Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SuRo Capital Corp (SSSS, Financial) reported a net asset value (NAV) of $162.3 million or $6.94 per share for Q2 2024.
- The company made significant investments in high-growth technology companies such as CoreWeave and Canva.
- SuRo Capital Corp (SSSS) has a strong cash position with approximately $54.4 million available for investment.
- The company announced a $35 million note repurchase program and a $75 million convertible note issuance, signaling confidence in its financial stability.
- SuRo Capital Corp (SSSS) successfully completed a modified Dutch auction tender offer, repurchasing 2 million shares at $4.70 per share, enhancing shareholder value.
Negative Points
- The NAV per share decreased from $7.17 in Q1 to $6.94 in Q2, indicating a decline in portfolio value.
- The company experienced unrealized depreciation of portfolio investments, contributing to a $0.30 per share decrease in NAV.
- SuRo Capital Corp (SSSS) reported a net investment loss, resulting in a $0.16 per share decrease in NAV.
- Market volatility and weak economic data have created an uncertain investment environment.
- The company’s stock continues to trade at a significant discount to its net asset value per share.
Q & A Highlights
Q: Typically for an IPO, what is the percentage that you may typically realize kind of on the opening? And then, how long is the lockup typical for the balance of that realization? Assuming a $10 million gain on XYZ company, what is retained by the company? And what is paid out to investors? And then, typically, what's the timing of dividends following some realizations? Is the company at this point carrying any tax shield to offset potential gains?
A: (Mark Klein, CEO) In a traditional IPO, shares are typically locked up for six months. As a BDC, we are required to distribute all capital gains. We carried some capital losses into this year, so initial gains would offset those losses. Once exhausted, we would be in a dividend position and communicate our dividend strategy to investors.
Q: Can you provide more details on the note repurchase program?
A: (Allison Green, CFO) On August 5, 2024, our Board approved a discretionary note repurchase program allowing us to repurchase up to $35 million in aggregate principal amount of our 6% notes due 2026 through open market transactions. As of August 7, 2024, we had not yet repurchased any of the notes.
Q: What is the current liquidity position of SuRo Capital?
A: (Allison Green, CFO) As of June 30, we had approximately $57.6 million in liquid assets, including $54.4 million in cash and $3.2 million in unrestricted public securities. There are 23,378,002 shares of the company's common stock outstanding.
Q: Can you elaborate on the recent investments made by SuRo Capital?
A: (Mark Klein, CEO) During Q2, we invested $10 million in Canva and $15 million in CoreWeave. Canva is a design software platform, and CoreWeave is a specialized cloud provider for AI and machine learning. Both investments are expected to strengthen our portfolio.
Q: What are the top investment themes in SuRo Capital's portfolio?
A: (Allison Green, CFO) As of June 30, the top allocation was AI, cloud, and Big Data, representing 34% of the portfolio. Marketplaces and education technology followed with 22% and 21%, respectively. Social, mobile, and consumer companies accounted for 13%, financial technology for 9%, and sustainability and alternative energy for 1%.
Q: How did the recent Dutch auction tender offer impact the company's NAV per share?
A: (Allison Green, CFO) The tender offer repurchased 2 million shares at $4.70 per share, representing 7.9% of outstanding shares. This resulted in a $0.20 per share increase in NAV, partially offsetting the overall decrease in NAV per share from $7.17 in Q1 to $6.94 in Q2.
Q: What are the details of the 6.5% convertible notes due 2029?
A: (Allison Green, CFO) We may issue up to $75 million in aggregate principal amount of 6.5% convertible notes due 2029. The initial issuance is up to $25 million, with interest paid quarterly. The notes are convertible into common stock at $7.75 per share and will mature on August 14, 2029.
Q: Can you provide an update on the company's public investments?
A: (Mark Klein, CEO) We began monetizing our position in PublicSquare following the expiration of lockup restrictions, selling 220,000 shares for approximately $632,000 in net proceeds, resulting in a realized gain of approximately $458,000.
Q: What is the status of the company's larger investments like Blink Health and WHOOP?
A: (Mark Klein, CEO) Blink Health continues to grow its customer base and partnerships, while WHOOP has announced a global partnership with Cristiano Ronaldo and launched new features. Both companies are well-positioned for future growth.
Q: How is SuRo Capital positioned for the reopening of the IPO window?
A: (Mark Klein, CEO) We have deployed capital into late-stage technology companies like CoreWeave, Canva, and Liquid Death at compelling entry prices. These investments strengthen our portfolio for the reopening of the IPO window, with potential upcoming IPOs signaling increased investor appetite.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
