Q1 2024 180 Degree Capital Corp Earnings Call

Q1 day's session has started to ask your question. Please press star six so recording has started and welcome to 180 re capital Corp's first quarter 2024 financial results update call.

Daniel B. Wolfe: And welcome to 180 Degree Capital Corp.'s first quarter 2024 financial results update call. This is Daniel Wolfe, President and Portfolio Manager of 180 Degree Capital. Kevin Rendino, 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 would like to ask a question, please type star six on your phone or click the ask a question icon if you are participating via your computer.

Daniel B. Wolfe: This is Daniel Wolfe, President and portfolio manager of 100 and your capital.

Daniel B. Wolfe: 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'll open the line to questions. If you would like to ask questions. Please type star six on your phone or click the ask a question icon. If you are participating via your computer.

Daniel B. Wolfe: I would like to remind participants that this call is being recorded and that we will be referring to a slide deck that we have posted on our investor relations website at ir.180degreecapital.com under financial results. Please turn to our safe harbor statement on slide 2. This presentation may contain statements of a forward-looking nature relating to future events. Statements contained in this presentation that are forward-looking statements are intended to be made pursuant to the safe harbor provisions of the Private Security Litigation Reform Act of 1985.

Daniel B. Wolfe: I would like to remind participants that this call is being recorded and that we'll be referring to a slide deck that we have posted on our investor relations website at IR Dot wanting to re capital Dot Com under financial results. Please turn to our Safe Harbor statement on slide two this presentation may contain statements of a forward looking nature relating to future events statements contained in this presentation.

Daniel B. Wolfe: 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 company's financial filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the company's business that could affect the company's 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.

Daniel B. Wolfe: Patients that are forward looking statements are intended to be made pursuant to the safe Harbor provisions of the <unk>.

Daniel B. Wolfe: Private Securities Litigation Reform Act.

Daniel B. Wolfe: 985. 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 company's finance filings with the Securities and Exchange Commission.

Danielle: For a more detailed discussion of the risks and uncertainties associated with the company's business that could affect the company's actual results, except as otherwise required by federal Securities laws 180 to recap. The 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. Thanks Danielle.

Kevin M. Rendino: Thanks, Daniel. Good morning, everyone.

Kevin M. Rendino: In Q1, we navigated what has been an endless, continuous rough environment for our asset class by posting a 3% increase in our NAV against the backdrop of having our cash and public securities rise 5.4% in a quarter. It was a tale of two halves, with a strong start to the year turning into a late-quarter decline for the microcap index as a risk-off environment took hold near the end of the year with a view that rates would be higher for longer as employment numbers stayed strong, and inflation levels leveled off above the Fed's 2% target. We'll have more on that later.

Kevin: Everyone. In Q1, we navigated what has been a endless continued rough environment for our asset class by posting a 3% increase in <unk>.

Kevin M. Rendino: Against this backdrop of having our cash in public Securities Rose five 4% a quarter it.

Kevin M. Rendino: It was a tale of two halves with the strong start to the year turning into a late quarter routes to the Microcap index as a risk off environment took hold near the end of the quarter as investors came to grips with a view that rates will be higher for longer as employment numbers stayed strong inflation level leveled off.

Kevin M. Rendino: Above the fed's, 2% target.

Speaker Change: We will have more on that later or increase our largest increases in value came from potbelly, which continued to post strong results in synchronous, which announced the sale of its messaging and digital assets to become a pure play cloud business.

Kevin M. Rendino: Our largest increases in value came from Potbelly, which continued to post strong results, and Synchronous, which announced the sale of its messaging and digital assets to become a pure play cloud business. On the negative side, Lantronic sold off after providing guidance for a reduction in revenues. Arena, which continued to shoot itself in the foot by getting into a disagreement with ABG over its Sports Illustrated agreement, and ComScore, which provided a soft revenue forecast. More on these in full depth in just a minute.

Kevin M. Rendino: On the negative side land trying to solve the off after providing guidance for a reduction in revenues arena, which continue to shoot itself in the foot by getting into a disagreement with AVG over its sports illustrated agreement and Comscore, which provided a soft revenue forecast.

Kevin M. Rendino: More on these in full depth in just a minute.

Kevin M. Rendino: We did receive a $1.3 million payment from the acquisition of our private portfolio company, Tara. As you know, we've broadly completed our transformation away from being a closed-end fund focused on VC investments to our current strategy of investing in public companies. On slide three, we'll review our holdings, which popularly increased by about $2.5 million or $0.25 per share per quarter this quarter. It pre-announced another strong quarter with 6.4% growth in same-store sales, an average weekly sale that exceeded estimates driven primarily by traffic growth. Popbelly also noted 192 new shop commitments as part of the pre-announcement that was expanded to 202 when Popbelly reported full results on March 24.

Kevin M. Rendino: We did receive a $1 $3 million payment from the acquisition of our private portfolio of companies Terra as you know we've broadly completed our transformation away from being a closed end fund focused on VC investments to our current strategy of investing in public companies.

Kevin M. Rendino: On slide three we'll review our holdings Potbelly increased by about $2 5 million or 25 per share per quarter.

Kevin M. Rendino: In this quarter.

Kevin M. Rendino: Pre announce another strong quarter with six 4% growth for same store sales and average weekly sales that exceeded estimates driven primarily by traffic growth, possibly also noted 192, new shop commitments as part of the pre announcement that was expanded to 202 when Potbelly report its full resorts.

Kevin M. Rendino: Full results in March of 'twenty four.

Kevin M. Rendino: The company provides long-term growth targets and supports its belief that the growth trends from 2024 will continue into the future. Synchronous increased from $6.21 to $8.35 in the quarter. In February, Synchronous reported that it completed its post-devastator cost removals that resulted in an annual savings of approximately $15 million.

Kevin M. Rendino: The company provided long term growth targets are supported its belief that the growth trends from 2024 will continue.

Kevin M. Rendino: Into the future.

Kevin M. Rendino: Synchronous increase from $6 21 to $8 35 in the quarter and February synchronous reported that it had completed its post divestiture cost removals that resulted in an annual savings of approximately $15 million.

Kevin M. Rendino: And the same release it noted that it expected to report revenue and adjusted EBITDA for Q4 dollars 24 that met or exceeded the upper end of its original guidance. The stock doubled after this announcement to a high of nearly $14 a share before retreating through the remainder of the quarter on what was no new information.

Kevin M. Rendino: In the same release, it noted that it expected to report revenue and adjusted EBITDA for Q4'24 that met or exceeded the upper end of its original guidance. The stock doubled after this announcement to a high of nearly $14 a share before retreating through the remainder of the quarter on what was no new information. Quantum's revenue increased in the quarter as well from $0.35 to $0.59. Even though Quantum remained delayed in filing its financial statements due to the ongoing review of revenue recognition as raised by its new auditor, Grant Thornton, the company was able to provide updates on its balance sheet and noted that it was taking steps to optimize its working capital and to reduce debt.

Kevin M. Rendino: Quantum increased in the quarter as well from 35 to 59 cents, even though quantum remain delayed in filing its financial statements due to the ongoing review of revenue recognition is raised by its new order Grant Thornton. The company was able to provide updates on the balance sheet and noted that it was taking steps to optimize its working cap.

Kevin M. Rendino: The company also announced a number of new products with artificial intelligence features. D-Wave's revenue increased in the quarter from $0.88 to $2.04. Additionally, the company announced the availability of new quantum computing resources and partnerships to drive quantum computing adoption.

Kevin M. Rendino: And to reduce debt company also announced a number of new products with artificial intelligence features.

Kevin M. Rendino: D wave increased in the quarter from 88 to $2 four since the company announced the availability of new quantum computing resources and partnerships to drive quantum computing adoption. The increase in the stock price also allowed it to regain compliance with the NYSE listing standards and the ability to tap the equity line of credit for.

Kevin M. Rendino: The increase in the stock price also allowed it to regain compliance with the NYSE listing standards and the ability to tap its equity line of credit for additional capital to fund operations. Lantronics declined in the quarter, and its stock decreased from 586 to 356. The reported results for Q2-24, which ended December 31st, met expectations. However, delays in one of its compute programs, coupled with weakness in its distribution sales channels, led to a lowering of full-year guidance.

Kevin M. Rendino: Final capital to fund them for fund operations.

Kevin M. Rendino: <unk> declined in the quarter.

Speaker Change: And a decrease from $5 86 to $3 56, the reported results for Q2 'twenty for that which ended December 31, I've met expectations or why were delays in one of its compute programs coupled with weakness in the distribution sales channels led to a lowering our full year guidance. While this reduction was expected to lead to weakness.

Kevin M. Rendino: While this reduction was expected to lead to weakness in the stock, the new CEO indicated his need to review every aspect of the company and would not back the opportunity funnel communicated on calls prior to his tenure. His tone and word selection made Lantronics appear as a turnaround rather than a strong business, and this approach placed extreme pressure on the stock that continued throughout the remainder of the quarter. We viewed this as a footfall in communications.

Kevin M. Rendino: And the stock the new CEO indicated his need to review every aspect of the company I would not back the opportunity funnel communicated on calls prior to his tenure as Tony and word selection made electronic land Tronox appears a turnaround rather a strong visit a strong business and this approach placed extreme pressure on the <unk>.

Kevin M. Rendino: Stock that continue throughout the remainder of the quarter, we view this as a footfall communications.

Kevin M. Rendino: Arena Group defaulted on its contractual payments to ABG related to its Sports Illustrated license, which resulted in ABG giving Arena notice that it was cancelling the license. Subsequent to the end of Q124, Arena signed a new agreement to run S.I. with MinuteMedia.

Speaker Change: Arena group defaulted on its contractual payments to <unk> related to its sports illustrated a license, which resulted in <unk>, giving arena noticed it was canceling license subsequent to the end of Q1 'twenty four AVG signed a new room into Runoffs side with many of media Arena was also served with lawsuits from AVG and <unk>.

Kevin M. Rendino: Arena was also served with lawsuits from ABG and former management, who they fired. In Q224, representatives from Arena held a conference call during which they reiterated the expectation of driving to a close of the transaction between Arena and Bridge Media, albeit without providing financial estimates on what the go-forward business looks like without Sports Illustrated in terms of financial performance. The stock is down 27% this quarter, and the comp score declined 7.8% in the quarter. The company missed top-line estimates and exceeded EBITDA targets for Q4 2023.

Kevin M. Rendino: Former management, who they fired.

Speaker Change: In Q2, 24 Representatives from Irina held a conference call during which they reiterated the expectation of driving to a close of the transaction between arena Enbridge media, albeit without providing financial estimates on what the go forward business looks like without sports illustrated in terms of financial performance. The stock is down 27 person.

Kevin M. Rendino: <unk> this quarter.

Kevin M. Rendino: Comscore declined seven 8% in the quarter.

Speaker Change: The company Miss topline estimates and exceeded our EBITDA target for Q4 2023.

Kevin M. Rendino: The score then provided guidance 24 that indicated expected revenue growth but not the ability to maintain or exceed 15% EBITDA margin for the year. The company was also unable to reach a conclusion on the outstanding negotiations with charter to resolve data licensing issues and with the preferred stockholders to resolve outstanding, 180 nominated Matt McLaughlin as a board nominee at the 2024 annual meeting and planned to run a competitive proxy Until Comscore decided to include Matt on its proxy and expand expand the board to accommodate his election As a result, we we we withdrew our proxy, Turning our attention to the environment on slide 5, it's been a painful period for microcap stocks which started to roll over in November of 22 during the Russian war with Ukraine and on the eve of a Fed funds rate hiking cycle which pushed Fed funds to its current 5% from zero.

Speaker Change: Core then provided guidance 24 that indicated expected revenue growth, but not the ability to maintain or exceed 15% EBITDA margins for the year. The company was also unable to reach a conclusion on the outstanding negotiations with charter to resolve data licensing issues with the preferred stockholders to resolve outstanding capital structure issues.

Matt McLaughlin: 180 nominated Matt Mclaughlin as a board nominee at the 2024 annual meeting and plan to run a competitive proxy until Comscore decided to include Matt on its proxy and extend and expand the board to accommodate his election as a result, we withdrew our proxy.

Kevin M. Rendino: Turning our attention to the environment on slide five it's been a painful period for Microstat Microcap stocks, which started to rollover in November of 22 during the rush in more with Ukraine and on the Eve of a fed funds rate hiking cycle, which pushed fed funds to its current 5% from zero.

Kevin M. Rendino: While there's a generation of investors who have never seen higher rates and, as a result, think we are in a permanent risk-off environment, what you can see from our chart on slide five is that what is more normal for the market in its history is having the Fed funds at its current level, not the free money level we have seen the market crash in 2008. As shown above in this chart, the average Fed funds rate for the entirety of the last 60 years is exactly 4.9%, or today's Fed funds rate.

Kevin M. Rendino: While there is a generation of investors, who have never seen higher rates and as a result think we're in a permanent risk off environment and what you can see from our chart on slide five what is more normal for the market and a history of having the fed funds at its current level not the free money level, we have seen the market crashed in 2008.

Kevin M. Rendino: As shown above in this chart the average fed funds rate for the entirety of the last 60 years is exactly four 9% or today's fed funds rate.

Kevin M. Rendino: If one excludes the last 14 years, the average fed funds rate is actually 6.3%. My point in showing you this chart is there have been plenty of bull markets during periods where the Fed Funds rate is exactly where it is today, and 5% of rates do not portend an end-of-the-world scenario that is depicted in the valuations for so many of our companies in our asset class, especially ones that aren't named NVIDIA.

Speaker Change: If one excluded the last 14 years the average fed funds rate is actually six 3%.

Kevin M. Rendino: My point in showing you. This chart is there has been plenty of room bull markets during periods with the fed funds is exactly where it is today and 5% of rates do not portend, an end of the world scenario that is depicted in the valuations for so many of our companies and our asset class.

Speaker Change: Especially ones that arent named Nvidia.

Kevin M. Rendino: Despite the endless chatter about the recession, employment levels remain healthy, and many parts of the economy are showing resilience. The Russell microcap, despite this, is still down 30% from its highs, despite many companies performing relatively well. For the record, our view has been that rates will be higher for longer, and the resiliency of the economy will leave the Fed thinking they don't have to cut rates. And that's not a bad thing.

Kevin M. Rendino: Despite the analyst chatter about the recession employment levels remain healthy in many of the parts of the economy are showing resilience. The Russell Microcap. Despite this is still down 30% from its highs despite many companies performing relatively well well.

Kevin M. Rendino: For the record our view has been that rates will be higher for longer and the resiliency of the economy will leave the fed thinking they don't have to cut rates and thats not a bad thing I'd, rather have today's market than an economy of clothing, where the fed actually does happen to lower rates.

Kevin M. Rendino: I'd rather have today's market than an economy imploding where the Fed actually does have to lower rates. For those that assume because rates are higher, the economy is going to collapse, let's turn to slide 6. And this chart tells an entirely different picture. Over the past 60 years, there have been 31 years, or half the time, when the Fed funds rate was 4.9% or greater. The dark blue bars in the chart above show that the economy grew in 26 out of those 31 instances, or 84%.

Kevin M. Rendino: For those that assume because rates are higher the economy is going to collapse, let's turn to slide six and this chart tells an entirely different picture.

Kevin M. Rendino: Over the past 60 years, there have been 31 years or half the time in which the fed funds rate was four 9% or greater.

Kevin M. Rendino: The dark blue bars in the chart above shows that the economy grew in 26 out of those 31 instances or 84%.

Kevin M. Rendino: Perhaps more interesting is that in the years where the Fed funds rate was greater than 4.9 percent, the economy grew an average of 3.3 percent. In the years where the Fed funds rate was less than 4.9%, the economy grew less than when it was over 4.9% or 2.9%. And finally, on slide 7, we show you a historic look at the Fed Funds Rate versus the growth of the Russell 2000 Index.

Kevin M. Rendino: Or perhaps more interesting is that in the years, where the fed funds rate was greater than four 9%. The economy grew an average of three 3%.

Kevin M. Rendino: In the years, where the fed funds rate was less than four 9%. The economy grew less than when it was over four 9% or two 9%.

Kevin M. Rendino: And finally on slide seven we show you a historic look at the fed funds rate versus the growth of the Russell 2000 Index. The Russell 2000 Index was down 14 out of the last 45 years.

Kevin M. Rendino: The Russell 2000 Index was down 14 out of the last 45 years. In eight of those 14 years, the Fed Funds Rate was less than 5%, while in six years, the Fed Funds Rate was 4% or higher, and was 4.9% or higher. The number of times the Russell 2000 Index was up in each interest rate environment is approximately equal, with 15 years of increases when the Fed Funds Rate was greater than 4.9% and 16 times when it was less than 4.9%.

Kevin M. Rendino: Eight of those 14 years, the fed funds rate was less than 5% while in six years, the fed funds rate was 4%.

Kevin M. Rendino: Or higher, whereas four 9% or higher.

Kevin M. Rendino: The number of times. The Russell 2000 index was up in each interest rate environment as approximately equal with 15 years of increases when the fed funds rate was greater than four 9% and 16 times and was less than four 9%.

Kevin M. Rendino: The point of all of this is not to suggest that there aren't any concerns to be worried about. Today's PPI report shows that interest rates may be higher for longer. But the pendulum has constantly slanted too far to the pessimistic side, which has resulted in a complete movement away from the kinds of companies that we invest in. Of course, that is the opportunity for us, although I must say the exhaustion level couldn't be higher, waiting for some normalcy to return to our holdings.

Speaker Change: The point of all this is not to suggest that there are concerns to be worried about today's PPI report shows that interest rates may be higher for longer but the pendulum has constantly slanted too far to the pessimistic side, which has resulted in a complete movement away from the kinds of companies that we invested of course.

Kevin M. Rendino: That is the opportunity for us although it.

Kevin M. Rendino: I must say the exhaustion level couldn't be higher waiting for some normalcy to return through our holdings.

Kevin M. Rendino: When it does, and we believe it will, we have enormous upside in our portfolio. But we aren't just waiting, as Daniel will explain, regarding our activist approach we have taken with many of our names. We are becoming active, and I'll let Daniel take you through some of that right now.

Daniel: When it does and we believe it will we have enormous upside in our portfolio, but we arent just waiting as Daniel explained regarding our activist approach we have taken with many of our names. We're getting currently active and I'll, let Daniel take you through some of that right now Daniel.

Daniel: Thank you Kevin.

Daniel B. Wolfe: Please turn to slides 9 through 11. Last quarter, we provided a slide that listed potential catalysts in each of our holdings that we believe, along with our constructive activism, could lead to material value appreciation in 24 and beyond, should these events occur. These slides provide an update on the status of each of our holdings through this call. I won't run through all of them, but I'll take the opportunity to discuss a few of them.

Daniel: Please turn to slides nine through 11.

Daniel B. Wolfe: Last quarter, we provided a slide.

Daniel B. Wolfe: That list of potential catalyst each of our holdings that we believe along with our constructive activism could lead to material value appreciation in 'twenty four and beyond should these events occur.

Daniel B. Wolfe: These slides provide an update on the status of each of our holdings through this call I won't run through all of them, but I'll take the opportunity to discuss a few of them.

Daniel B. Wolfe: Synchronos, as Kevin mentioned, reported a strong first quarter of $24 and reiterated guidance also for the calendar year. This was the first full quarter of the company reporting as a newly cloud-only business, and it is clear from the results that the transformation made a material difference in the financial profile of the company that should be the basis for material cash flows in future quarters and years going forward. SCORE nominated our candidate, Matt McLaughlin, for election at its upcoming shareholder meeting.

Speaker Change: Synchro dose as Kevin mentioned recorded a strong first quarter 'twenty four and reiterated guidance for also for the.

Daniel B. Wolfe: Calendar year 'twenty four this is the first full quarter of the company reporting as a newly cloud only business and it is clear from the results of the transformation made a material difference in the financial profile of the company that should be the basis for material cash flows in future quarters and years going forward.

SCORE: Score nominated our candidate Matt Mclaughlin for election in its upcoming shareholder meeting, we couldnt be more excited for what we believe Mac can bring to score in terms of experience and improved corporate governance.

Daniel B. Wolfe: We couldn't be more excited for what we believe Matt can bring to SCORE in terms of experience and improved corporate governance. Potbelly continues to sign up new franchisees to fuel its future growth after a successful turnaround of its operations and company-owned stores.

Daniel B. Wolfe: Potbelly continues to sign up new franchisees franchisees to fuel future growth off a successful turnaround of its operations and company owned stores imac resolved its payment dispute with Seagate in the hard disk drive business is on a cyclical upswing with hammer is seen as the enabling technology for future growth.

Daniel B. Wolfe: IBAC resolved its payment dispute with Seagate, and the hard-disk drive business is on a cyclical upswing with Hammer seen as the enabling technology for future growth. iVac is also in qualification for its TRIO tool at a leading glass coating company in Asia as it refines its go-to-market strategy for this new product. Lantronics reported securing an additional purchase order from its SmartGrid customer Gridspertise, which is important to show that the product has the potential to help drive growth into Fiscal 25 and beyond.

Daniel B. Wolfe: <unk> is also in qualification for its trio tool at a leading glass coating company in Asia as it refines its go to market strategy for this new product <unk> reported securing an additional purchase order from its smart grid customer grids for Ts, which is important to show that the product has the potential to help drive growth into fiscal 'twenty five and beyond.

Daniel B. Wolfe: Ascent resolved the issues with its tubular plant in Bristol and is now back at 100% operating capacity. Ascent also secured a new large order in its chemicals business as it continues to reshape its operations under its new CEO and CFO. On the negative side, as Kevin mentioned, Arena lost its Sports Illustrated license, and it remains unclear whether the company will need to pay its sizable termination payment. Arena now needs to complete the merger with BridgeMedia and provide investors with clarity around its operating model and its ability to run profitably on the combined assets of the two companies, as it noted on the call it held earlier in the second quarter.

Speaker Change: Send resolve the issues with its tubular product tubular plant in Bristol.

Daniel B. Wolfe: And he is now back at 100% operating capacity.

Daniel B. Wolfe: <unk> secured a new large order and its chemicals business as it continues to reshape its operations under its new CEO and CFO.

Speaker Change: Negative side as Kevin mentioned Arena losses Sports illustrated license and it remains unclear whether the company will need to pay a sizable termination payments arena need now needs to complete the merger with Virgin media and provide investors with clarity around its operating model and its ability to run profitably on the combined assets of the few companies as it.

Daniel B. Wolfe: Noted on the call it held earlier in the second quarter.

Daniel B. Wolfe: Please turn to slides 12 through 14. We often say that 180 Degree Capital is a unique investment vehicle for those investors that are interested in having exposure to a concentrated portfolio of microcapitalization stocks with both active management and activism. We thought it might be useful to provide some data to back up our beliefs, and we believe these slides do so. Tern's portfolio holdings of 10 to 15 companies is drastically lower than the median number of holdings of our Lipper Peer Group, comprised of open-ended funds and closed-end funds that We also focus on companies with market capitalizations that are substantially below the median market capitalization of the holdings of these funds.

Daniel B. Wolfe: Please turn to slides 12 through 14.

Daniel B. Wolfe: We often say that we believe are 180 to recapitalize the unique investment vehicle for those investors that are interested to have exposure to a concentrated portfolio of micro capitalization stocks with both active management and activism.

Daniel B. Wolfe: We thought it might be useful to provide some data to back up our beliefs and we believes these slides do so tourists portfolio holdings of 10 to 15 companies has drastically lower than the median number of holdings of our Lipper peer group comprised of open ended funds in closed end funds that invest in micro and small capitalization stocks.

Daniel B. Wolfe: We also focus on companies with market capitalizations are substantially below the medium market capitalization of the holdings of these funds while other funds hold certain of our portfolio companies. The overlap in terms of percent of the total positions held by each fund tops out at just north of 4%.

Daniel B. Wolfe: While other funds hold certain of our portfolio companies, the overlap in terms of percent of the total positions held by each fund tops out at just north of 4%. Also, we believe, as important, none of the listed funds include activism as part of their investment strategy and approach.

Daniel B. Wolfe: Also we believe as important none of the listed funds include activism as part of their investment strategy and approach.

Daniel B. Wolfe: Since our inception, we have also delivered gross total returns that are in the top decile. While past performance is not a guarantee of future returns, we believe our differentiated approach has delivered outsized returns in the past and is well suited to potentially do so also in the future for investors who are interested in our unique investment vehicle. Please turn to slides 15 and 16. As previously disclosed in a press release on November 13th, 23, 180 Degree Capital's Board of Directors set two management periods of January 1st, 2024 to December 31st, 2024 and January 1st, 2025 to June 30th, 2025, in which it will evaluate the average discount between Tern's estimated daily NAV and its closing stock pursuant to the discount management program.

Daniel B. Wolfe: Since our inception, we've also delivered gross total returns that are in the top decile of its peer group.

Daniel B. Wolfe: While past performance is not a guarantee of future returns. We believe our differentiated approach has delivered outsized returns in the past is well suited to essentially do so also in the future for investors who are interested in a unique investment vehicle.

Daniel B. Wolfe: Please turn to slide 15 and 16.

Daniel B. Wolfe: Should Tern's common stock trade an average daily discount to NAV of more than 12% during either of these measurement periods, 180 Degree Capital's board will consider all available options at the end of each measurement period, including, but not limited to, a significant expansion of 180 Degree Capital's current stock buyback program of up to $5 million, cash distributions reflecting a return of capital to shareholders, or a tender offer. We reported on May 1st, 2014 that the average discount between turns estimated, net asset value per share, and its daily stock closing price, during April 24 and year-to-date through the end of April, were approximately 14% and 20%, respectively. This discount was approximately 16% on April 30th of 24.

Speaker Change: As previously disclosed in our press release on November 13th of 23, 180, <unk> capital to its board of directors set to management periods of January one 2024 to December 31 2024.

Daniel B. Wolfe: On January one 2025 as of June 32.

Daniel B. Wolfe: 2025, and which you will evaluate the average discount between turns estimated daily NAV and its closing stock pursuant to the discounted discount management program.

Speaker Change: Should turns common stock trading average daily discounts to NAV more than 12% during either of these measurement periods 180 degree Capital's board will consider all available options at the end of each measurement period, including but not limited to a significant expansion of our 180 recapitalized current stock buyback program of up to $5 million cash.

Speaker Change: <unk>, reflecting a return of capital to shareholders or a tender offer.

Daniel B. Wolfe: We reported on May 124 that the average discount between turns estimated net asset value per share in dailies closed stock closing price.

Daniel B. Wolfe: On April 24, and year to date through the end of April were approximately 14% and 20% respectively. This discount was approximately 16% on April 30 of 'twenty. Four we will continue to provide updates on the discount monthly throughout the measurement periods to be clear. The most important thing. We can do is to find investments that materially increase in <unk>.

Daniel B. Wolfe: We will continue to provide updates on the discount monthly throughout the measurement periods. To be clear, the most important thing we can do is to find investments that materially increase in value so that, as a result, NAB increases from its current levels. We believe that will have the most impactful and positive effect on the long-term stock price and returns for shareholders.

Speaker Change: Value so that as a result nab increases from current levels. We believe that we have will have the most we leave that will have the most impactful and positive effect on <unk> stock price and returns for shareholders. We would now like to open up the line for questions. If you have a question. Please type star six on your phone or click ask a question.

Operator: We would now like to open up the line for questions. If you have a question, please type star six on your phone or click ask a question if you are participating via your computer. We will now wait to see if there are any questions. While you're waiting, I...

Speaker Change: If youre participating via your computer.

Speaker Change: I will now wait and see if there's any questions. While you are waiting I mentioned.

Kevin M. Rendino: I am not seeing any questions in the queue.

Kevin M. Rendino: While you're waiting, I mentioned November 22 was the peak for the Russell Microcap. It was November 21, so this is going on the third year of what has been significant underperformance relative to large cap stocks. And the second point I'd like to make while we're waiting for questions, we didn't announce that discount program just for the sake of announcing the discount program. We do things intentionally, as all of you know, and it is our hope that if this continues in terms of our stock price trading at a significant discount to its NAV, that we will take advantage of that or at least allow our shareholders to participate in a monetization effect closer to NAV than where the stock currently trades at today.

Kevin M. Rendino: November 22 is the peak for the Russell Microcap was November 21. So this is.

Kevin M. Rendino: Going on the third year of what has been a significant underperformance relative to the large cap stocks and the second point I'd like to make while waiting for questions. We didn't announce that discount program for the sake of announcing the discount program.

Kevin M. Rendino: We do things intentionally as all of you know.

Kevin M. Rendino: It is our hope that if this continues in terms of our stock price trading at a significant discount to.

Kevin M. Rendino: It's AAV that we will take advantage of that or at least allow.

Kevin M. Rendino: Our shareholders to participate.

Kevin M. Rendino: And a monetization of that closer to NAV and where the stock currently trades at today.

Speaker Change: I am not seeing any questions in the queue.

Kevin M. Rendino: Okay, with that said, we will look forward to reviewing Q2 with you sometime in, I assume, August, and we wish all of you a good start to your summer. Thanks.

Kevin M. Rendino: Okay with that said, we will look forward to reviewing Q2.

Kevin M. Rendino: We view sometime and I assume August.

Kevin M. Rendino: And we wish.

Kevin M. Rendino: All of you.

Kevin M. Rendino: Good start to your summer.

Operator: Thank you, everyone; you can now disconnect.

Speaker Change: Thank you everyone you can now disconnect.

Operator: Goodbye.