Q2 2022 180 Degree Capital Corp Earnings Call
<unk>. Please press star six so recording has started second quarter 2000.
22 financial results update call. This is Daniel Wolfe, President and portfolio manager of 180, Recapitalize, Kevin <unk>, Our Chief Executive Officer, and portfolio manager and I would like to welcome you to our call. This morning. All participants are currently in a listen only mode. Following our prepared remarks, we will open the line to questions if you'd like to ask to ask you a question.
Please type star six on your phone or click the ask a question icon, if you're participating via your computer.
To remind participants that this call is being recorded and that we're referring to a slide deck that we have posted on our Investor Relations website at IR Dot 180, REIT capital Dot Com under financial results. Please turn to our Safe Harbor statement on slide one or the first slide after the title slide in this presentation may contain statements. So forward looking nature relate.
Future events statements contained in this presentation that are forward looking events are intended to be made pursuant to the safe Harbor provisions of the <unk>.
Private Securities Litigation Reform Act 1995 these forward.
Looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the company's current beliefs and a number of important factors could cause actual results to differ materially from those expressed herein. Please see the companys filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the <unk>.
Company's business that could affect the companys actual results, except as otherwise required by federal Securities Laws 180 degree capital Corp undertakes no obligation to update or revise these forward looking statements to reflect new events or uncertainties I would now like to turn the call over to Kevin. Thank you Daniel and good morning, everyone I met what's amidst what's been a.
A very difficult 2022, there is some underlying positives that we have to share with you. This morning, and Daniel will talk a little bit more about that in terms of our transformation from where we were a business that was filled with private assets on our balance sheet to one where 80% of our balance sheet currently is in cash.
And public assets.
Summary of Q2 starts on slide two where we show an AAV declined in the quarter were 14, 9% led by an in line decline of our public holdings versus the Russell Microcap index. The NAV decline, while disappointing should come as no surprise given the backdrop of a very bearish environment for the equity markets.
The decline was less than the decline for the Russell Microcap index, given we still have some private assets. It didn't go down as much as the Russell plus we had a larger than expected cash position following the monetization.
Petra pharmaceutical, which you know sold itself to Eli Lilly.
It was an across the board selling type of quarter.
Indiscriminate selling if I if I have to.
Call it something almost every name we own as investors, we're trying to make sense of a world where high inflation fed determined to ratchet rates higher to quell inflation continued supply chain issues of Russian more with Ukraine very difficult backdrop for the market.
As all of you know we will have more on the individual names later in this presentation, but in total our public holdings caused us $13 million or $1 27 of our NAV decline in the quarter. Our private decline was much more muted of no given D. Wave quantum is now a public company. We are as I said down to just 20%.
Of our assets in private holdings with AG volume, representing two thirds of that total we have totally transformed ourselves in.
Cause of that our stock should trade much more closely to NAV than any time since we arrived here in early 2017, our SMA is totaled close to $30 million at the end of the quarter, including a new smaller SMA.
Which we opened up this past quarter.
Clearly smart timing for a new client that client is up 11%.
The next slide we show our NAV through time. This speaks how difficult the environment has been in calendar 2022 of note and as we alluded to in our press release D wave quantum.
Which is now public is marked at $6 55.
And we have also had a snapback in our public holdings in Q3, so our book value and our cash per share at least for today is meaningfully higher than the reported numbers that we're showing here for the June 30, close slide four shows.
That we have not just had a meaningful correction.
Crash, albeit one that took a lot longer to unfold in let's say the 1929 are the 1987 crashes and while we continue to debate about whether or not we're we will be headed to a recession. It is our conclusion, we're already in one.
Left the debate is the severity of this downturn or how bad the downturn will be either way I would argue that our market down 33% and eight months.
Discounting a lot of bad news already I'd encourage everyone to read our shareholder report, where we talked a lot about the markets how they perform in and out of recessions as a little long I must confess, but I had a lot to say and you can find that letter on our website.
Slide five shows the trajectory of our cash and liquid securities. They would have been 604 at period end June 662. If you include D wave at a mark of $6 55.
I believe it closed yesterday closer to 12, and if you think about our public holdings being up double digit this quarter or more the number is much greater than our June mark that as of today, obviously the quarter has a long way to go either way we have Derisked. This company as our balance sheet is now comprised.
Imminently up cash and public assets on slide six we show you every quarter. Since we started it makes little to no sense to me that the market thought our business was worth 65 cents on the dollar when we had 90% of our assets in private holdings and 65% 65 cents on the dollar when we have 80% of our assets in public assets.
Our management team will be more than happy to take advantage of that dislocation in our equity price.
Once the window for insider purchases opens up tomorrow and as <unk> seen every quarter. It seems like since we've gotten here will be active skipping to slide eight you'll see our normal sources of change in assets quarter to quarter, where.
Where we start with the book value of $9 80 lose.
Lose $1 27 from our public holdings 12 cents from our privates and seven from our operating expenses to arrive at an $8 and 35% said book value obviously disappointing for sure.
Slide nine shows our year to date sources of change in assets <unk> and gains from our private is $2 39 said loss from our publics and <unk> 12 of operating expenses, we have shown exceptional performance from our stock picking and you've seen the benefits of our concentrated style. Since we started back in 2017.
2022 has shown the risk of that concentrated nature of how we invest it also doesn't say anything about our ability to become a $200 million company. In fact this period may make it may make giving their easier given the all time low valuation levels for many names that were seeing across the board.
And finally on slide 10, which does show how <unk> strategy of investing in public companies is accrued to the benefit of our shareholders I am proud of this slide.
As an aside we've been able to achieve these results.
During the <unk>.
During this period, we've had quarters, where we were down four 8% six 4% 13, 1%, 38% six 6% 14, 8% and 19% markets are markets. They go up they go down the Gulf a lot sometimes they go down a lot other times, what I've learned over the years as investors.
Timelines go no further than today.
Functions are usually that the market will continue to do in the future exactly what it's doing today and history says that the reality couldnt be farther from the truth. So although this period has been challenging and difficult. It also creates opportunities that hopefully we will look back on three years and say.
No.
Thankfully we invested in this name in that name in this name and they all doubled over the next three years, we will see.
Slide 11 is a synopsis of our stock performance for this past quarter other than in Vela, which.
We had across the board selling in almost all of our names. Unlike Q1 when companies like quantum truly disappointed and we suffered negative alpha from our stock picking this quarter for me was mostly beta we didn't have one quarter Miss a number and it didn't matter.
Why do I think it was indiscriminate selling because all the group has nothing in common with potbelly or commercial vehicle group or Comscore, synalloy and yet they all went down anywhere between 17 and 27% in tandem.
View, they were trading mostly as a group of Russell Microcap companies and not as individual companies.
If anybody has any questions on any of our names that would be more than happy to answer them in the Q&A for now ill talk about a couple of them are comscore will do the first by now you've seen the public letters. We spent we have sent to the Comscore Board.
Highlighting our criticism of how it is governing the company.
In case, you haven't read them Theres links on our on our website for those letters the stock decreased 29, 2%. This quarter, we surmise that part of the decline resulted from two factors first comscore was removed from the Russell indices due to decline in the market cap of the company.
Secondly, the company made little to no progress in the quarter was the hiring of a CEO .
To our disappointment Comscore also refused to address many of the recommended steps that we had for them for creating value for all shareholders and while the announcement of a new CEO didn't occur last quarter on July six we were pleased to see the appointment.
John Carpenter as CEO , we've been impressed with him ever since he joined the Comscore management team as CFO late last fall and believe he has the right focus and sense of urgency required to turn this company around were also particularly pleased to see that and then abandoned fine jewelry.
I've been appointed chair of the Board Comscore. It's board has long suffered from ineffective leadership and change was indeed needed.
Given comscore is improving financial performance and clarity on management.
Currently believe that comscore share prices.
Well beyond absurd.
The biggest concern competitor Nielsen has stumbled from a fundamental perspective over the last two years and yet it was still sold for Forex of revenue Comscore trades at less than onex. It is incumbent upon comscore as board to create value for all stakeholders in this company, including the common shareholders and actually do the work that board members.
Are required to do under Delaware Law law to date. The Comscore Board has failed to create value and failed to represent common shareholders. The appointees of comscore as preferred shareholders or failed to represent any shareholder other than themselves.
If need be we will pursue further action through the Delaware courts will continue to press the company until the rights of the common shareholder are properly reflected in the decision of the Comscore board for the quarter Comscore reduced our NAV by <unk>, <unk> or $1 6 million.
The second thing I'll talk about is potbelly.
As most of you know following consistently dreadful performance in its comparable same store sales under the prior two management teams Potbelly has seen a resurgence under its current leadership Robert Wright, who is the former CEO of Wendy's and Steve <unk>, who was the former SVP of strategy at Panera.
Potbelly reported continued strong results in Q1 2022 is average unit volume continued to improve particularly in the central business district stores that were particularly hard hit by Covid related issues, Bob Steve and their colleagues or executing on what we believe will be an exciting long term plans to strategically grow potbelly.
From 400 shops to 2000 shops with improved operating metrics and overall financial performance.
<unk> appear to be waiting for the company to complete a meaningfully meaningful re franchise <unk> franchise deal to prove that the management strategy is viable and we believe once that happens that will be a catalyst for the stock price to start moving higher we do believe the stock can reach the mid to high teens, if the company can post 10% EBITDA margins.
Over the next three years in the short term as people return.
Back to the office, we think some of Potbellies urban locations like Chicago.
New York City, Washington, D C should catch up to the growth of its suburban locations. We are of course mindful of escalating food and labor course costs and we'll monitor those as 2022 unfolds, although they just reported earnings last quarter and they were able to manage themselves right through that.
It is our top holding by weight as of the end of Q2, 'twenty two and we're firm believers we have a chance this triple our money from the current stock price for the quarter Potbelly reduced our NAV by 15, or 16 or $1 6 million.
If you skip ahead to slide 19, you'll see how despite how difficult 2022 has been for us through June from a historical perspective, we have gotten more things right than wrong are winners when we've won have one big.
For our shareholders, while we have limited the losses for our mistakes all of this shows itself on slide 21, which is our track record for a myriad of Timeframes. While the short term has been challenged to say the least the long term speaks to an investment process that is generated outside returns versus the benchmark.
And great absolute returns for our shareholders and finally on a we've been at went out this for five plus years.
In my opinion, we took over a company that had a flawed business strategy a flawed business model one that if it wasn't altered was leading its shareholders down the path of destruction and on the way to zero in my opinion and while this quarter in all of 2022 have proven to be a challenge we have a balance sheet that can withstand the.
Market dislocation in our permanent capital gives us a chance to find interesting investment opportunities with what we consider to be high upside slide 22 shows the massive transformation from what we are today to where we were five years ago. This compensation composition change to our balance sheet.
Ultimately should lead to a re rating of our equity price much closer to our anyway with that I'll turn the call over to Daniel Daniel Thanks, Kevin.
Please turn to slide 23, this slide showing our top legacy private holdings continues the important theme from the prior slide Kevin was just discussing and that the number of companies on this slide have declined substantially since 2017, and we really only have one material position remaining in that exact volume.
Because as Kevin mentioned earlier on August 2022, D wave systems announced the successful completion of its merger with this fact <unk> capital to form the newly public company D wave quantum Inc that trades under the symbol <unk> Bts.
<unk> holds approximately 900000 shares of common stock of the merged company.
That as Kevin said was valued at June 30, <unk> had approximately $6 55 per share. While this is clearly an important milestone for <unk> and our efforts to monetize our legacy portfolio just want to make sure that it is important to note that we can't sell our traders trade our shares of D wave systems D wave quantum immediately.
The shares of the new publicly traded D wave owned by one eight years subject to restrictions from trading until registration statement as filed and deemed effective by the SEC as well as the expiration of a lockup period that will last four to six months from the date of the business combination depending on trading of the stock post merger.
Second the value of our potential future payments from the sale Tara Biosystems Cavallo House is comprised of $2 6 million in cash that's due to be paid over the next.
So 18 months and the potential to receive an additional $3 3 million upon achievement of certain milestones. We received our upfront payment in early April 2022, and the next payment of approximately 275000 is expected in early December 2022, the remaining payments will be over the next period of time.
Through April of 2024.
So what does that leave us with one large legacy private holding in AG by him and the rest are only three 5% of our net assets. This progress greatly simplifies our balance sheet and our story when combined with the progress in our public and related portfolio quarter to date, we continue to make strong progress towards having a 100% of our assets and cash.
And public and related securities.
Please turn to slide 24 for.
For Q2 2022, our regular operating expenses equaled approximately $741000 based on the performance during the quarter. This amount incurred includes the reversal of an accrued accrual for a certain deferred bonus amounts from 2020 and the amount of approximately $80000.
This amount or a portion of it could be reinstated in future quarters, depending on performance and at the discretion of the compensation Committee of our board. We will continue to maintain a lean cost structure outside of our fixed expenses for being a public company focusing our expenses on activities solely designed to enhance our investment performance or to increase our revenues.
Managing outside capital as has been the case since Kevin and I took over 180. The management team will only participated in a bonus pool, if our performance warrants. It our performance through Q2 2022 doesn't warrant it and therefore the reversal.
The accrual that we had from the prior years and no accrual for this year, thus far please.
Turning to slide 25, and 26, we provide these slides each quarter that enable our shareholders to look at the trend of our total expenses and compensation related expenses as a percentage of net assets. We continue to anticipate the reductions in our operating expenses as a percentage of net assets will be based on our growth in net assets rather than further reductions in <unk>.
<unk>.
We remain committed to treating every dollar of shareholder money with the utmost care and consideration as we always say, it's much easier for us to grow NAV, where the expense run rate is today. Please turn to slide 27, and 28 here we present, our scorecards for Q2 'twenty two based on certain metrics that we track throughout the year, while the first half of 2022 is dip.
We believe we are well positioned to grow value for our shareholders across all these metrics over time as we have during the prior five years <unk> existence, our performance during the first part of Q3 2022 will help along this line.
But it does remain too early to know where we'll be at the end of this quarter or for the year.
Paul.
Please turn to slide 29 as of the end of Q2 'twenty two return traded at 73% of NAV or securities publicly traded and related companies cash and other assets net of liabilities were $5 98 per share.
Our stock price was 613, if we receive a 100% credit of the value of these assets net of liabilities. The market is ascribing a value of approximately <unk> 15 per share $1 6 million to our legacy private portfolio, given our private legacy private assets within that number.
Valued at $2 $24 6 million in the market is discounting the value of our legacy product portfolio by approximately 94%.
As of the end of Q2, 'twenty, two but that actually includes the D wave amount in the legacy private portfolio. If you take the D wave value carrying value of <unk> as of June 30th.
Out of the legacy private portfolio and put it into the public and related portfolio holdings, our remaining legacy private portfolio.
<unk> had negative in flight value.
And this negative implied value includes approximately $2 6 million that we are contractually due over the ensuing 175 years from the sale Tara biosystems of Allo.
Now take that fact, as we mentioned earlier, our public and Ray provides materially increased in value in Q3 to date and think about our stock price. We certainly do not believe it reflects the appropriate value of 180 and as Kevin said as you see us do in prior quarters similar situations, we look forward to adding to our ownership.
Management looks forward to adding as their ownership of 180, when the Windows open for such purposes, I will now hand, the call back to Kevin Yes. So two two points before we open it up for Q&A one on our.
Para bellum, which is the spec that we invested money in.
The one thing I'll say about that is we are as we've been.
Deep into due diligence on.
Trying to find the target company for for that spec.
We're neither.
We're not dissuaded from our abilities to two to find.
Company, one that the market is going to want to own.
<unk>. The fact that the market has had its challenges for 2022.
So we feel we feel good about where we are there is that as <unk>.
Much as we can we can say.
Without without taking the entire call over the wall and secondly, I'm asked all the time kind of where are you now where are you in the middle of the quarter. Unfortunately, we're not in open end mutual funds. So we don't price everyday but what we've tried to do and this call is help you bridge.
Trying to figure out where our NAV or book value is at any given point in time versus where it was.
40, 40 days or so ago, the two things I'd say number one.
You know where our cash in public assets were at the end of the quarter 600, <unk>. We said, we're up double digit this quarter or something like that so you can figure that piece out.
And the second part is we own 900000, some odd shares of D wave quantum.
The Mark that we have for that is $6 55.
It's publicly traded as of Monday, and you can figure that out.
Obviously, you don't know what we're doing in and out of the quarter in terms of buying and selling but thats my best way of helping.
<unk> on the call is try and figure out where we are at any given point in time during the quarter and if you do that work Youll know that we are as I said in our.
That I said and Daniel said were meaningfully higher from both a cash and public assets perspective, and an NAV.
<unk> and where we were at the June 30 quarter with that Daniel I'll turn it back over to you and we can take some questions. If there are any.
If you have a question. Please type star six on your phone or click ask a question icon. If you are participating via computer.
Our first question is from Adam Waldow. Please go ahead.
Good morning, Kevin and Daniel I Hope you can hear me, okay, and thanks for taking my questions. We can.
First of all thanks for all of your continued hard work and progress given the market backdrop, you've got a lot of great things going on especially with the private side and with Comscore. So continued success there.
Three topics I'd like to explore first.
It will be an aspect of D wave second.
If we can get anything further on AG bio.
Beyond whats available on press releases or just your general sense of of liquidity timeframe, there and third your thoughts on macro hedging at this point in the current market cycle.
So with respect to.
D wave.
I think this morning in a pre market, it's around $10 50, a share it closed over $10 yesterday, obviously, you have a nice markup coming there from where you were carrying it at the end of the June quarter have you given what are your thoughts on potentially coloring, some or all of that position given the like period of time over which you could diversify the holding.
Unfortunately, we're not allowed to do any hedging selling or anything else respected to the position that we hold.
Currently.
According to the lockup agreement that all prior investors.
D wave are subject to.
Okay fair enough with respect to AG volume.
You know, obviously difficult market environment, great fundamental story and warn Ukraine, obviously adds to that given what's going on in agricultural input prices.
Is it is there.
Is there anything else you can say beyond.
What you put in your public communications on what we can see it.
At the company's website as too.
What do you think the timeline might look like there for an IPO or liquidity event over the next couple of years.
So it is 15% of your NAV at the end of the June quarter.
It is what it is so we.
What part of that is because it's growing because it's been a successful private holdings as it.
Two.
As opposed to some of the other ones over the years.
The right idea at the right time.
Especially with what food prices Youre doing.
It is.
It's well run.
Management team is exceptional.
It's got a board that is interested we think and we're not on the board, but it is a board that we think is interested in.
And getting this thing public at some point.
This wasn't the right time for them to do that.
And so they've chosen and elected not to do that they're not ready.
Not even ready from an accounting perspective.
So there's really not more we can say Adam other than.
Because we don't own a controlling stake we'd like this company to be public once it is that we will complete our transformation.
From where we were to where we are we've already where 80% of the way there. We got another essentially 20% to go and this is two thirds of that 'twenty. So.
We would love to see a public but we wanted to see a public at the right time with the right valuation and with the right macro.
Economic backgrounds, so that the market can appreciate the assets of this business. So if you are giving me a timeline of two years do I think it'll be public in two years.
Personally I think the answer to that is yes, but I mean, that's just my opinion, that's with no knowledge no facts no nothing.
I do think I do think if youre, giving me two years it.
And it'll be public in two years Thats My guess I think the only thing I'd add to that is and I share those opinions I mean, we're not on the board we don't have control.
Bye.
What is public when everybody knows that they raised.
Large amount of capital last year, so, they're well funded which is crucially important.
And they can.
Use that to be in a strong situation when they go to the public markets.
And take advantage of that I think that.
Where we want them to.
So and they're getting to a scale now where they could be a public company and that's important.
So, we'll see where that goes by.
We do think that it's trending in the right direction as Kevin said they are in the right space right time with a good management team.
So if I could.
We're down to one name in our private portfolio that matters one.
When I got here there was 24 names in this private portfolio.
Some of them monetize some of them went away because they went out of business.
And we whittle them down to <unk>.
To 20 from 24% as you can see on that slide was there six or seven on there Daniel.
And really.
Analyze the ones to analyze.
Our one.
One that matters and the one that matters is a very well run business that were not all that concerned about right now.
Agreed Kevin you said something about the accounting given the accounting and the right.
The state to be a public company in it that that's has some work to be done they've made a number of obviously management hires that you can see on the press.
Releases on their website late last year that you would typically higher if you were getting ready for an IPO, obviously the market conditions, probably haven't shelving that now as you said, but how long do you think it takes them to get the accounting where they need to be sure that they could go out as market conditions improve.
And be ready to go out into the public market.
I think the way to just think about it is it going getting to being IPO ready as a multi pronged.
Process.
Counting absolutely.
And.
You need to have <unk> compliant.
<unk> financial statements and it can take three to six months for that Pete did you just get done by I think the key is in your side right. There, they're appointing new members to their board of directors with a lot of relevant experience there increasing the diversity of the board of directors.
They're they're taking all of the steps that I think all of US would believe would be appropriate for the evolution of the business and the accounting is just one piece of it.
No. That's fair very helpful color and then on overall portfolio hedging.
What is your current thinking.
Given your portfolio construction bottoms up in your macro view.
Given the interest rate and inflation environment.
I don't know if it changes every day.
To be honest, if you read my shareholder letter.
We went through a typical day in the life of all of Us.
And in Q2 and.
It's a very confusing environment on the one hand.
Inflation is high on the other hand, we think it's peaked.
On the other on the one hand interest rates are going up on the other hand, the 10 year is at $2 70.
<unk> is historically low for rates, so our bonds more of a competition for equities, yes, but.
But I remember when utility bonds yielded 16 or 17%, we're not in that environment right now so multiple should compress, but do they need to be halved from where they were I don't think so.
Everyone tells me the world's ending and yet we posted 500000 jobs last month and close to 300000 in the month before which we can argue is inflationary and means the fed is going to continue to raise.
Well My point is I don't believe everything that I'm told I believe in one of my companies tell me when they report their earnings and.
And while I, we underperformed the Russell in Q1.
Because quantum missed.
It was fundamentally fundamentally deserve to be down in Q2 every single one of our company's hit numbers and then hit reduced numbers. They hit the numbers that existed when we started the year.
I'm not seeing an end of the world scenario and if we are in an end of the world scenario. We just lived through a 33% contraction in the Russell from November so none of the mindset right now where I want to hedge.
I don't want to hedge when potbellies at five on its way to <unk>.
What do I want to hedge do I want to hedge.
In video do I want a hedge Amazon and my hedging Google My hedging the Russell Microcap index.
Many of our companies don't even trade, let alone have options I can't there's not a lot of hedging I can do around in a number of our names. So I wanted to hedge quantum after we've just participated in the rights offering.
So it's a complicated question its a good question.
If I feel that valuations get extended from for the names that we own we sell them.
We've had we've owned Russell puts before.
I'm not going to tell you what we're going to do in the middle of a quarter I can't do that from a.
<unk> perspective, but I don't think its as cut and dry as all my God, the world's ending hedge while the world's not ending.
In our estimation and to some extent and already ended and I think we are in a recession I believe the nominal growth being down two quarters in a row consumers, having less money in their pockets now than they did in the start of the year as the definition of a recession.
And embedded in the word recession has received we've receded question is one of severity. So it's.
It's complicated I am sure you have your own views and maybe you're more bearish than we are and you want us to hedge and maybe there is somebody else who's.
Wildly bullish and would kill us if we hedged.
So we're just going to try and do what we always do item, which is b disciplined be agnostic be unemotional.
Try and do the best job, we can for our shareholders trying.
Maneuver ourselves through what has been a challenging period.
<unk>.
And we will see I mean, if the market's up another 20% in two weeks as we head into September October .
And I would take money off the table, yeah I might.
But we weren't thinking about hedging at any point.
Wrong wrongly by the way in which that hedged in November I wish I never I wish I didn't own any stocks in November , but that's not what we do for a living.
No.
We werent thinking about hedging as we exited the June 20th quarter.
The June 30 timeframe, and we'll think about it as we think about everything.
And to hedge by the way it takes an enormous amount of capital also and I'll go back to what I said this is a long winded, but what exactly in my hedging.
No that's terrific very helpful gentlemen, thanks very much.
<unk> success.
Over the rest of the quarter and the rest of the year.
Adam as always we were happy to hear from you and we'll talk to you again soon.
Thanks, Adam.
If you have a question please type star six on your phone or.
Ask the question on the computer we did have one question that came over the chat, which is price and slide 15, where we had list price of Paragon at 669, what youre seeing in that slide in in any of those slides is the basis on which we determined value four at 180 instead of <unk>.
Isn't that it's it is less than where the current trading price for <unk> in the open market is because we have discounts built in because the shares that we own through the sponsored vehicle that we invested in are not the exact same as the ones that are traded publicly in that.
I don't have rights for redemption from the trust.
On a business combination they would convert into exactly the same securities and Thats why youre seeing we carry them at a discount which reflects the differences in those terms and the fact that.
If a business combination did not occur there is a risk because those shares would be actually worthless and so that's the difference I. Appreciate the question D. Wave is also similar in that if you look at where it was versus where it was trading as a spec.
There was a discount on that as well.
And that's why the Mark is 655 I think at the end of June 30th.
And obviously right now it's public and trading so that that will change at the end of Q3.
They'll still going forward, you'll still have some level of a discount for lack of marketability related to the fact that the shares until the shares are actually registered and available to be traded from an FCC perspective, the lockup youre not allowed to actually take a discount on.
Probably more information everybody wanted but if you have any other questions on any of those valuations, obviously feel free to reach out.
I'm seeing no other questions in the queue.
Okay. Thank you everyone for listening it's been a challenging <unk>.
Six months, it's been a better 40 days, we're happy the way it's public.
And we have completely trends that completely.
We mean.
Meaningfully transformed our business.
From where we were to where we are today.
And made a massive step forward.
In our.
Desire to have 100% of our assets in cash in public.
Assets with the events of Terror Petra and D wave. This year. So we look forward to reviewing our results for Q3, when we chat with you sometime in late October early November and we hope everyone has a great rest of the summer and we'll speak to you.
Speak to you then of course, if anybody has any follow up questions feel free to E mail or call us and we'll be happy to get on the phone or respond to you over email.
Whatever your questions are so thank you very much have a great summer and we'll talk to you soon take care you can now disconnect.
Goodbye.