U.S. markets open in 9 hours 17 minutes
  • S&P Futures

    3,653.00
    -7.50 (-0.20%)
     
  • Dow Futures

    29,687.00
    -117.00 (-0.39%)
     
  • Nasdaq Futures

    12,438.75
    -13.50 (-0.11%)
     
  • Russell 2000 Futures

    1,832.90
    -2.60 (-0.14%)
     
  • Crude Oil

    44.15
    -0.40 (-0.90%)
     
  • Gold

    1,812.60
    -6.30 (-0.35%)
     
  • Silver

    23.82
    -0.27 (-1.14%)
     
  • EUR/USD

    1.2077
    -0.0001 (-0.01%)
     
  • 10-Yr Bond

    0.9340
    +0.0900 (+10.66%)
     
  • Vix

    20.77
    +0.20 (+0.97%)
     
  • GBP/USD

    1.3417
    -0.0006 (-0.05%)
     
  • USD/JPY

    104.4200
    +0.1040 (+0.10%)
     
  • BTC-USD

    18,521.88
    -174.30 (-0.93%)
     
  • CMC Crypto 200

    363.55
    -16.31 (-4.29%)
     
  • FTSE 100

    6,384.73
    +118.54 (+1.89%)
     
  • Nikkei 225

    26,821.87
    +34.33 (+0.13%)
     

Edited Transcript of SSSS.OQ earnings conference call or presentation 5-Nov-20 10:00pm GMT

·31 min read

Q3 2020 SuRo Capital Corp Earnings Call WOODSIDE Nov 19, 2020 (Thomson StreetEvents) -- Edited Transcript of SuRo Capital Corp earnings conference call or presentation Thursday, November 5, 2020 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Adam Bates;Investor * Allison Green SuRo Capital Corp. - CFO, Treasurer, Chief Compliance Officer & Secretary * Mark David Klein SuRo Capital Corp. - President, CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Andrew Harte;BTIG;Analyst * Jon Robert Hickman Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and thank you for standing by, and welcome to SuRo Capital's Third Quarter 2020 Earnings Call. (Operator Instructions) This call is being recorded. I would now like to turn things over to Adam Bates. Please go ahead. -------------------------------------------------------------------------------- Adam Bates;Investor, [2] -------------------------------------------------------------------------------- Thank you for joining us on today's call. I'm joined today by the Chief Executive Officer of SuRo Capital, Mark Klein; and Chief Financial Officer, Allison Green. Please note that a slide presentation that corresponds to today's prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events and Presentations. Today's call is being recorded and broadcast live on our website, www.surocap.com. Replay information is included in our press release issued today. This call is the property of SuRo Capital and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in today's earnings press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements, which relate to future events or future performance or financial condition. These statements are not guarantees of our future performance or future financial condition or results and involve a number of risks, estimates, and uncertainties, including the impact of COVID-19 and any market volatility that may be detrimental to our business, our portfolio companies, our industry and the global economy that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including, but not limited to those described from time to time in the company's filings with the SEC. Management does not undertake to update such forward-looking statements unless required to do so by law. To obtain copies of SuRo Cap's latest SEC filings, please visit our website at www.surocap.com or the SEC's website at sec.gov. Now I would like to turn the call over to Mark Klein? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Adam. We are pleased to share the results of SuRo Capital's third quarter 2020. These are obviously unprecedented times we are living through, and society is facing tremendous challenges. We at SuRo Capital would like to again thank the frontline workers and responders who have put themselves at risk throughout the COVID-19 pandemic. We are fortunate to report that our employees and their families remain healthy and continue to function remotely. I will discuss how our portfolio has fared during the ongoing COVID-19 pandemic and volatility surrounding the election and highlight how a few of our larger positions have even experienced degrees of business acceleration during these uncertain times. To conclude, I will hand the call over to Allison Green for a brief financial overview. At the conclusion of our remarks, we will open the call for questions. Let's start with Slide 3. This quarter, SuRo Capital reported its highest dividend-adjusted net asset value per share since September of 2015. At September 30, 2020, net asset value was $12.46 per share adjusted for dividends declared during the quarter of $0.40 a share, an increase from $11.84 per share at June 30, 2020. Net asset value totaled approximately $253 million at quarter's end compared to $193 million in the second quarter. Please turn to Slides 4, 5 and 6 for a review of notable developments in our investment portfolio in the third quarter and subsequent to quarter's end. We continue to take initiatives to drive shareholder value. On October 28, SuRo Capital's Board of Directors declared a $0.25 per share dividend to shareholders. This dividend was driven by year-to-date monetizations in SuRo Capital's investment portfolio and is made in addition to the $0.25 per share dividend declared by SuRo Capital's Board of Directors on September 25 and paid in October. Based on ongoing activity in our investment portfolio, we anticipate declaring an additional dividend by year-end. Additionally, on October 28, SuRo Capital's Board of Directors authorized a $10 million increase to our share repurchase program. This brings the total dollar amount allocated to share repurchases to $50 million, inclusive of the $10 million modified Dutch tender offer that SuRo Capital effectuated in the fourth quarter of 2019. During the third quarter, SuRo Capital executed at the money -- at the market offering, raising approximately $51 million before fees at a weighted average price of $13.36 per share. This capital raise was quite accretive to our NAV per share. We have not issued any stock since September 28, which was 2 days prior to the Palantir direct listing. Later in the call, Allison will provide additional details on the dividends, the current status of the share repurchase program, and the results of our Q3 at the market offering. SuRo Capital's top 5 positions as of September 30 were Coursera, Palantir, Course Hero, Nextdoor and ASI media. These positions accounted for approximately 71% of the investment portfolio -- and the investment portfolio. As of September 30, our top 10 positions accounted for approximately 89% of the portfolio. Now I would like to discuss notable developments in a few of our largest positions. First, I want to highlight our investment in Palantir, our second largest position. On September 30, Palantir executed a direct listing and began trading on the New York Stock Exchange. The direct listing comes after Palantir announced it had confidentially submitted a draft registration statement on its Form S-1 with the SEC in early July. Consistent with Palantir's lockup agreement, 20% of Palantir shares were freely tradable upon the execution of Palantir's direct listing. Consistent with our view of monetizing our public securities, we sold a portion of our unrestricted shares on September 30 and the remaining freely tradable shares shortly after quarter's end. We continue to hold the remaining restricted 80% of our Palantir Class A common stock and will evaluate further monetization of this investment after the lockup period expired. I would like -- next, I would like to note that our investments in online learning through our positions in Coursera and Course Hero represent 1/3 of our investment portfolio. From recent media reports as well as earning reports from public online learning companies, it is evident that the COVID-19 pandemic has continued to spark surges in demand for online education. We continue to believe the effects of the pandemic have accelerated a long-term structural change in how education is being and will be consumed with a clear transition towards online education. On July 17, Coursera, our largest position, announced that it has raised $130 million in Series F financing. The round was led by NEA, and we participated with a $2.8 million pro rata follow-on investment. The round also included existing investors, Kleiner Perkins, Seek Group, Learn Capital and others, and brought the company's cash balance to more than $300 million. This is according to the company's announcement. The information in online publication reported the round values for Coursera at approximately $2.5 billion. According to pits (SP) growth , Coursera had last raised $103 million in April 2019 at a $1.56 billion pre-money valuation. Coursera continues to take initiative to support students and universities during the COVID-19 pandemic. In March 2020, in response to COVID-19, Coursera launched a campus response initiative, providing every university in the world with free access to Coursera's course catalog to Coursera for Campus. Since this launch, Coursera has activated more than 10,000 programs for colleges and universities, reaching more than 1.4 million students. Additionally, Coursera launched a workforce recovery initiative to help governments combat unemployment. Since the launch, Coursera has activated more than 220 programs for governments across 70 countries and 25 U.S. states. In June of 2020, Coursera announced that it was extending college and university students free access to over 3,800 courses, 150 guided projects, 400 specializations, and 11 professional certificates on the Coursera platform. Through September 30, students could enroll at no cost in the program, which includes online instruction from the world's top universities and professional certificates from leading industry educators like Google and IBM. With 70% of the world's students impacted by campus closures, the program allows students to continue learning outside of the classroom. Combined, these programs have benefited more than 200,000 learners. As reported, in August 2020 in the TechCrunch article, Course Hero, our third largest position, raised a new $70 million tranche of its Series B capital, and a $1.1 billion pre-money valuation. This round brings the total primary capital raise in Course Hero's Series B round to $80 million. According to an EdSurge report, this financing included investments from TPG, Goldman Sachs Asset Management, and others. The report also indicated that Course Hero has over 1 million subscribers, that each pay between $10 and $40 per month, and that Course Hero surpassed $100 million in revenue last year. EdSurge previously reported in February, that Course Hero had raised $10 million of the initial Series B round, led by new view capital at the $1.1 billion pre money valuation. New view capital has also contributed $30 million to the company's employee tender program. Due to the impact of the COVID-19 pandemic and related quarantines and school closures, with less in-person student access to teachers or study groups, students have increasingly turned to online learning supplements for their studies, including Course Hero's online document library. Chegg, a key competitor of Course Hero, noted in its October 2020 Earnings Call that its research indicates more than 2/3 of the U.S. undergraduates who are asked about their experiences during the recent lockdown said they would welcome more online education after the pandemic ends. Additionally, the research found that approximately half of the professors now feel online education is an effective teaching method and feel better prepared to teach online. This is up from roughly 35% of the professors in May. Students turned to Chegg in record numbers during the quarter with expectations for this trend to continue throughout the year, regardless of what college campuses will look like. We believe Course Hero is similarly positioned to capitalize on this long-term trend towards online learning. In response to the pandemic, Course Hero has offered educators free access to its document library of more than 40 million teaching and learning resources. In October of 2020, Course Hero announced a partnership to enable students affected by COVID-19 to access micro grants of up to $500. Through this partnership, Course Hero has distributed funds to 1,000 students and institutions across the country. In July of this year, Course Hero also announced the launch of an educator exchange, where college faculty can earn income by uploading and sharing, teaching, learning and study materials with peers and students. This exchange further expands Course Hero's efforts to partner with faculty by providing a platform where the value of lecture nodes, practice tests, and teaching materials can be recognized and shared. Nextdoor, our fourth largest position, is an outstanding platform that serves over 219,000 neighborhoods across 11 countries. We believe Nextdoor has tremendous upside to continue to monetize its hyper-localized user base in the $161 billion United States local advertising market. According to Second Measure, Nextdoor had over 100 million visitors to its platform in September 2020, up nearly 30% year-over-year. As reaching local audiences through digital advertising channels has become one of the most important mobile marketing trends, we believe Nextdoor has reached a critical mass of users and that it is highly valuable to advertisers. Nextdoor's traction has continued during the COVID-19 pandemic as the company has launched Nextdoor Groups and Nextdoor Help Map to provide healthy individuals an opportunity to support neighbors in need. Segmented by 6 general investment themes, the top allocation of our investment portfolio is education technology, representing approximately 45% of the investment portfolio at fair value. Big Data and cloud was the second largest category, representing approximately 26% of the portfolio. Our financial technology and services category accounted for approximately 11% of our portfolio at fair value. Our social and mobile category accounted for approximately 10% of our portfolio and marketplaces accounted for approximately 9% of our investment portfolio at fair value. As previously discussed, we have broadened our focus beyond our core equity strategy into private credit and into pre-SPAC merger pipes. We continue to see a high-volume of attractive opportunities across each of these areas. A few industries of focus include e-commerce and retail, financial technology, food technology, and transportation and logistics. As such, we are excited to announce that we have invested $10 million in Blink Health. Additionally, we have a couple of investments in the final stages of closing. Please turn to Slide 7. Blink Health is a pharmaceutical technology platform that enables consumers to access the medicines they need at prices they can afford. The company is focused on disrupting the traditional pharmaceutical supply training chain to provide better data to manufacturers and more importantly, better prices to consumers. The existing supply chain is unnecessarily complex, and it rewards middlemen for providing literal value to the end consumer. As a result, the existing supply chains reliance on middlemen has raised drug prices for consumers. Blink aims to disrupt the existing supply chain model by negotiating directly with pharmaceutical manufacturers and keeping the continued focus on lowering the end cost for consumers while also providing critical data to the key players in the supply chain. Blink Health's B2B software platform alongside their online pharmaceutical marketplace creates value throughout the supply chain by eliminating a need for traditional middlemen in the market. The company is focused on the entire prescription market, unlocking savings on both generic and branded drugs for both cash and insurance-based claims. Given the recent success of Good Rx's IPOs in September, we believe the public market is excited about companies focused on lowering drug costs, while Blink competes with a number of players in the pharmacy, PBM, and telemedicine spaces. Blink Health is uniquely positioned to succeed as they continue to use a software and tech-enabled approach to create a new customer experience and supply chain for prescriptions. As Blink Health is a well-capitalized and capital-efficient provider on its pharmacy as a service platform, we believe this investment presents a compelling opportunity to participate in the disruption of the existing pharmaceutical market. Last week, we closed on an investment in the Series A and Series C preferred stock that we believe gives us significant upside in the future of Blink Health. Not only does the company have the financial backing to continue to develop its product suite, we believe Blink Health's ability to compete against large pharmacy chains alongside their value-add to health systems and drug manufacturers uniquely positions them to succeed. Looking ahead, we believe that SuRo Capital is well positioned to deliver long-term shareholder value. We are executing against a disciplined growth investment strategy with strong tailwinds, and we believe the fundamentals of our portfolio are strong. Thank you for your attention. And with that, I will turn the call over to Allison? -------------------------------------------------------------------------------- Allison Green, SuRo Capital Corp. - CFO, Treasurer, Chief Compliance Officer & Secretary [4] -------------------------------------------------------------------------------- Thank you, Mark. I would like to follow Mark's update with a more detailed review of our financial results as of September 30, 2020, our recently declared dividend, the expansion and status of our share repurchase program, the results of our at-the-market offerings, our continued expense reduction initiatives, and our current liquidity position. We are pleased to report we ended the third quarter with an NAV per share of $12.46, adjusted for $0.40 per share in dividends declared during the quarter. A breakdown of NAV per share as of quarter end is shown on Slide 8 and is consistent with our financial reporting. In sum, the increase in NAV per share during the third quarter was largely driven by $0.80 per share of net unrealized appreciation of our portfolio investment, approximately $0.24 per share attributable to our at-the-market capital raise, and approximately $0.12 per share in net realized gains from the exit or sale of investments in our portfolio. These increases to NAV per share were partially offset by $0.40 per share in dividends declared during the quarter, a net $0.13 per share decrease in net investment loss, and a net $0.01 per share decrease attributable to the conversion of 1,780,000, or just under 5% of our 4.75% convertible senior notes due March 2023. On July 29, our Board of Directors declared a dividend of $0.15 per share paid on August 25 to shareholders of record on August 11. This dividend was related to investment activity in 2019 and brings the total dividend declared related to 2019 investment activity to $0.47 per share. All dividends attributable to 2019 have been categorized as net realized capital gains for tax purposes. On September 25, our Board of Directors declared a dividend of $0.25 per share paid on October 20 to shareholders of record on October 5. This dividend is related to current year investment activity and is expected to be categorized as net realized capital gains for tax purposes. Subsequent to quarter end, on October 28, our Board of Directors declared a dividend of $0.25 per share payable on November 30 to shareholders of record on November 10. This dividend is also related to current year investment activity and is expected to be categorized as net realized capital gains for tax purposes. As Mark noted, we anticipate paying an additional dividend to those I noted here closer to year-end. Please refer to Slide 9 as I review the current status of the share repurchase program. During the third quarter, the company did not repurchase any shares as our at-the-market offering was active. As Mark mentioned earlier, we are pleased to announce that on October 28, our Board of Directors authorized an additional $10 million expansion of the share repurchase program. This brings the total allocation by our Board of Directors to the share repurchase program to $40 million. This is in addition to the $10 million 2019 modified Dutch option tender offer. Subsequent to quarter end, we repurchased 371,283 shares of our common stock for approximately $3.1 million. Since the inception of the share repurchase program in August 2017 to date, we have repurchased 4.823,332 shares of our common stock for approximately $30.4 million, excluding the $10 million modified Dutch option tender offer effectuated in the fourth quarter of 2019. Considering share repurchases to date and the recent additional allocation by the Board of Directors, this leaves approximately $9.6 million for future repurchases under the program. As of today, between the share repurchase program and the 2019 modified Dutch option tender offer, SuRo Capital has repurchased 6,272,607 shares of common stock for approximately $40.4 million since the inception of the share repurchase program in August 2017. This represents over 28% of the shares outstanding at that time. On July 29, the company entered into an at-the-market sales agreement with BTIG, JMP Securities, and Ladenburg Solman, to issue and sell up to $50 million in aggregate amount of shares of our common stock via an SSA market capital raise or ACM offering. On September 23, we increased the maximum amount of shares available to be sold through the ATM offering to $150 million from $50 million. We primarily intend to use the net proceeds from the ATM offering to make investments in portfolio companies in according to our investment objectives and strategy. During the third quarter, we issued and sold 3,808,979 shares under the ATM offering at a weighted average price of $13.36 per share, for gross proceeds of $51 million and net proceeds of $49.9 million after deducting commissions to the agents on the shares sold. The last day of sales was September 28 prior to the Palantir direct listing on September 30, and no additional shares have been issued or sold since September 28. As of today, up to approximately $99.1 million, an aggregate amount of the shares remain available for sale under the ATM offering, but we have no current intention of issuing additional shares of common stock under this ATM offering at this time. During the third quarter, we continued to see the cost-saving effects from the internalization of the management of serial capital. As previously discussed, as an internally managed BDC, we have a significantly reduced cost structure. Upon termination of the Investment Advisory Agreement on March 12, 2019, we no longer pay management fees each month, as management is now employed directly by the BDC, and we no longer accrue incentive fees. Total operating expenses for the third quarter were approximately $3 million. This represents a decrease of approximately 17% in operating expenses from $3.6 million during the third quarter of 2019, adjusted for stock-based compensation expense. When compared to our last third quarter as an externally managed entity, the third quarter 2020 total operating expenses of $3 million represent a nearly 34% decrease from total operating expenses before waivers of $4.6 million in the third quarter of 2018. The adjusted total operating expense for the first 9 months of 2020 or year-to-date was $9.2 million, adjusted for the impact of accounting guidance that requires acceleration of the recognition of all unrecognized compensation costs related to stock-based compensation in the event of a cancellation of such stock-based compensation without a repurchase, exchange, or replacement. This accelerated cost recognition upon cancellation of approximately $2 million of stock-based compensation in Q2 is offset in the equity section of the balance sheet. The adjusted total operating expense of $9.2 million for the first 9 months of 2020 is compared with $12.6 million in the first 9 months of 2019, adjusted for the reversal of incentive fee accrual and $16.3 million in total operating expense before labors for the first 9 months of 2018. So last year, we were fully externally managed. The continued decrease in operating expenses is primarily due to the elimination of management fees, incentive fees and costs under the prior administration agreement, and further supported by ongoing expense reduction initiatives, separate from the inherent savings of the internalized management structure. We anticipate operating expenses to further decrease in 2020, as we will be fully internalized for the entire year and as costs related to the internalization have generally been absorbed in 2019. Together, we believe our ongoing meticulous efforts to reduce operating expenses and the meaningful cost savings we are realizing as an internally managed BDC will continue positive impacts on NAV. We remain diligent about managing our expenses moving forward. Finally, I would like to review SuRo Capital's current liquidity. We ended the quarter with approximately $107.3 million of liquid assets, including $60.3 million of cash, $7.2 million of unrestricted marketable public securities, and $39.5 million of public securities subject to lack of restrictions. Our cash balance of $60.3 million as of September 30, consisted primarily of proceeds generated via the at-the-market offering and the monetization of various portfolio positions during the year. The $7.2 million of unrestricted marketable public securities and $39.5 million of public securities subject to lack of restrictions held as of September 30, represent our shares in Palantir. During the third quarter, we sold a portion of our unrestricted shares in Palantir, not included in the $7.2 million held at quarter end, for approximately $4.1 million in net proceeds, realizing approximately $3 million in gains. Subsequent to quarter end, we sold our remaining unrestricted shares for approximately $7.6 million in net proceeds, realizing approximately $5.4 million in gains. That concludes my comments. We would like to thank you for your interest and support of SuRo Capital. Now I will turn the call over to the operator to start the Q&A session. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We'll hear first today from Jon Hickman with Ladenburg. -------------------------------------------------------------------------------- Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [2] -------------------------------------------------------------------------------- Could you tell us what you got, the -- I guess, the raise for Coursera and Course Hero were at $2.5 billion and then $1.1 billion, respectively. Could you tell us how -- what you have those positions valued at on your -- as of September 30? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [3] -------------------------------------------------------------------------------- As you know, we don't comment on the values of the company, simply on our positions and what our positions have worked, but not as they relate to total corporate value. With that said, our valuation metrics, as you know, we utilize, among other variables, the last round valuation. We overlay other items such as secondary trading and the waterfall and capital structure. So I know I'm not answering your question directly, but typically, our valuation is something slightly lower or maybe more than slightly lower, but typically lower than the last round that was raised. -------------------------------------------------------------------------------- Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [4] -------------------------------------------------------------------------------- Yes, don't you put like a private discount on that, on the last round? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [5] -------------------------------------------------------------------------------- We do a series of things in our valuation work that I know you and I have discussed at length, but is we apply our heuristics to our valuations, which include, but don't limit the last round trading in the secondary markets, if those variables aren't there then public comps. -------------------------------------------------------------------------------- Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [6] -------------------------------------------------------------------------------- Okay. And then, I think I read recently that Nextdoor was contemplating an IPO. Is there anything you could say about that that's already put? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [7] -------------------------------------------------------------------------------- Well, I mean, John, there was a Bloomberg article approximately 2 weeks ago by the SPAC reporter at Bloomberg, who stated that she believed that Nextdoor was in conversations with one or several SPAC's evaluations between $4 and $5 billion as a value of the company. That's what we've read, that's probably what you've read, and that's all we know or can comment on. -------------------------------------------------------------------------------- Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [8] -------------------------------------------------------------------------------- Okay. And then, I'm sorry, I have one last question. The Blink business model, they make money -- they deal directly with the manufacturer. And then -- so they take a cut between that and the consumer? Is that how they do it? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [9] -------------------------------------------------------------------------------- Yes. But their value proposition predominantly is you as the consumer, when your doctor wants to recommend and pick a drug, that when they ask for your pharmacy, you give them blank. They then entered into the Blink system, you can then go and determine which pharmacy and you can get pricing and which pharmacy you want it to be either delivered from or picked up from. And one of the real advantages that they provide is that since they work with both the generics as well as the name brand equivalents, they get the same pricing. They get the appropriate pricing and the lowest pricing at a given pharmacy as opposed to having you run around to go to Walgreens for one thing and perhaps your local pharmacy for something else. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- Our next question today is from Andrew Harte with BTIG. -------------------------------------------------------------------------------- Andrew Harte;BTIG;Analyst, [11] -------------------------------------------------------------------------------- I'm wondering if you can kind of give us an update on what the pipeline might look like on future credit investments. And then as a follow-up, maybe when we could expect to see some investments in the future in the -- in any SPAC acquisitions, previous SPAC acquisitions? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [12] -------------------------------------------------------------------------------- Sure. Well, obviously, we just -- we sort of disclosed what we've disclosed in our prepared remarks. We are -- we have evaluated in this quarter, the better part of 60 different portfolio companies with a fair amount of them credit opportunities. We -- the credit work is extensive to have it -- it's bespoke. So we're creating term sheets to do that, which is a much longer process than an equity being offered at a price or a negotiation as such. We had several credit investments in various stages of being completed. We have term sheets out on a few of them, and we have further more advanced dialogues on some of them. So that's that. On the SPAC pipe side, we are very active in looking at those. Obviously, there's been an immense amount of activity in the stack from both the underwriting as well as the announcement of SPAC transactions. We've got down the path on quite a few, I'd say, on several. We've gotten very deep down the path on a couple. And we may be able to announce that we've completed 1 or 2 as we end this calendar year. -------------------------------------------------------------------------------- Operator [13] -------------------------------------------------------------------------------- (Operator Instructions) We'll hear next from [Ron LeVine with Ron LeVine Associates]. -------------------------------------------------------------------------------- Unidentified Analyst, [14] -------------------------------------------------------------------------------- This is [Ron LeVine]. Mark, my question pertains to Coursera, if you have a comment on its current profitability or any thoughts they may have of going public? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [15] -------------------------------------------------------------------------------- Obviously, there's been a fair amount in the public domain about Coursera, given where it is in size, where is in its maturation, and there's been articles written about it that may or may not go public. So to the degree that we comment, we comment simply on what's in the public domain, which what's in the public domain leads the investment public to believe that they will contemplate -- they are headed towards a public offering. The timing of that is -- remains uncertain. -------------------------------------------------------------------------------- Unidentified Analyst, [16] -------------------------------------------------------------------------------- Okay. Second question, do you have any feeling as to why the stock sells at such a discount to the NAV, especially in the light of the changes that the current management team has made, which I really appreciate very much and congratulate on? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [17] -------------------------------------------------------------------------------- Thanks, [Ron]. Well, I mean, I'd say a few things, right? We -- the volatility that we've experienced in our share price over the last 6 months, if you really want to go back to the onset of COVID, has been unprecedented for our stock. Obviously, with the Palantir becoming public and given the publicity around Palantir and the excitement around that, there was a much broader-based interest in our company as that -- as investors realized through various publications, articles and analysts that was a large position in our portfolio. And our stock got bid up sharply. And I think that Palantir becoming public, it was about a $22 billion valuation, which was obviously significantly higher than we had held in the highest valuation that is achieved on an outright basis, which we viewed it as very exciting. I think the investment public view it as somewhat disappointing. So we then had the same rush of folks that running and bid our stock up, then became the sellers of our stock. So we had this bit of a pendulum approach to what had gone on, and our stock got sold down fairly indiscriminately, I think, and hopefully, today is an indicator. And the stock and even over the last few days, the selling is clearly subsided. I think we've had a bit of a turnover in our shareholder base. I do believe, talking to a lot of our shareholders, that the shareholders that now are buying our stock or own our stock, realize that this is a pretty interesting vehicle, and that our net asset value makes a lot of sense. And then our portfolio was far broader than a one-trick pony in Palantir. And the fact is, we still own 80% of our Palantir and have a fair amount of value that is there and will be created. But I think investors are now coming to realize the value of -- when we discuss even 3 or 4 of our top 5 positions, letting up some of our other positions. So I think the discount this time is much more of a function of the volatility in the stock. I think the actions that we continue to take -- and we took advantage of it, right? The idea of the stock trading down to low $8 range with their NAV at $12.46 was an excellent opportunity for our board to extend and expand our buyback. So -- because if we can buy back stock, which is at -- the stock has to go up 50% to get back to our NAV, it's trading at 30-something discount. So that was an opportunity for us to create shareholder value by buying the share count at that level. But I don't -- I really don't believe you're going to continue to see significant discounts, because our portfolio continues to have companies that are now -- are really demonstrating how good they are. We will have monetizations within our portfolio. We are having opportunities to make investments like we just did in Blink and some other things that are occurring. So I just think it is -- we're not the old GSV, if you will. And I think with that, I think you saw that for our stock trading above NAV was the first time in -- and certainly at a 10% or 15% premium entity, was the first time in about 8 years that that occurred. And that's because of a lot of the things that we are doing. And I suspect that the stock will start to trade back up to in and around NAV, now that the shareholder base is little bit set and the volatility is run ahead of it a bit. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- We'll hear next from [Chris Prozesky], a private investor. -------------------------------------------------------------------------------- Unidentified Participant, [19] -------------------------------------------------------------------------------- I'm just curious if the organization is ever considered creating its own SPAC to maybe take some of the smaller positions public if they were interested, or if that's something that we even be possible? -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [20] -------------------------------------------------------------------------------- We're not in the business of creating SPACs for ourselves. I think there are a lot of very good sponsors out there. I think our opportunity to invest in pipes that they create for deals that they're creating is in a very interesting pre-IPO strategy for us. I think we will have the opportunity at some point in time to participate on the -- I call the founders equity side, if we chose to put at-risk capital with SPACs, but it's not in our -- it's not in our mandate to create pipes to create SPACs. We won't do that. We will participate alongside other sponsors either through pipes or maybe at some point in time in their founders equity as well. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- (Operator Instructions) And at this time, I would like to turn things back to management for any closing remarks. -------------------------------------------------------------------------------- Mark David Klein, SuRo Capital Corp. - President, CEO & Director [22] -------------------------------------------------------------------------------- Thank you all for taking time. It's obviously an extremely interesting time in the country between the election and the pandemic. We really appreciate the time you're spending with us and the support that many of you have expressed directly to us and management. So thank you all very much, and try and stay healthy. Thank you. Bye. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- And that will conclude today's conference. Again, we thank you all for your participation, and you may now disconnect.