to come up with some consistent enough framework for what an ordinary, unsophisticated person would consider earnings. With all the necessary explanations and citations below as to what is excluded and whatnot, what is not and why. But that will be, maybe it is a future project. Thank you. Yep. No problem. Okay. I will remind our listeners, if you have a question to post it on the GoToMeeting platform. We do have a couple, and I am going to paraphrase them because they both are very similar and are associated with the concept of growth. The first questioner has gone through the math and has seen, it is relatively obvious, that we have had inflows and outflows related to our mutual funds and SMA channels throughout the year and of course, since Murray's passing. I will tell the questioner, for starters, they have not changed substantially over that time period. We have seen redemptions in our mutual funds as well as some of the SMA accounts, but a relatively small amount in the SMA accounts, I would say. The changes that you see in the AUM are principally around the market price changes of the assets that are within the portfolio. So that as a background. The person's actual question is, what are we doing, or can we talk about how we want to think about the distribution methods for the various fund products, particularly the Japan Fund or the BCDF fund, which Murray previously noted being ones marketed as word-of-mouth, but things that he was very excited about. I will tack on the second question was simply, you mentioned an increased marketing effort. What can you say further about that? Can you illuminate that, those marketing efforts and exactly what is coming down the pipe there? Sure. I will take that, Mark. For the mutual funds, there was actually a very large redemption that accounts for the majority of that, and that actually took place and it was initiated when Murray was still alive. It did not actually hit until the second quarter. So, it is something that we dealt with and we paid it out. I think in hindsight, I would have liked to have paid that out in kind, i.e., transfer out the securities. In the future, if we ever have something like that again, that is the likely path that we will follow. But mutual funds, as anyone knows, are not necessarily a growing business. We have been able to grow the assets only because of the performance, but it is very challenging for a couple of reasons. One, most individuals and most institutions are gravitating towards ETFs. The second thing is a lot of our mutual funds have fairly high concentration, and most institutional buyers will not do that unless they know us very intimately and they are very comfortable with what we are doing. We tend to, in the mutual fund business, even though it looks like we had a big loss of assets there, it really was just principally one account. People that own the funds are relatively pleased because the performance over the lifetime, the flagship Paradigm Fund, the small cap fund, have been just absolutely fantastic. That gets back to the things that Steve and I spoke about earlier, the way we approach the world, the way Murray helped shape that, where we are finding companies that are off the beaten path, and then we tend to leave them alone. Our turnover is a fraction of what it is for the industry. With regard to marketing, ETFs are really a very different business, and we had some success initially with the Inflation Beneficiaries ETF because inflation at this exact moment we brought it out was the topic of the day, and you could not open up a periodical, a magazine, or listen to the news without hearing about inflation. We got a fair amount of inflow from that at the start. The focus that we are going to be shifting to is going to be much more driven towards targeted marketing, where we are getting assisted by databases, and we are going to go after holders of other ETFs that have products similar to ours, and we just think ours are better. We think we will be able to migrate at least future business away from the existing ETFs that we compete with to ours, because I think they will just look at the results and see that ours might actually have a better performance or likely does have better performance. Some of it might be in the future, although we have not started this. ETFs tend to be more of a kind of a retail product, and we have never done any type of mass marketing or anything like that. We do not have that on the table at the moment, but it is something that we are contemplating. We are going to know in short order, probably by mid-October, November, how successful we are making inroads with this new marketing effort. We are not standing still. If this does not work, we will try something else because I think we are known as an investment shop, and we do not really have the distribution that we probably should because we should, as a firm, be a much larger organization based on our performance. That is our goal and intention. I do not know if you have anything to add to that, Steve. Yeah. I'm not a marketer. I certainly talk too much and too inefficiently. For me, I like the idea that Peter was talking about. There are people around institutions that have a lot of assets in Think of as Inflation Beneficiaries ETFs. This goes to the heart of what we do that's differentiated. Because what will those be? They'll hold mining companies and hard asset intensive cyclical companies that are supposed to benefit during periods of high prices and inflation and energy companies directly, buy some ExxonMobil or whatnot. We've made a study of this. We actually have some published academic work on it. The truth is that holding gold or holding gold miners or holding other such conventional securities or assets or companies, they're really not good long-term inflation beneficiaries. They might have a pop for a little while, but if you're going to have a period of endemic inflation, it's not going to do well for you. Whereas ours, our asset-light approach, which is an elegant aspect of that, it does better. It seems to me if I were sitting down with an individual who asked me what we can do for them or whatnot, I would say, "Look, I'll explain to you what we've got and how it's different. I dare say we can do it for you, or you can do it yourself. Take a look at our historical statistical returns and try a little mix. Put ours in as 5% or 10% of your fund and run the numbers, and I think you'll see that you do better and with less volatility," if I'm speaking their language. Yeah, it might be worth it to peel a little bit off of what you're doing and put it with us and see how you do." Those are the people who are already oriented that way. I dare say if you went to someone who's mostly in the S&P 500 or the Russell 1000 or your typical indices and said, "You know what? You have all this money. Why don't you peel off 1% and try this? I think you'll find that it improves your statistics." I would think it should be an easy sale, but as Peter's alluded to, part of marketing effort is setting up the process by which you can identify and talk to these people. I think once we're doing that, time will tell. I think we'll probably be successful. Okay. Thank you for that. We have had another question come in. It deals with new investments. From time to time, and we've had a few this year, a new investment may has come along, sometimes private, sometimes public. The question is about how would you decide where to put said investment between the various funds we have, including rent fund, FRMO or private funds and so forth. Yeah. I would say that that's really a case-by-case basis. In the case of, let's say, a fund where there's a new capital raise, sometimes we don't have the ability to offer that to the broad client base or the individual client base because there's not enough time, so it might go in some of our pooled vehicles. If we do have enough time and we think it's a good investment, as we've done in the past, we'll place it in virtually every account that we actually have. Make it available to all the individuals and let them decide whether or not they want to participate in that. It really is a case-by-case basis, and certain things are just not appropriate. The strategy may not be appropriate for the particular investment, then it's obviously not going to go in that particular portfolio. If it's a broad-based, well-researched, something that we think has great opportunity, we try to do it far and wide within all our portfolios. Steve, anything to add to that? No. We like to evaluate things as they happen. As soon as you start on a rigid-- Policies are important. If you have a rigid policy, it's not always the best thing to follow originally. In the recent past, we've had some very interesting opportunities presented to us, and we would've used it more broadly with individual client accounts, but the window was just too short to go through. We tried to evaluate it, to go through all the back and forth paperwork with clients to get signatures and documents signed and information taken down in order to make it work. Next time, if it's a similar opportunity, maybe we'll have the time. Yeah. If we find something that we think is appropriate or works for clients, we don't make judgments based on any considerations other than, does this work in this client portfolio? Is there enough cash? Is it appropriate for the client? Does it fit within the portfolio? Do we have to sell anything? Do we have to take gains too much in the way of capital gains in order to make room? Maybe it doesn't make sense on an after-tax basis. That's how we go about it. Okay. Well, that concludes the questions that have been provided. Thank you everyone for joining us. Peter, Steven, any last thoughts? I guess I will just repeat what I said earlier. We have a collection of really talented employees, and I am really thankful, and I will not go into all the names, but people have stepped up and, again, I share with my wife, I am like, we have a really solid organization, and I expect good things to happen. I think our investments are really poised to do well. We cannot guarantee that obviously, but as Steven pointed out, we have no shortage in new idea generation. We are being presented with new ideas frequently because people have heard about us. Expect to hear from us in the future about opportunities that we are likely to come to you and see if you want to participate. That is all I have, Mark. Okay. Thank you very much. That concludes our call for today. Okay. Thank you all very much. Thank you. Thank you.