Q1 2021 180 Degree Capital Corp Earnings Call
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Yeah.
Human day session has started to ask your question. Please press star six the recording has started.
As the company completed a very effective secondary used to pay off expensive debt.
So all of the beginnings of a recovery in the media and entertainment vertical for quantum and the stock price has continued its upswing.
Maven was up 36, 5%.
The 31 cents a share tour any of the this past quarter. Finally, the company started filing current numbers with the hope they will be turned on totally current by the middle of this quarter from there an uplift as possible.
Communicate for free.
The ball rebound.
<unk> session has started.
It is moving and under the leadership Ross 11th in the company.
Got it.
As for the numbers.
Good.
<unk>.
I believe it was up 34%.
And helped our LTV by 'twenty three stars.
They also did a secondary that we participated in with the proceeds used to improve its balance.
Sheep.
Okay.
Obviously, the end of the pandemic will improve their comparable same store sales.
Yes.
<unk>.
Yes.
All of whom management led by Bob right.
And the <unk>.
Yes.
All of this really helped the company ill implement.
Yes.
<unk> practices.
Yes.
And you see.
That the rising share price.
Yes.
Rice.
All of the group was up 31 per cent and added 21 same store anyway.
The.
You see the nice recovery in their business as economies of continuing to open.
The.
The company will certainly benefit from a long awaited infrastructure plan that is being bandied about in Congress.
Growth.
<unk>.
So in the core investment was concluded.
<unk> is the company agreed to be acquired by centrally and part.
Sure.
<unk> the stock advanced 62% in the quarter.
For.
Order and added 15 cents or any.
Perfect.
Vic by no stretch what I call. This the successful invest.
<unk>.
Right.
We'll add from the time, we were named chairman of the board.
<unk> for the sale to set their partners the stock was up 90%.
Uh huh.
We made a few dollars for our SPV shareholders.
Yes.
And although the investment never turned out the way we want.
The.
Wanted is one of our great SPV partners said to me.
If making money is the result of your bad decisions, you'll be okay as an.
Sure.
I'm happy to conclude.
With our set of core investments.
<unk> finally, Armstrong flooring is now of core position of nearly 8% of our portfolio as of the close of business may.
Okay.
Thanks.
10 for average price per share of slightly <unk>.
Over the dollars of shoe.
For here.
Sure.
<unk>.
And our two public letters, we have written two.
Yeah.
Two the pathetic board of Enzo Biochem.
Everyone should understand that is amongst our smallest positions that we have.
The.
And having bought the stock around three.
Yeah.
<unk>, we sold the significant portion of what we owned <unk>.
The five.
Most of we will revisit our ownership stake the closer we get.
As proxy season.
The.
Season.
The next bill will have the ability to make a change in the board construct of the company.
Okay.
Until then Theres really nothing for us to do other than.
And then all of the board.
[noise] out for their gross negligence and overseeing the company.
Okay.
Company.
On slide seven we show that we have achieved the 382% return.
Okay.
<unk>, our SMA in our public stock picking.
Okay.
For nearly a 45% gross IRR.
Or are not all of that.
Okay.
Debt.
Okay.
You can review of the table and see our performance for each and every security we have owned.
On closely winters and a few losers along the way.
Okay.
It makes for good returns.
Yes.
On Slide 13, we show our performance in the tables on illustrates two things.
Yes.
<unk> for one of our batting average of winners to losers is really.
Okay.
Good I've always said that if you are right two thirds of the time, you'll have investment of excellence as long as the one time, you're wrong doesn't outweigh the two times that youre.
Right.
Okay.
We've been right in our portfolio of over 80% of the time and we're proud.
Okay.
Of that.
The second is what we call slugging percentage.
Sure.
<unk>, meaning on the names, we've gotten right we've hit more triples and home run.
Yeah.
<unk> on the names we've lost on the losses are singles.
Yes.
This equated for us having both the high batting average and the highest slugging percentage.
Yes.
<unk>, both of which helped show why we.
On a forum so significantly.
On slide 14, you'll see a full analysis of a return.
Yes.
Turns versus the indices for all the time frames that matter.
Sure.
Matter, we said when we started we're playing the long game.
Sure.
<unk>, we're fast approaching half decade performance numbers for.
Yes.
The us absolute performance is real good and we have really good outside returns versus the benchmark.
Sure.
Mark $3 82.
The 382% for 180.
<unk> versus.
Good.
80% for the Russell Microcap index.
The.
Next on Slide 15, we included this chart just in case, you're interested in seeing where we got.
Performance.
<unk>.
You can see here.
This quarter of third of our performance came from in the information technology set.
<unk>.
Sector.
Your level of outperformance from.
Our Tech holdings has been an ongoing pattern.
And for.
For us.
<unk> always felt we have of competitive strength in picking text.
Yes.
Stocks due to our in depth knowledge of the space.
Okay.
<unk> also said historically will we think will add value in both the industrial and materials space.
Base.
Of course.
And of our 30 year history of investing in cyclicals.
Yes.
Calls industrials this quarter provided 25%.
Of our overall, 28%.
<unk>.
<unk>.
<unk>.
Uh huh.
Next slide somewhat argue we.
We must be taking massive risk in our investments give or are.
We given our longer term outsized returns.
On the answer to that is no.
No I hope everyone gets the chance to read our shareholder letter that we filed with the SEC and posted on our website, where I go through an elaborate discussion.
Yeah.
<unk> of how we manage risk.
And think about risk.
Risk the long on the short of it is we manage risk not by asking what the beta is.
Is on an individual security.
The.
<unk>.
Risk costs as the aftermath of our process.
Okay.
The process that one.
Paid close attention to the price we pay for the business can we buy.
One two.
To the complete evaluation of the company's financial health.
True.
Health through an examination of the company's income statement balance sheet.
She's next flow state.
<unk> three.
Yes.
<unk> of necessity to marry micro analysis.
The Pacific Company.
The state.
With a view of the World we live.
<unk>.
And the competitive land.
Escape for the company we were looking at.
Lance and for and of course at the end of the day.
Day, using the activist approach that is core to our.
The feed to help drive returns.
Losses, while some may define risk is beda.
That's the case, we have below average risk relative to the indices.
Yeah.
These ones that we compete.
Thanks.
Against that that's not how we think about risk.
Risks on slide 17. This is the residue with the success we have.
And our public market strategy.
At the degree.
<unk>, we have completely remade the company as you can see from this pie chart.
Sure.
Chart of no quarter, better exemplified just how little the private portfolio drives our returns than this quarter.
<unk>, we lost $1.5 million on our private valuation.
Okay.
Asian and gained $16 5 million.
On our public companies.
Yes.
Dan.
Yeah.
Daniel Thank you.
Kevin Please turn to <unk>.
Hey.
As Kevin mentioned earlier.
On the call.
The key and building our position.
Armstrong.
On an arms.
Strong cash.
I'm sorry.
In Q2 2000.
Okay.
Yes.
Okay.
The key became of core position in Q1 two.
The key.
Good morning.
<unk> designs.
And.
And many of person sells resilient.
The package.
Wood.
Good.
The.
For a resilient.
So resilient.
Wood free.
For residential.
So first.
For.
Your line is small construction sectors.
The new CEO Michel Vermette.
Imagine the company in 2000.
At September 2000.
<unk>.
90.
Serving as a longtime executive at Mohawk industries.
Net.
History, New CFO, Amy Amy Trojan.
The house joined in October two.
Aspen.
Keep on cameras company.
And Keith together, Michelle and Amy have.
Hi.
Led efforts at EFI.
Yes.
Mine operations.
Items.
<unk> reduced.
And.
Cost an eye towards.
So I sort of improving EBITDA gross margins in.
Towards.
Cash.
Income.
Hello.
Our investment thesis.
For ASI, which.
The sincerely.
For today is two factors.
On to.
The first company announce.
For.
Announced.
It sounds.
On slide.
Late 'twenty than it was looking to sell.
Great.
Sell of eight.
Eight.
California facility.
Eight of due diligence led us to believe that the facility can be.
That's $50 million to $80 million.
The word.
The company completed.
<unk>.
This.
The talk.
All of this facility for 77 million.
But in Q1.
One of them into 'twenty.
Which dramatically.
One.
The improved.
These balance.
<unk>.
On sheet removal.
Of the liquidity concerns.
The second part of our.
Yes.
The.
That's one of the pieces.
Investor that with the liquidity issues.
<unk>.
All of Cal any of.
All of them.
The.
The mid.
Management would be able to focus.
Team.
On fixing the bed.
Just.
Net.
We believe.
The process is well underway and AFI.
That proposition.
<unk>.
As non.
As the.
The replay.
Please turn to slide.
Good.
19.
This slide.
With certain large.
Sorry.
Largest.
Sorry for.
Just.
Language privately.
Get the bald holdings by value as of the.
Hello.
The end of the order.
<unk> for the quarter on a private.
Private folio.
Okay.
<unk>.
Net.
As of men decrease.
As Matt and Houston value by.
<unk> 5 million.
By one.
And.
One of 14.
Or.
So on Sir.
The largest decreases in value.
Yeah.
We're due to the potential future milestone payment.
Sure.
Payments for sale of buy.
The next to Amgen.
The inspection.
Jen from material reduction.
On auction.
<unk> in the blood.
And abilities.
All of these.
<unk> of respondents.
Pan and resulting.
And from the termination.
From.
<unk> of the phase III clinical trial in Q.
One.
From the <unk>.
On 'twenty.
One utility.
The funny.
Additionally, a b S material.
Hello.
The decline in value.
New business is being shut down.
And as the liquidated.
And.
Today, the benefit of creditors.
The kind of increasing in value.
How you were.
For.
Black hole.
Holding ad buy on.
<unk>.
And.
Yeah.
And it's helped offset.
Yeah.
Offset.
Sat.
The down.
Down.
From inside.
From an club.
And almost every shareholder.
While we desire to Shepherd our.
On our existing price.
ZIP oleo.
Private.
The.
That's accurate.
The.
The accident.
Our.
The uncertainties.
<unk> of our positions.
The Soc companies.
And thus we have the luxury of being able.
Hey will.
Well the Saar private.
We believe.
Holdings.
It makes.
Makes.
Makes sense shareholders.
Makes sense sooner rather than.
Holders.
And being for us to do so to survive.
Or is it just because you haven't seen any.
I'm on page.
Given.
<unk>.
A given quarter.
That doesn't mean.
The theme.
Means that we have not.
<unk> been active.
Been acting to.
Active and monetize.
I'm on it.
The tide holdings.
All of the remaking of our business.
Business significant cash.
Isn't it.
Cash and free.
She sees the public portfolio of companies that we have.
We do.
Bill I have to sell anything.
Don't have to so that is the <unk>.
The right thing to do for shareholders.
Right. We can tell you that we have.
Jack <unk>.
<unk>.
Jack.
Hi.
Private.
But of course.
No.
Yeah.
All of them.
Bob.
John thinking.
Sparks could come in.
In until.
Until it from us.
That will never happen under.
Why.
Or why I can't emphasize.
The.
No.
And having.
For instance.
Between having.
The cell and want.
<unk>.
The team to sell.
Given.
<unk>.
Of our six in remaking our balance.
Thanks.
Balance sheet.
Balance for that.
For the.
The last one.
The last.
Yeah.
We do.
Cheers.
Not the fee of.
Got it for.
Hold on.
For a whole they won't.
You won't.
Unless the price makes sense.
On last into the start of turn of private portfolios.
It is now.
The reduced.
But do you sense of share while public investing strategy is increased NAV.
The two sides.
<unk>.
The ones.
Sat there.
Sure as of the end of 2000.
It takes away of 32 holdings.
Six day.
Holdings.
We have two.
We have.
But really 10 net on that.
But at.
Matter of those 10 private holding.
Felicia.
Holding.
On this.
The advice.
Bye.
<unk>.
The <unk>.
The proxy.
90%.
Each of our private.
Of.
Holding value.
Please turn to.
Slide 20.
The slides as we have noted in previous.
He just letters.
Previous Mac, we reduced.
Letters.
Our cost or under our new strategy.
Possibly.
<unk> in 2000.
Virginia.
<unk> 16 before.
Thanks for our funds.
For the investment focus.
Range.
The management.
The matters.
And for.
<unk>.
<unk>.
Susan.
For the vaccine.
Because based compensation interest.
And on scene.
Okay.
Debt averaged.
Average.
One for me.
Per quarter.
For Q1, 2021 of our operating.
Operating.
For the expenses equaled approximately 900.
Operating.
<unk> 9000.
Given our corporate and.
On.
Vigil.
Sure.
Warm in Q1.
From inside of 2021.
One of sensation.
One gene committee approved approximately $500000.
<unk>.
And the cool.
Sure.
For potential.
For <unk>.
Bonus brand.
Year end it should be noted.
That's the plan.
That's the.
Mt.
The mountain.
Throughout the year.
Based.
On.
Based.
Compensation committees assessment.
<unk> of corporate and individual.
Net performance.
Perfect.
<unk>.
The rest of 120.
For asking one.
The one please turn to.
Slide 20.
Slides.
The one and two.
Two we continue to add.
The reductions in our operating.
Tiffany.
<unk>.
Makes.
And as of the vintage of net.
Because of it.
Net app.
So based on growth and on <unk>.
Based on.
Net asset.
Other than production.
And then.
And.
For our expenses.
The positive.
<unk>.
Event.
Central.
The 121 and year.
Once.
To.
Day Q2.
<unk> 2021.
Date.
Gus previously.
If they.
Okay.
Hold.
All of them.
All of the three year will help reduce.
Do you see.
<unk> reduced the ratio.
The fixed.
Goes further.
Shows we remain Kim.
Yeah.
And at every dollar of shareholder.
The dream on.
The money most.
The parents consideration.
Karen is much easier for us to grow in.
<unk>.
The win.
When.
And the expert.
The ex.
For hurdle rate is.
Where.
Okay.
Please turn to.
On slide.
Slide.
<unk> 23.
Slide the slide shows the.
Yeah.
The.
Most of the proposals.
Boats for it to shareholders.
Those will.
The center.
They are on annual meeting that we held.
Turning to April.
And if the board and management.
<unk> appreciate the overwhelming.
I mean.
Some of our.
Super.
Elders.
Shown us.
So now.
And through their.
There is.
Votes gear.
Everyone at <unk>.
Turn laser focus.
For <unk>.
Focus.
Yes on creating value.
On care holders.
<unk>.
I will now turn the call back.
For the cabin.
Okay.
Yeah.
Thanks Daniel.
Finally for me are normal some of the parts.
Sure.
Chart, if you could give us full credit for our cash and liquid securities.
And I don't think there's any reason.
Sure.
On why you Shouldnt.
Okay.
For a given our performance and our ability to generate return.
Yes.
You'll see on this chart.
Chart that the market is effectively paying one seven per cent for our private portfolio.
Yeah.
Private portfolio that we think culture.
Please.
The lease by the end of this year, we'll have a couple of monetization.
So all in all while the stock price has done well, it's actually cheaper today.
Day than it was when we first started.
Okay.
Our debt and more importantly than that we're going to continue to drive.
The.
Five of shareholder value by focusing.
From what we can focus on.
On which is providing investment excellence.
<unk> or at least attempting to provide investment excellence.
Yes.
Once in our Graham and Dodd philosophy.
Okay.
In the Microcap world with enact.
Okay.
Of this style.
No.
Style with that I think Daniel we should open it.
For questions.
I look forward of hearing.
<unk> for me.
For me absolutely.
Do you have a question.
These.
Please for six.
Types.
On.
On your.
The.
From Europe asked the question.
The asset.
The ICR purchases.
And for European.
Purchase on your computer.
By giving the.
And then for the queue to populate.
Yes.
The moment.
Yes.
That's the question.
Our free from Benjamin Bray.
<unk>.
Please go ahead.
Hey, guys.
Thanks for taking my question.
Thanks, Kevin you've mentioned on a few quarters ago.
And does that turn.
There's about 87 million.
And congrats.
Okay.
Moving on milestone payment.
The balance about direct down.
Payments et cetera.
Can you talk more about.
It's the happened for those.
What.
Payments are received.
Needless.
And what.
The likely outcome on that.
You can give on that.
The tenant.
So Dana I'll.
Yes.
I'll take a crack in the new finish the rest of if you don't mind.
Yes.
Mind.
We should we should have of returned S growth to us.
Oh.
Plus the $1 million.
Yes.
More than zero of this month.
As for.
For the.
That was from the time of the deal I would say that.
Okay.
As it relates to milestone payments.
Yes.
Since the.
You know what we did was basically.
The NPV.
<unk>.
<unk> and.
The potential.
On a full value for all of those payments and that's why you see the value that what you see for it on our balance sheet.
I would say the first payment.
The most likely.
Lee.
Which could come.
Which are within a year or two.
<unk> and I think that payment in and of itself.
<unk> only reliant on the drug.
Right.
Rug entering phase one testing.
Thanks.
Testing I don't think the company would have been sold.
Yes.
<unk> for the buyer wouldn't have bought the company.
Okay.
Any if they werent anticipate.
Yeah.
Having.
Mhm.
<unk>.
Basically a.
You know of phase one trial.
Uh huh.
While that number in and of itself.
<unk>.
Shelf thing of all happened in the front of me.
But I think that number is actually greater.
But for.
<unk> that number itself is greater if we got full.
Sure.
Hey.
The.
For.
Sure.
Then the for listed for Us on our balance.
Good.
<unk>.
<unk> is based on revenue.
Yes.
Future revenues.
And it's a bit pie in the sky.
Okay.
And it's a bit early to be able.
I don't know what else you wanted to.
Yes.
Yes.
Kevin summarized it well, we're not really.
We can't go in.
<unk>.
Thanks.
The takeout.
Out.
The act.
Milestone.
What triggers those milestones.
On.
<unk>.
And.
Some of.
Okay.
You can't really.
Net.
Yes.
Okay.
We do the probability weighting.
The.
The analysis.
All.
I think that when you look at these.
Office.
These type of deal.
He is.
And the opportunity to.
And on a.
Generate.
Cash.
Generation from them there.
Those are a few that we.
For our fee in the near term.
[noise] believed.
Term I would say the majority of.
From.
Of the.
Of.
The.
The.
All of them.
Hi.
It would be over.
No.
On pretty soon.
If we can kind of time, but there is the material.
Can you sort of be.
I think near term.
In the near Dear in my in my in my opinion much as much as my appear.
And maybe uneducated.
Okay.
Okay.
Got it.
Sure.
And it doesn't.
Okay.
Have perfect view.
You bet.
The one of the biggest.
But the dollar amounts.
Yes.
It's those.
Yes.
<unk> revenues.
Yes.
<unk> was early.
Yes.
And in my mind.
Of the easiest.
It comes on we'll see how it plays.
[noise] out again, when you're dealing with.
Okay.
With no milestone payments that.
Our multi years out I mean really multi years out it's really hard for us to.
For searching.
The asset, especially when the.
<unk>.
<unk> hasn't even.
Phase one trial.
Okay.
Yeah.
Yes.
At the.
Yes. Thank.
Yes.
Thank you.
Yes.
Alright. Thank.
Yeah.
Yeah.
Yes.
Yes.
Hi, Whitney.
It needs to go.
You've had.
Go ahead.
Mark.
Thanks.
Thanks.
No.
Excellent.
Yes.
Hi.
Got.
Got a couple of questions.
Right.
And for the first one.
<unk>.
Hum.
When I run.
On the power.
We are on the close of business yesterday.
Okay.
The portfolio is.
Okay.
The.
Okay.
The.
Just as.
The support.
One.
Ex 31.
I have of Delta.
On.
The increase in.
No.
In the public for.
Okay.
Uh huh.
Oh, just shy of $2 million.
That sounds about right to you.
All of our size.
Or do you prefer to not comment and I. Appreciate if you don't.
Oh.
No no. So are you, saying if you took our portfolio of March 31st and ran it out to the Monday.
Okay.
Day or two here.
Yeah.
Yeah you're.
You're in the ballpark of slight in the ballpark.
Okay.
All.
Alright.
Right.
Right.
The slightly on the low <unk>.
Yes.
Sure.
Okay.
Yeah.
Yeah.
Okay.
What I thought.
But because.
At the would be changes of course.
Of course.
Of course.
Yes.
Sure.
My second.
It has to do with materials and energy.
James.
Energy one of the slides.
The 2%.
Okay.
And it showed.
Materials, maybe of 3% or something energy.
The T Rowe.
Yeah.
And of course the two.
Jan.
Her.
Really strong area on the markets right now.
Uh huh.
Now with the <unk>.
Level.
Yeah.
Backlog of economic.
Amit.
Okay.
So for us.
Okay.
Yeah.
Paying suppliers.
Okay.
Screams for among many materials.
The industry.
Yes.
Trees and all.
Yeah.
All.
All of the spinning out of the government.
This is not just our government the.
And the governments around the <unk>.
The.
World.
Okay.
Helpful.
Is there any contemplation.
Uh huh.
<unk> directed towards adding to those areas.
<unk> or.
So.
Sure.
It is.
Yeah.
Yes.
Is that an area that you.
Yeah.
Okay.
Guys.
Yourself, because all of them.
No it's not it's not that we don't focus on.
Yes.
On it.
Everything is opportunity cost I guess.
Yes.
And we found.
And what we thought.
Or are you more Armstrong flooring for example, we think it was <unk>.
Incredible value of $4.
Right.
Because we think it's literally going.
Going into the mid teens.
Okay.
<unk>.
I don't think that's 100% return.
For.
Term potential.
Just like more.
Thats 300 400 per.
Per cent per day.
The term potential.
Sure.
Yes.
And we've been interested in you know we bought versus all of his paper of materials company, we bought Babcock and Wilcox.
Okay.
<unk> obviously.
Uh huh.
It's going.
That's going to grow out of the pandemic.
The.
<unk> you want to have as much cyclicality as you can.
All of the group is a perfect example of the construction company.
Cam.
Dealership.
Chip business.
For construction equipment.
So, yes, I mean, the energy fits.
Of that as well.
Yes.
Well, the only issue with energy for us.
Yes.
And the Theres no energy in us owning it we've owned.
Yes.
On a couple of names here and there since we started.
The only name of the only issue is you know many of them are levered.
Okay.
Average they have downside risk.
Risk.
They're dependent upon.
The price of oil.
John.
Oil.
And you've got to get a lot of things right when you're picking of energy stocks and you know.
Do you live in used.
That's.
Houston.
<unk> seen good our oil markets and bad ones that you've seen.
That's.
The big companies on lousy.
The.
Yes.
So it's not that we're against the group.
Group Whitney.
It's been more of we found value in other areas.
It's just on but we're continuing to dig in on the.
Yes.
Group for sure and if we can find the name or two that we like we'll put it in the portfolio. We're certainly.
Not I mean, I've been investing in energy names.
Yeah.
For 30 years.
I mean I owned Exxon before was the Exxonmobil, that's how old I am so.
You know at Halliburton and in all of the rest and we lived through.
The the BP disaster.
Okay.
And the there've been a lot of oil markets over the years.
Yes.
Both up and down but it's like any other cyclical you buy.
I am when everyone thinks there.
Their value stocks and you sell them when everyone thinks of the growth stocks.
Sure.
At the time right you can make a fortune.
As you know so.
Hum.
No.
We're on.
We're digging in and we're still looking.
Do you have a few names send them our way.
Thanks So.
Fine thanks.
For the quarter.
Always good to hear your voice.
Okay.
Buddy.
Thank.
Okay.
Please go ahead with.
The question.
On your question.
Hi.
Hi.
Good morning.
Beginning on.
Got.
Uh huh.
Got it.
Daniel.
No.
No.
All.
I would.
All.
He can of great quarter.
No.
Okay.
Right.
I'm.
I'm glad you guys removed.
On that.
All of the mentioned.
Right.
So the guide itself on the site.
Yes.
That's.
Okay.
Net.
Merit of you guys want people to build the right.
Okay.
And then I know.
And then for the long winded.
Okay.
The.
Yes.
No.
Most of you.
You are.
No.
No.
Good for.
Hey, guys.
Yes.
Can you say.
Yes.
Okay.
The performance and.
Hi, Tom.
Yeah.
On leap.
Hey, guys.
As you of a version of the system.
And.
No.
On Europe.
Yeah.
Both.
It was again.
The whole.
No.
Okay.
Okay.
Sure.
As stated on.
And because of.
Yes.
Yes.
The.
Okay.
Thanks track record.
Great.
Right.
Right.
On the uptick of equity side.
Yeah.
The land.
And.
Hum.
I.
Okay.
Hey.
None of them.
Net.
Bob.
Yes.
Okay.
No.
No.
Okay.
For investors.
On your earnings.
Yes.
Action.
Is.
Is.
Sure.
What do you mean.
One.
Jim.
I'll now turn.
The.
Turn books.
Sure.
In five years.
On.
The.
Hey, Bill.
The.
Uh huh.
They can get.
And on.
On.
That's true.
Along.
On.
Got.
Even the base.
Got it.
And have you discussed.
Okay.
That's your stock price for.
Yeah.
Right now.
Yeah.
Yes.
The asset management business.
I wanted.
No.
Yes.
Also.
On the operations.
Sort.
As the business.
Yeah.
As for long term.
The long.
Do you want.
On.
On head.
Good morning.
Count without.
Morning.
No.
No.
Hum.
All of them.
And.
Man.
Right now.
Right.
Oh really.
Okay.
Yeah.
Yeah.
Anyhow.
Anything else on the AD.
M.
The other.
Just.
Curious here thank you.
Well those are awfully nice words.
Yes.
Anytime you mentioned the Sistine chapel in the sentence.
It's.
Yes.
Some of our high compliment.
Okay.
And we thank you very much for.
Okay.
For that so let me.
Let me start from the beginning.
I was retired before I took this job.
Job I was running my own friends and family fun.
Fun and wanted to do some board work on was nominated to the predecessor company.
Okay.
Company called Harrison Harris.
Oh.
Now when they got there.
Yeah.
There and Danny and I spent some time together.
[laughter].
Other sets of Daniel.
On like this is going to zero.
Oh.
Zero like what what is what's going on here like I couldn't understand the math.
Okay.
Math of having declining investments.
Yes.
With significant cost.
Yeah.
Cost.
<unk> Daniel.
As like I know.
Yes.
No we need to fix.
And that's why we wanted you to come on the board to help us for.
So Daniel and I.
Fix of developed.
<unk> strategy and it was basically doing what I was doing in my retirement.
Okay.
Fireman, having worked at Blackrock.
Rob for 25 years.
Correct.
Years.
And.
Board asked us to run.
Okay.
On it and we got out of Manhattan, and we moved them on clear New Jersey, and we cut our head count by 70%, we cut our expenses.
Hum.
And in half.
Overnight.
And everything we do is going to be for shareholders and every investment we can make is going to be in the public mark.
Sure.
But at the time.
Uh huh.
I'm I didn't know whether or not I was doing this.
Yes.
As of turnaround.
And I didn't know if we would be successful I knew what I wanted to do.
[laughter].
But they didn't know what it would look like.
Okay.
Like for five years from the time, we started well we're at four of five years and to your point.
Yes.
We've actually built.
Oh.
<unk>, we've been able to generate.
<unk> $40 million.
The pension account from a public company.
Based on our performance.
And we turned about $12 million of cash and liquid securities, which is what we had.
Hi.
Had sort of at the end of 16 or middle of the 16.
<unk>.
<unk> into close to $80 million today.
Day.
Okay.
I humbly suggest that it's a lot harder.
Harder.
<unk> the turned 12 million into 80.
Yeah.
Then it is going to be turning 80 million.
And the $200 million.
And 200 million is nearly $20 a share and it's in the in cash and liquid securities.
Yes.
<unk> essentially means of share price should be about 20 Bucks.
So.
So we turned the business around.
On a failing business.
<unk> of business that was on its way to zero.
Yes.
ROE and actually I think now I'm actually more excited I wrote about it on our last shareholder letter.
Okay.
Letter of more excited about.
Of being here today than it was when I started.
Because I think we have of real company.
Good day.
Company and I didn't know if we're going to be able to have a real company for years ago. I just thought we were trying to survive.
Five into something and I didn't know what that was going to be.
Okay.
And so five years from now.
Oh.
Now I fully expect our share price to be close to $20.
Yes.
Because I expect that our cash and liquid securities to be 200.
Okay.
And like I said.
<unk> said its going.
At.
That's not an easy lay up by any stretch of imagination, you have to have a decent.
The.
Backdrop.
Up to the markets you have to have investment excellence.
Yes.
Who knows if we can replicate our last.
For years of performance.
Left but as I said having scale.
Oh.
<unk> makes it easier getting to $200 million and it was getting to where we are from 12.
Okay.
And so with that.
Hi.
That will seek will continue to seek outside capital for those investors that actually want to partner with us.
Pat.
US and I don't know why people wouldn't want to partner with us.
Given.
US of the performance, we've been able to generate in the has to be the.
The mix that makes sense for both us and.
<unk> and the client.
And our.
Client we get.
Pat.
That we're not going to just take on money for the sake of taking it on.
On.
On it one in 10, we talk about that in our shareholder letter towards the end if you want to read.
Net.
Debt.
Yes.
Net.
Yes.
But when we get a great client.
That loves what we love what we do.
Line Love.
Do.
Love our style.
Phil.
While I love our activist approach.
<unk>.
Rich I wake up every day excited to try and create value for people on the stock jockey. It's all I've ever been this is the only thing I've ever.
Wanted.
On the tool.
Two.
Okay.
And if we can find people that want.
On a invest with us.
Uh huh.
For more than happy.
We did them along for the.
Yes.
Right.
We would love to manage the other people's money, but we're only going to do.
Uh huh.
If they understand what we do.
For.
Do.
I understand the timeframes associated with.
Yeah.
And making an investment in the small name, where you need sort of two or three years for the inverse.
Moving to play out.
<unk> of course, the economics have to make sense. So.
Five years from now on.
In my mind, I'm trying to get to a 20 dollar stock.
Okay.
Doc that's based on.
You know $200 million or so of assets.
On.
<unk>.
Hopefully the price.
Private portfolio will no longer be of thing at all of that we've got it down to 33%.
Uh huh.
And five years I hope it's zero.
Oh.
Zero and I hope it zero not because it's going to zero based on valuations I don't think that's going to be the case, but I hope it zero because.
No.
<unk> monetization events in the rest.
Yeah.
Rest.
And then of course, we'll take on added people.
Only if we find investment ex ones.
<unk> in them.
Anybody that can come in the in the door here and help us make money. That's the only thing I care about it I don't care, if you live in Cali.
<unk> of cornea.
Cal, Florida, New York I don't care, where you are I don't care.
Yeah.
How often I see you if you can help us make money if you can help us pick stocks and create alpha.
<unk>.
We you can get paid of 180, and so I think over the.
Five years, we'll probably have a couple of more analytical people in here.
The next.
Well does that.
Okay.
It helped.
Yes.
Yes.
Yes, Sir thank you very much.
Thank you for snacks.
Thanks.
Yeah.
<unk>.
Yeah.
Thank you.
I'm seeing no further questions in the queue.
Yes.
Thank you everyone for taking the time to join US today on our Q1 call. We look forward of reporting our Q2 call sometime in August.
Until then.
The investing and I hope, everyone stays safe and healthy.
And let's hope this pandemic continues to.
And the way it feels like it's been ending in the last couple of months, we'll speak to you soon.
Soon.
Sure.
Yeah.
Take care.
Okay.
Thank.
Perfect.
Thank you.
You can.
Now does that.
Goodbye.