Q3 2023 SuRo Capital Corp Earnings Call
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Speaker 1: Good day and welcome to the Silver's Capital's third quarter 2023 earnings call.
Good day and welcome to the solar Capital's third quarter 2023 earnings call.
Speaker 1: Today's call is being recorded, your lines will be only listened only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host Adam Bates to begin today's conference. Thank you.
This call is being recorded your lines will be on listen only however, you will have the opportunity to ask questions. At the end. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, Please press star zero and you'd be connected to an operator.
I will now hand, you over to your host Adam Bates to begin today's conference. Thank you.
Speaker 2: Thank you for joining us on today's call. I'm joined today by the Chairman and Chief Executive Officer of Sero Capital, Mark Klein, and Chief Financial Officer, Alison Green. Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at www.serocap.com under Investor Relations, Events, and Presentations.
Thank you for joining us on today's call I'm joined today by the Chairman and Chief Executive Officer of Spiro Capital, Mark Klein and Chief Financial Officer, Alison Greene. Please note that a slide presentation corresponding to todays prepared remarks by management is available on our website at www Dot zero cap Dot com.
Under Investor relations events and presentations.
Speaker 2: 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.
<unk> call is being recorded and broadcast live on our website Www Dot zero cap Dot Com replay information is included in our press release issued today.
This call is the property of zero capital and the unauthorized reproduction of this call in any form is strictly prohibited.
Speaker 2: I would also like to call your attention to customary disclosures in today's earnings press release regarding forward-looking information.
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 performed.
Speaker 2: Statements made in today's conference call and webcast may constitute forward-looking statements which relate to future events or future performance or financial conditions.
Speaker 2: 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 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 and tensions and expectations reflected in or suggested by the forward looking state.
Thats or future financial condition or results and involve a number of risks estimates and uncertainties, including the impact of 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 intend.
And the 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.
Speaker 2: As for results made 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 and the company's filings with the SEC.
Speaker 2: Management does not undertake to update such for looking statements unless required to do so by law. To obtain copies of SuroCapitals latest SEC filings, please visit our website at www.surocap.com or the SEC's website at scc.gov. Now I would like to turn the call over to Mark Poin. Thank you.
Undertake to update such forward looking statements unless required to do so by law.
A copy of the zero capital latest SEC filings. Please visit our website at Www Dot zero cap dot com or the SEC website at SEC Gov, now I would like to turn the call over to Mark Klein.
Thank you Adam good afternoon, and thank you for joining US we're pleased to share the results of Cerro capitals third quarter 2023.
Speaker 3: We are pleased to share the results of Suro Capital's third quarter 2020.
Speaker 3: The third quarter of 2023 was characterized by broad ongoing weakness in the public equity and bond markets. Economic uncertainty has continued into the fourth quarter, although recent reports and commentary from the Federal Reserve has led investors to believe that the Fed may be done or close to done raising in the...
The third quarter of 2023, it was characterized by broad ongoing weakness in the public equity and bond market economic uncertainty has continued into the fourth quarter, Although recent reports and commentary from the federal reserve.
Led investors to believe the fed may be done or close to done raising interest rates, while the fed may be done with interest rate hikes geopolitical unrest, including the wars in Israel in Ukraine, coupled with the view that consumers are pulling back is fueled continued volatility in the equity markets.
Speaker 3: While the Fed may be done with interest rate hikes, geopolitical unrest, including the wars in Israel and Ukraine, coupled with the view that consumers are pulling back, has fueled continued volatility in the equity market.
Speaker 3: In the first half of the year, we expressed our view that we believe the IPO market could open in Q3.
In the first half of the year, we expressed our view that we believe the IPO market could open in Q2 Q3, which.
Speaker 3: which in fact did occur. Unfortunately, while there were several notable tech companies that debuted in the public market, as of today, all of these companies have declined from their IPO prices.
Which in fact did occur.
Unfortunately, while there were several notable tech companies that debuted in the public markets as of today. All of these companies have declined from their IPO price.
Speaker 3: The poor performance of these stocks, as well as other IPOs, has led to a pause in the IPO market. The IPO market is broadly closed and will likely reopen during the first or second quarter of 2024.
The poor performance of these stocks as well as other Ipos has led to a pause in the IPO market.
The IPO market is broadly close and will likely reopened during the first or second quarter of 2024.
Speaker 3: The apparent delay in the IPO market has led to more volatility in the private markets with secondary trading in many countries.
The apparent delay in the IPO market has led to more volatility in the private markets with secondary trading in many instances being significantly and consistent with public comparables.
Speaker 4: being significantly inconsistent with public competition.
Speaker 4: As we have highlighted for several quarters, there is a disconnect between the pricing of late-stage secondary opportunities and the recent performance of the COVID-19 pandemic.
As we have highlighted for several quarters. There is a disconnect between the pricing of late stage secondary opportunities and the recent performance of public markets.
Speaker 3: While we have been fortunate to find what we believe to be a couple of excellent opportunities
While we have been fortunate to find what we believe to be a couple of excellent opportunities. These are more the exception than the rule as valuations of private markets remained inconsistent and higher than their public comparables.
Speaker 4: These are more the exception than the rule. As valuations of private markets remain inconsistent and high-
Speaker 3: To that end, we have observed private secondary opportunities trading up or down around 25% within very short periods of time with no apparent catalytic effect.
To that end, we have observed private secondary opportunities trading up or down around 25% within very short periods of time with no apparent catalyst.
Speaker 4: Additionally, we have noted stocks bid and offered simultaneously and meaningfully different prices. Finally, and perhaps the most instructive, we have observed trading in companies at levels that were meaningfully about their IPO.
Additionally, we have noted stocks bid and offered simultaneously and meaningfully different prices finally, and perhaps most instructive, we have observed trading and companies at levels that were meaningful meaningfully above their IPO.
Speaker 3: where their IPO was first indicated and finally priced.
Where are their IPO was first indicated and finally price.
Speaker 3: It is clear to us that the private secondary markets are opaque. To navigate through them, it is imperative to have constant dialogue with the myriad of secondary participants.
It is clear to us that the private secondary markets or opaque to navigate through them. It is imperative to have constant dialogue with the myriad of secondary person participants to be prudent and price and price and such an opaque and wide ranging market. It is critical to perform rigorous valuation analysis as we deploy.
Speaker 3: to be prudent and price in such an opaque and wide-raising market, it is critical to perform rigorous valuation analysis as we deploy capital against these opportunities.
Capital against these opportunities.
Speaker 3: private companies face the prospects of prolonged timelines to TIL IPO, our pipeline has remained extremely active with many companies and investors seeking
As private companies face the prospects of prolong timelines until IPO. Our pipeline has remained extremely active with many companies and investors seeking liquidity in fact, we continue to see more potential investments than other times.
Speaker 3: In fact, we continue to see more potential investments than other times. With that said, as always, we remain very focused on our potential entry level.
With that said as always we remain very focused on our potential entry levels.
Speaker 3: During the quarter, we were able to execute several new investments. Additionally, as previously discussed, one of our SPAC investments closed its previously announced merger and two other SPACs announced definitive agreements to merge with Hartford County.
During the quarter, we were able to execute several new investments. Additionally, as previously discussed one of our spec investments closed its previously as our previously announced merger and two other specs announced definitive agreement to merge with target companies.
Speaker 3: We made two new investments during the quarter. We invested $5.89 in four kites, a supply chain visibility software company, through secondary transactions.
We made two new investments during the quarter, we invested $5 $8 million in four types of supply chain visibility software company through secondary transactions and we also invested $1 million and steak trade a sports betting exchange doing business as profit exchange through a prime.
Speaker 3: And we also invested $1 million in stake trade of sports betting exchange doing...
Speaker 3: profit exchange through a primary transaction as part of the SIRO Capital Score to Portfolio.
<unk> transaction as part of the Cerro capital Sports portfolio.
Please turn to slide four.
Speaker 3: Forecrites is a leading, real-time supply chain disability solution. Forecrites has been a pioneering force behind the idea that companies should know where their goods are at all time from the initial onset of being loaded onto a truck to when they finally reach a delivery destination.
<unk> is a leading real time supply chain visibility solution for kite has been a pioneer in force behind the idea that companies should know where their goods are at all time from the initial onset of being loaded onto a truck to when they finally reach.
Delivery destination the.
Speaker 3: The impact of forecrides technology is evidence in its impressive clientele, which includes recognized brands such as nine of the top ten consumer package good companies, and 18 of the top 20 food and beverage.
The impact of <unk> technology as evidenced in its impressive clientele, which includes recognized brands such as nine of the top 10 consumer packaged good companies and 18 of the top 20 food and beverage companies.
Speaker 3: Today, 4K helps over 1,200 of the world's most recognized brands leverage real-time visibility and unlock efficiencies that save them millions of dollars.
Today for kite helps over 200 of the world's most recognized brands leverage real time visibility and unlock efficiencies that save them millions of dollars a year.
Speaker 3: We believe that four crates is in a unique position to capture additional market share as they continue expanding their business and target customers with
We believe the four cases in a unique position to capture additional market share as they continue expanding their business and target customers with some of the most complex supply chain needs.
Speaker 3: We also made a $1 million investment in profit exchange through a primary transaction. Profit exchange is a peer-to-peer sports betting exchange, focused on providing betters the best pricing and a seamless experience that is different from the incumbent operators. Betters on the platform have the ability to request their own wagers or pimp from outstanding options driven by both users and market makers.
We also made a $1 million investment in part profit exchange through a primary transaction profit exchange is a peer to peer sports betting exchange focus on providing better is the best pricing and a seamless experience that is different from the incumbent operators betters on a platform have the ability to request.
Theyre, all wagers or pick from outstanding options, driven by both users and market makers. The company has gone through extensive licensing and regulatory steps and is now live in new Jersey with plans to expand to other legal betting states in the future.
Speaker 3: The company has gone through extensive licensing and regulatory steps and is now live in New Jersey with plans to expand to other legal betting.
Speaker 3: We are excited about the exchange wagering opportunity in the U.S. given the success that Fair has had in the U.K. And we believe profit exchange...
We are excited about the exchange wagering opportunity in the U S. Given the success Betfair has had in the U K and we believe profit exchange as both the team and the technology to execute on our large market opportunity.
Speaker 3: and the technology to execute on the large market opportunity.
Please turn to slide five.
Speaker 3: During the quarter, Columbia Acquisition Corp, a SPAC in which we own both stock and war,
During the quarter Columbia acquisition Corp, a stack of which we own both stock and warrants successfully closed its business comps combination with PFS Q Holdings also known as public square public square is a leading marketplace of patriotic businesses and consumers that began trading on the New York stock exchange under the <unk>.
Speaker 3: successfully closed its business combination with PSQ holdings, also known as public square. Public square is a leading marketplace of patriotic businesses and consumers that began trading on the New York Stock Exchange under the symbol.
Symbol <unk> on July 20th.
Speaker 3: At quarter and we valued our position at approximately $18 million and our cross basis in public square is approximately $2.7 million.
At quarter end, we valued our position at approximately $18 million and our cost basis in public squares, approximately $2 $7 million.
Speaker 3: The lock-up restriction on the warrants expired on August 19th and our common shares are subject to a one-year lock-up period as of the business combination's closing with a pricing condition that would unlock shares earlier. Allison will provide additional details on our public square in Virginia.
The lockup restriction on the warrants expired on August 19th and our common shares are subject to a one year lockup period as of the business combinations closing with a pricing condition that would unlock shares earlier Alison will provide additional details on our public square investment later in the call.
Speaker 4: As we previously discussed, All-C Acquisition Corps has announced a signed-
As we previously discussed <unk> acquisition course, corporate announced a signed definitive agreement to merge with <unk> and advanced vision technology and nuclear fuel company on July 11 2023.
Speaker 3: merged with Oklo, an advanced fission technology and nuclear fuel company, on July 11, 2023. On September
On July 11 2023.
On September 27th of 2023, the company filed an S four with the SEC.
Speaker 3: The combined company will be named Oklahoma and tends to list on the New York Stock Exchange with a symbol.
Bond company will be named Oklahoma, and intense listen the New York stock exchange with the simple Okay Hello.
Speaker 3: The transaction, which has been approved by the Board of Directors, OPAL and ALDSI, is expected...
The transaction, which has been approved by the boards of directors of <unk> is expected to close in late 2023 early 2024 and is subject to approval by <unk> shareholders as well as other closing conditions.
Speaker 3: early 2024 and is subject to approval by ALTC and OVLUS shareholders as well as other closing conditions. Lastly,
Lastly, during the quarter on August one 2023 Churchill Capital Corp, Seven announced signed a definitive agreement to merge with core pack.
Speaker 3: Churchill Capital Corp. 7 announced it signed a definitive
Speaker 3: A corporate compounder specialized in acquiring small and medium-sized businesses.
Corporate compounds are specialized in acquiring small and medium sized business enterprise also known as Smbs in the U K. The transaction has been approved by the boards of directors of core packet Churchill seven and is expected to close in early 'twenty four subject to approval by Churchill seven in core Pac shareholders is.
Speaker 3: also known as FMEs in the UK. The transaction has been approved by the boards of directors of Corpac and Churchill 7.
Speaker 3: expected to close in early 24, subject to approval by Churchill 7 and Corpac shareholders as well as
Well as other closing conditions.
Speaker 3: Turning to the third quarter, we ended the quarter with net asset value of $212 million, or $8.
Turning to the third quarter, we ended the quarter with net asset value of $212 million or $8 41 per share. This is an increase in net assets up from $7 35, a share in Q2 of 2023 and up from $7 83, a share in Q3 of <unk>.
Speaker 3: share. This is an increase in net asset up from $7.35 a share.
Speaker 3: and up from $7.83 a share in Q3 of 2022. Please turn to slide six.
1022 please.
Please turn to slide six.
Turning to our top five positions I first want to highlight our cash position as of quarter end, our cash and short term U S treasuries available for investment or approximately $94 million.
Speaker 3: As of quarter end, are cash and short-term U.S. treasuries available for investment?
Speaker 3: approximately $94 million, representing 32% of our gross assets.
Representing 32% of our gross assets.
Speaker 3: We continue to believe having cash in this environment advantageously positions us to continue seeking out new opportunities emerging from current market conditions.
Continue to believe having cash in this environment.
<unk> positions us to continue seeking out new opportunities emerging from current market conditions.
<unk> top five positions as of September 30th where <unk> public Square service type Blink health and storm with these.
Speaker 3: These positions accounted for approximately 61% of the investment portfolio at fair value. Additionally, as of September 30th, our top 10 positions accounted for
These positions accounted for approximately 61% of the investment portfolio portfolio at fair value. Additionally, as of September 30, our top 10 positions accounted for approximately 82% of your investment portfolio at fair value.
Transitioning to our public investments.
Speaker 3: As previously stated, it is our objective to sell our public positions when lockups restrictions expire and there is relative stability in a given public position.
As previously stated it is our objective to sell our public positions when lockups restrictions expire and there is relative stability in a given public positions trading in line with this approach we have continued to monetize our public unrestricted positions during the third quarter, we monetize most of our remaining position in.
Speaker 3: trading. In line with this approach, we've continued to monetize our public unrestricted positions. During the third quarter, we...
Speaker 4: store. And subsequent to quarter's end, we began monetizing our position.
Next door and subsequent to quarter's end, we began monetizing our position in public square warrants, we plan to continue to Opportunistically monetize our public positions as market conditions.
Speaker 4: and to continue to opportunistically monetize our public.
Speaker 4: As previously discussed, we continue to focus on our shareholder-friendly initiatives. To that end, on August 7th, our Board of Directors authorized an additional $5 million per share report.
As previously discussed we continue to focus on our shareholder friendly initiatives to that end on August seven our board of directors authorized an additional $5 million per share repurchases and an extension of the share repurchase program through August October 31, 2024.
Speaker 4: extension of the share purchase program through October 31st, 2024.
Speaker 4: Given the significant discount in which our stock is trading compared to an asset value, we determine the current continuation of the share of purchase program to be an efficient and accretive deployment of capital.
Given the significant discount at which our stock is trading compared to net asset value. We determined the current continuation of the share repurchase program to be an efficient and accretive deployment of capital.
Speaker 4: As public and private market volatility persists, we remain patient and selective as we evaluate new opportunities. We believe our considerable investable capital...
As public and private market, both the volatility persists, we remain patient and selective as we evaluate new opportunities. We believe our considerable investable capital affords us an opportunity to continue to add high quality companies to our portfolio.
Speaker 4: continue to add high-quality companies to our portfolio.
Speaker 3: Thank you for your attention, and with that, I will hand it over to Allison Green.
Thank you for your attention and with that I will hand, it over to Alison Greene, our Chief Financial Officer.
Speaker 5: Thank you, Mark. I would like to follow Mark's update with a more detailed review of our portfolio activities since the start of the 3rd quarter. Details on the share of purchase program followed by our financial results of September 30th, 2023 and finally our liquidity.
Thank you Mark I would like to follow Mark's update with a more detailed review of our portfolio activities. Since the start of the third quarter details on the share repurchase program followed by our financial results as of September 30 of 2023, and finally, our liquidity position.
Speaker 5: First, I'd like to provide a more detailed update on our investment portfolio activity for the third quarter and subsequent to quarter end. This does not include investments in short-term U.S. Treasuries.
First I'd like to provide a more detailed update on our investment portfolio activity for the third quarter and subsequent to quarter end. This does not include investments in short term U S treasuries.
Speaker 5: During the third quarter, we invested a total of $7.3 million in new and follow-on investments.
The third quarter, we invested a total of $7 3 million in new and follow on investments Steven.
Speaker 5: These include a $5.8 million investment in Fork Heights common shares via a secondary transact.
<unk> been clear.
$5 $8 million investment in pork hype common shares yes secondary transaction of.
Speaker 5: a $1 million investment through Storo Capital Sports and Profit Exchange's Simple Agreement for future equity or space, and a $500,000 follow-on investment in Hearth's Series B4 Preferred Shares, for which we also received warrants.
1 million dollar investment you throw capital sports and profit exchanges simple agreement for future equity or state.
And a $500000 follow on investment in hearth series B preferred shares for which we also received wide.
Speaker 5: Over the course of the third quarter, we continued to monetize our next-door public shares. We sold 589,996 public common shares next door for approximately $1.8 million of net proceeds, resulting in a net realized loss of approximately $1.4 million. In addition to sales of our unrestricted publicly traded investments, we received approximately $266,000 in proceeds from Second Avenue related to principal repayment and interest on the 15% term loan due December 2023, as well as other investment dividend and interest income.
Over the course of the third quarter, we continued to monetize our next door a public shares we sold 589996 public common shares next door for approximately $1 $8 million of net proceeds resulting in a net realized loss of approximately $1 $4 million.
In addition, the sales of our unrestricted publicly traded investment we received approximately 200 and thank you $6000 in proceeds from second Avenue related to principal repayment and interest on the 15% term loan due December 2023, as well as other investment dividend and interest income.
Speaker 5: Subsequent to Quarter End, we made a $325,000 follow-on investment through Suro Capital Sports and XPoints Convertible Notes.
Subsequent to quarter end, we made a $325000 follow on investment <unk> capital sport and convertible note.
Speaker 5: Subsequent to Quarter End as well, through yesterday, we sold 67,931 PSQ Holdings Inc. warrants for approximately $68,000 of net proceeds, resulting in a net realized gain of approximately $39,000.
Subsequent to quarter end as well through yesterday, we sold 57931, PSU Holdings, Inc. Warrants for approximately $68000 of net proceeds resulting in a net realized gain of approximately $339000.
Speaker 5: Finally, subsequent quarter end, we received approximately $86,000 in that proceeds from 2nd Avenue related to principal repayment and interest on the 15% term loan due December 2023, as well as other interest dividends and interest income.
Finally subsequent to quarter end, we received approximately $86000 in net proceeds from second Avenue related to principal repayment and interest on the 15% term loan due December 2023, as well as other interest dividends and interest income please turn to slide 17.
Speaker 5: Segmented by six general investment themes, the top allocation of our investment portfolio at quarter end was to education technology, representing approximately 40% of the investment portfolio at fair value.
Segmented by six general investment themes, the top allocation of our investment portfolio at quarter end with the education technology, representing approximately 40% of the investment portfolio at fair value.
Speaker 5: Marketplaces was the second largest category, representing approximately 22% of the portfolio. The financial technology category accounted for approximately 18% of our investment portfolio, and approximately 15% of our portfolio was invested in cloud and big data.
Marketplaces was the second largest category, representing approximately 22% of the portfolio.
The financial technology category accounted for approximately 18% of our investment portfolio and approximately 15% of our portfolio was invested in cloud and big data companies.
Speaker 5: Social and mobile accounted for approximately 4% of the fair value of our portfolio, and sustainability accounted for less than 1% of the fair value of our portfolio as of September 30th.
Social and mobile accounted for approximately 4% of the fair value of our portfolio and sustainability accounted for less than 1% of the fair value of our portfolio as of September 30th.
Please turn to slide eight.
Speaker 5: As Mark mentioned, on August 7th, our Board of Directors authorized a $5 million expansion to the Share of Purchase Program to $60 million and an extension of the Share of Purchase Program through October 31st, 2024.
As Mark mentioned on August seven our board of directors authorized a 5 million dollar expansion the share repurchase program to $60 million and an extension of the share repurchase program through October 31 2024.
Speaker 5: During the quarter ended September 30th, 2023 under the share purchase program, the company repurchased 186,493 shares of its common stock for approximately $680,000 subject to regulatory.
During the quarter ended September 32023 under the share repurchase program. The company repurchased 186493 shares of its common stock for approximately $680000 subject to regulatory restrictions.
Speaker 5: Here today, under both the share of purchase program and our modified Dutch auction tender offer, we have repurchased 3.2 million shares for approximately $14.2 million and have a remaining $20.7 million approved to deploy via the share of purchase program.
Year to date under both the share repurchase program and our modified Dutch auction tender offer we have repurchased three 2 million shares for approximately $14 $2 million and have a remaining $27 million approved to deploy via the share repurchase programs.
Speaker 5: Since the inception of the share purchase program in August 2017, we have repurchased a total of 6,018,501 shares of our common stock for a total deployment of approximately $39.3 million of the $60 million authorized by the board. This does not include repurchases under various tender offers during this time period.
Since the inception of the share repurchase program in August 2017, we have repurchased a total of 6 million 18501 shares of our common stock for a total deployment of approximately $39 $3 million of the $60 million authorized by the board. This does not include repurchases under various tender offers during this time period approximately $27 million.
Speaker 5: Approximately $20.7 million remain authorized under the Sheriff's Purchase Program and is currently set to expire on October 31st, 2024.
Authorized under the share repurchase program and is currently set to expire on October 31 2024.
Speaker 5: Under the Share Purchase Program's journal capital, Mary purchases outstanding common stock in the open market, provided that complies with pro-habitians under its insider trading policies and procedures and the applicable regulations. Please.
Under the share repurchase program zero capital, maybe repurchases outstanding common stock in the open market provided to comprise a prohibition on rates and better trading policies and procedures and the applicable regulation.
Speaker 5: We recognize that our NAV per share is an important input to our shareholders. Over the years, we have received inquiries as to how we determine our NAV, more specifically, how we attribute value across our investment portfolio. Before I discuss our financial results for the quarter, I'd like to briefly make a very high-level note of how we value our portfolio, which comprises the most significant portion of our NAV.
Please turn to slide nine.
We recognize that our NAV per share is an important input to our shareholders.
Over the years, we've received inquiries as to how we determine our NAV.
More specifically, how we attribute value across our investment portfolio before I discuss our financial results for the quarter I'd like to briefly make a very high level note of how we value our portfolio, which comprises the most significant portion of our navy.
Speaker 5: Serial capital applies fair value accounting and accordance with US generally accepted accounting principles or GAPs. And the AICPA's audit and accounting guide for investment companies with consultation from the AICPA guide for the valuation of portfolio company investments of venture capital and private equity funds and other investment companies. The value are assets on a quarterly basis or more frequently if required.
Zero capital apply fair value accounting in accordance with U S. Generally accepted accounting principles or GAAP and the AICPA is audit and accounting guide for investment companies with consultation from the SBA guide with evaluation of portfolio company investments of venture capital and private equity funds and other investment companies.
Our assets on a quarterly basis or more frequently if required.
Speaker 5: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value.
Value is defined as the pilot would be received sell an asset or paid to transfer liabilities, a liability and an orderly transaction between market participants at the measurement date.
<unk> establishes a framework for measuring fair value and include the hierarchy used to classify the inputs used in measuring fair value.
Speaker 5: The hierarchy prioritizes the input devaluation techniques used to measure fair value into three levels.
The hierarchy prioritizes the inputs devaluation technique used to measure at fair value into three level.
Speaker 5: The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.
Level and the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level of inputs that are significant to the fair value measurement.
Speaker 5: When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input to the significance of the fair value measurement in its entirety. In summary, on the hierarchy.
Wendy and put to use to measure at fair value fall within different levels of the hierarchy the level, but then which the fair value measurement is categorized is based on the lowest level and posted a significant the fair value measurement in its entirety in summary on the hierarchy.
Speaker 5: Level one valuations are based on unadjusted quoted prices for identical assets in an active market or generally publicly traded investors.
Level, one valuations are based on unadjusted quoted prices for identical athletes and an active market or generally publicly traded invested.
Speaker 5: Level 2 valuations are based on observable inputs other than level 1 prices, such as quoted prices in markets that are not active or secondary trade.
Level, two valuations are based on observable and but other than level one prices such as quoted prices in markets that are not active or secondary trades.
Speaker 5: Level 3 valuations are based on unobservable inputs and reflects the best estimate of what market participants would use in pricing and asset as the measurement.
Level three valuations are based on unobservable inputs and reflects our best estimate of what market participants would use it in pricing and asset at the measurement date.
Speaker 5: While many of our portfolio investments are deemed to have their values determined by level 3 on observable inputs, in some instances, a secondary transaction will occur. For the guidelines discussed, when a secondary transaction occurs in one of our portfolio companies, we closely review the size of the transactions to share class and any other pertinent information regarding the transaction to assess fair value. Unless a rare exception is noted, these secondary transactions are classified as level 2 valuation inputs and are deemed to be a more appropriate indication of fair value than a level 3 fair value now.
While many of our portfolio investments are deemed to have their values determined by level three on that so everybody, but in some instances a secondary transaction will occur.
The guidelines discussed when a secondary transaction occurs in one of our portfolio companies. We closely review the size of the transaction the share class and any other pertinent information regarding the transactions with us for about your.
The rare exception as noted these secondary transactions are classified as level two valuation inputs and are deemed to be a more appropriate indication of fair value than a level III fair value analysis.
Speaker 5: We are pleased to report we ended the quarter, the third quarter 2023, with an NAV per share of $8.41, which is pleased to sit with our financial reporting.
We are pleased to report we ended the quarter the third quarter 2023, with an NAV per share of $8 and 41%.
Speaker 5: The increase in NAV per share from $7.35 per share at the end of Q2 2023 to $8.41 per share as of September 30th was primarily driven by a $1.16 per share increase resulting from net unrealized appreciation of investments during the quarter largely due to observed secondary trades in our portfolio.
It seems to fit with our financial reporting.
Increases in NAV per share from $7 and 35%.
75 cents per share at the end of Q2 2023 to $8 41 per share at September 30th was primarily driven by a $1 16 per share increase resulting from net unrealized depreciation of investments during the quarter largely due to observe secondary trades in our portfolio companies.
Speaker 5: Also contributing to the increase was a $0.04 per share increase due to net repurchase of common stock and a $0.03 per share increase due to stock-based compensation. As we previously noted, the use of cash in connection with the repurchases decreased net asset value as of quarter end. However, the reduction of shares outstanding as of quarter end resulted in an increase in the net asset value per share.
Also contributing to the increase was the four cents per share increase due to net purchase of common stock and a three <unk> per share increase due to stock based compensation as we previously noted the use of cash in connection with the repurchases decrease net asset value as of quarter end. However, the reduction of shares outstanding at quarter end, resulting in an increase in the net asset value per share.
Speaker 5: The increase in NAVy per share was partially offset by 11% per share decreased due to net investment loss, and a 6-cent per share decreased due to net realized losses on investment during the quarter.
The increase in NAV per share was partially offset offset by <unk> 11 per share decrease due to net investment loss.
And a <unk> <unk> per share.
Due to net realized losses on investments during the quarter.
Speaker 5: Finally, I would like to take a moment to review Stereo Capital's liquidity position as of September 30th.
Finally, I would like to take a moment to review throw capital liquidity position as of September 30th.
Speaker 5: We ended the quarter with approximately $105.4 million of liquid assets, including $73.5 million in cash, $20.3 million in short-term US treasuries, and approximately $11.6 million in unrestricted public security.
We ended the quarter with approximately $105 $4 million of liquid assets.
<unk> $73 $5 million in cash.
$3 million in short term U S treasury and approximately $11 $6 million in unrestricted public securities.
Speaker 5: The approximately $11.6 million of unrestricted public securities held as a quarter end represent our shares in next door, new late capital partners, forged global, skillsoft, and our public square war.
The approximately $11.6 million of unrestricted public securities held as of quarter end represent our shares the next door Newgate capital partners towards global Skillsoft, and our public square Werent.
Speaker 5: As September 30, 2023, there were 25,209,108 shares of the company's common stockout standing. That concludes my comment. We would like to thank you for your interest in support of Stereo Capital. Now I will turn the call over to the operator to start the Q&A session. Operator. Operator.
At September 32023, there were $25 209108 shares of the company's common stock outstanding that concludes my comments, we would like to thank you for your interest and support of Cerro capital now I will turn the call over to the operator to start the Q&A session operator.
Speaker 1: Thank you. As a reminder, if you like to ask a question, please press the one on your telephone keypad. Please limit your question to only one. Thank you.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypads. Please limit your questions to only one thank you.
Okay.
Speaker 1: There are no further questions. I would like to hand the call over to your host, Mark Lenn, to conclude today's conference. Thank you.
There are no further questions I would like to hand, the call over to your host Mark Glance. This concludes today's conference. Thank you.
Speaker 3: Thank you everybody for participating on our call. We greatly appreciate your support.
Thank you everybody for participating on our call we greatly.
Speaker 3: Do you have any further follow-on questions? Feel free to reach out to us either through our IOR portal or just directly through email.
I appreciate your support.
Do you have any further follow up questions feel free to reach out to us either.
Either through our IR portal or just directly to E mail. Thank you very much.
Speaker 1: That concludes today's event. Thank you for your participation. You may now disconnect.
That concludes today's events. Thank you for your participation you may now disconnect.
Okay.
Speaker 6: You know.
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Hmm.
Speaker 7: The.
Okay.
Yeah.
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