Q1 2025 TriplePoint Venture Growth BDC Corp Earnings Call
Speaker Change: Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Core First Quarter 2025 Earnings Conference Call.
Speaker Change: Company Management is pleased to share with you the company's results for the first quarter of 2025.
Speaker Change: Today representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board.
Sajal Srivastava: Sajal Srivastava, President and Chief Investment Officer, and Mike Wilhelms, Chief Financial Officer.
Speaker Change: Before I turn the call over to Mr. Labeh, I'd like to direct your attention to the customary Safe Arbor Disclosure in the company's press release regarding forward-looking statements, and remind you that during this call, management will make certain statements that relate to future events or the company's future performance or financial condition which are considered forward-looking statements under federal securities law.
Speaker Change: You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements.
Speaker Change: The company does not undertake any obligation to update any forward-looking statements or projections unless required by law.
Speaker Change: Investors are caution not to place undue reliance on any forward-looking statements made during the call which reflects management's opinions only as of today.
Speaker Change: to obtain copies of our latest SEC violence, please visit the company's website at www.ppvg.com. Now I'd like to turn the conference over to Mr. Labeh.
Speaker Change: Thank you operators. Good afternoon everyone and welcome to TPVG's first quarter earnings call.
Speaker Change: Following some positive developments in the venture markets in the fourth quarter, venture capital deal-making continues to absorb and assess the uncertainties over terrorists.
Speaker Change: and the broader equity market sell-off in macroeconomic volatility and the impacts that all of these have on their portfolio companies.
Speaker Change: With that said, investment activity remains underway and we're experiencing strong demand from quality venture growth companies, some of which is fueled by this market.
Speaker Change: Given this backdrop, we continue to remain selective and capitalize on attractive lending opportunities, particularly in the sectors we are focused on, as we stay on our course of portfolio diversification and investment sector rotation.
Speaker Change: We also remain focused on proactively managing the portfolio and maintaining our strong liquidity
Speaker Change: Q1 sign term sheets would venture growth stage companies at our sponsor, TriplePoint Capital, finish strong and mark the second consecutive quarter of more than 300 million in sign term sheets at venture growth stage companies.
Speaker Change: and now totals almost 640 million during the last two quarters.
Speaker Change: Debt Commitments at TPVG also increased in Q1 as new debt commitments to venture growth stage companies in the quarter reach two year highs and the strong pace continues into
Thank you. Thank you. Thank you.
Speaker Change: Fundings for the quarter landed at 28 million, and while we're only slightly past 1-3rd of the way into the current second quarter, we've already funded more than 50 million.
Speaker Change: The Q2 fundings today compare favorably with our quarterly fundings guidance, and we believe starts to reflect the early results of the increases we're experiencing in the signed term sheets, commitments, fundings, and pipeline.
Speaker Change: as well as the increasing investment activity bars like venture capital investors over the last few quarters.
Thank you.
Speaker Change: Activity in our market is being driven both by the entrepreneurs and the investors who increasingly recognize venture lending as a strategic tool.
Speaker Change: Some drivers behind the increasing demand work experiencing, including the mounting backlog of high quality companies in the IPOQ waiting for public markets to reopen.
Speaker Change: Quality growth stage companies pushing off timing of their next equity financing round.
Speaker Change: Companies executing on their growth plans, those seeking financing for creative and opportunistic acquisitions, and given these market full utilities.
Speaker Change: Quality companies, previously without debt, who were turning and cresaling towards debt, as part of their financing and capitalization strategies in this market.
Speaker Change: Going forward, we expect a strengthening demand for venture lending to continue throughout the year.
Speaker Change: Fueling our expectations of renewed portfolio growth in 2025. As East Venture Growth Company seeks strategic financing for these reasons and amid the fluctuating capital markets and macroeconomic uncertainties.
Speaker Change: During the quarter, we generated net investment income of 27 cents per share and declared a regular 30 cents per share dividend.
Speaker Change: We're pleased with the pace of our signed term sheets and fundings to date, and recognize a portfolio growth as well as prepayment activity over the course of the year, we'll have a material impact on our ability to cover our distribution.
Speaker Change: We will be continued, we will continue to be mindful of both as a year of progressives.
Speaker Change: Turning to the portfolio, for the first quarter, there were no credit downgrades and there was one upgrade.
No new companies were added to the watch list.
Speaker Change: We will continue to be vigilant during these market conditions and will discuss credit in more details shortly.
Speaker Change: One portfolio now to address are these tariffs, which continue to be unpredictable and whose changing nature make it a difficult exercise to fully assess the impact on our portfolio.
Speaker Change: based on our analysis of the portfolio and subject to any future terror announcements and implementation changes.
Sajal Srivastava: We believe we have a small handful of TPVG companies with exposure, and primarily those consumer and e-commerce businesses sourcing from overseas, which Sajal will cover in more detail.
Sajal Srivastava: Aside from this, we've been following our well-prescribed path to portfolio diversification and industry sector rotation, continuing to actively add new borrowers in durable, high potential sectors such as AI.
Sajal Srivastava: Many companies we added to our portfolio this past quarter are reflective of this investor shift towards AI, including touch of science, thought, spot, and air do.
Sajal Srivastava: Tetriscience is an AI-native data management solution for scientific youth cases.
Sajal Srivastava: We're excited by the market opportunity AI presents and believe AI will be a massive megatrend that persists for many years to come.
Sajal Srivastava: Other companies reflecting our continued diversification and investment sector rotation include those operating in innovative and specialized software solutions.
Sajal Srivastava: Deep Tech, Machine Learning, Robotics, Cybersecurity and Satellite Technologies, and Short Tech, FinTech, Health Tech, and others.
Sajal Srivastava: All these sectors offer exciting investment opportunities and are experiencing strong investment momentum.
Sajal Srivastava: As we've stated on task calls, our focus in these new sectors continues to be on companies that have recently raised capital, have ample cash runways.
Sajal Srivastava: backing from our select venture capital investors and prudent management teams with business models that have attractive unit economics and high retention rates.
Sajal Srivastava: Those with higher levels of revenues, promising growth trajectories, visibility to profitability, and business models reflective of today's venture market conditions and valuations.
Sajal Srivastava: We also continue to factor in and consider both potential tariff issues that could be faced and the possibility of any future macroeconomic recessionary effects when evaluating prospects as well.
Sajal Srivastava: including actively avoiding sectors that are experiencing first-order direct effects from terrorists or government-spending reductions.
Sajal Srivastava: While we'll continue to maintain our careful discipline and opportunity, given the market conditions and the pickup and investment activity by our select venture investors, we see increased deployment of our capital and venture growth stage investment.
Concentrating solely on our investment sectors of focus [inaudible]
as well as increasing portfolio development through the year.
Sajal Srivastava: All of which we believe will enable us to continue to execute on our plan to increase TPVG scale, durability, portfolio diversification, and income generating assets with the objective to grow the portfolio.
With that, let me turn the call over to Sajal.
Thank you.
Sajal Srivastava: Thank you Jim and a good afternoon regarding investment portfolio activity during Q1 TriplePoint Capital signed 315 million of term sheets with venture growth stage companies compared to 130 million term sheets in Q1 2024 and 323 million in Q4.
Sajal Srivastava: With regards to new investment allocation to TBVG during the first quarter, we allocated 77 million and new commitments with five companies to TBVG compared to 10 million in Q1 2024 and 72 million in Q4.
Sajal Srivastava: 80% of the commitments made during the first quarter were to new portfolio companies in the AI and enterprise software sectors, reflecting our focus on obligatory diversification and sector rotation.
Sajal Srivastava: During the first quarter, we funded 28 million in debt investments to five companies as compared to 14 million to three companies in Q1 and 50 million to three companies in Q4.
Sajal Srivastava: These funded investments carried a weighted average annualized portfolio of 13.3% down slightly from 13.5% in Q4.
Sajal Srivastava: TVG with at the low end of our Guider Range for Fundings, primarily due to timing, with a number of fundings occurring immediately after quarter end, as demonstrated by our 50 million of fundings already here in the second quarter.
and many more. Thank you. Thank you.
Sajal Srivastava: During Q1, we had 17 million of loan prepayments, primarily for more season loans, resulting in an overall weighted average portfolio of 14.4% as compared to core portfolio yield of 14.1% excluding prepayments.
Sajal Srivastava: which was slightly down from core portfolio to 14.2% excluding prepayments in 2.4.
Sajal Srivastava: Four portfolio companies with debt outstanding raised $137 million during the quarter compared to six portfolio companies raising $96 million in Q4.
Sajal Srivastava: As a quarter end, we held warrants in 102 companies and equity investments in 48 companies with the total fair value of 117 million flat from Q4.
Sajal Srivastava: As Jim mentioned, no new companies were added to our credit watch list during the quarter and the weighted investment ranking of our debt investment portfolio was 2.12 as compared to 2.27 as at the end of the prior quarter.
Sajal Srivastava: One company, Upfittery, was upgraded from category three to category two as part of its
Sajal Srivastava: Where our loans were assumed in full and extended. The combined business, which will continue to focus exclusively on European markets, announced their projected to generate over 130 million in revenues this year.
Sajal Srivastava: We continue to have the same five companies in our category for ranking. These are not new situations or reflective of our recent original nations.
Sajal Srivastava: These are companies that we generally identified years ago as challenged and we continue to work with them and their investors to target profitability with liquidity and or exit events.
Sajal Srivastava: With regards to tariffs, as Jim mentioned, although the situation is evolving, we have reviewed our portfolio to identify those companies potentially impacted and continue to monitor the potential near-term and long-term impact.
Sajal Srivastava: We have not seen any impact to our AI, software, B2B, and enterprise focus portfolio companies and believe that the risk, if any, lies with our consumer and e-commerce companies.
Sajal Srivastava: We benefit from the fact that many of our consumer and e-commerce companies are either European companies primarily selling in Europe or US companies that source locally.
Sajal Srivastava: The few US and European companies that we have determined may have some US tariff exposure are primarily companies that source their products throughout Asia and sell in the US.
Sajal Srivastava: Most of them are actively working to see if there are opportunities to change their supply chains and source products in lower tariff regions, increase pricing and or expand their sales outside of the US.
Sajal Srivastava: We expect to know more as the administration's long-term approach is solidifying, but we as as yet have not seen any material business impact in these few companies, but they are all preparing for it.
Sajal Srivastava: On a more broader basis, we are seeing a significant increase in the volatility in the market and macroactivity.
Sajal Srivastava: As of yet, we have not seen material changes in venture capital equity investment activity from traditional venture capital investors.
Sajal Srivastava: Although there was optimism earlier in the year that the IPO and M&A markets would open soon in 2025, we believe that the capital markets are closed for the time being, which is creating increased demand for investment capital, including debt finance.
Sajal Srivastava: We expect more will be known over the quotes of the year, but as Jim mentioned, we continue to see and manage our pipeline in a discipline fashion and pro-perspective companies and the potential impact of these sources of volatility on their businesses as we determine whether they are worthy of our capital.
Sajal Srivastava: As we step back, we saw improving market conditions in the venture capital market in the first quarter, both from a deal activity basis.
Sajal Srivastava: But given the recent volatility and the geopolitical uncertainty, we will continue to real-time assess portfolio company performance and outlook over the course of the year and update our Marx and values accordingly.
During the quarter, we've also participated in Revolute Secondary Process.
Sajal Srivastava: selling 2.3 million of our holdings, resulting in a realized gain of 2.3 million on our initial investment.
Sajal Srivastava: The secondary process was originally announced in August 2024 at a 45 billion valuation, primarily for revolute employees. We continued a whole 34.4 million of warrants and equity at fair value
Sajal Srivastava: As some of our investors may be aware, Revolut just followed its annual financials in April and announced revenues at $4 billion, up to 72% and net profit of $1 billion, roughly double from 2023.
Sajal Srivastava: In closing, we remain focused on executing our plan for position TBBG for 2025 and beyond.
Sajal Srivastava: by building overall scale, diversification, and durability, targeting well-positioned and well-capitalized new customers in attractive sectors, and increasing the pace of new commitments and investment
Sajal Srivastava: We will remain disciplined in mind the volatile market environment as we continue along the path with the goal of driving TBBG's earning power over the course of 2020.
Mike: With that, I will now turn the call over to Mike.
Mike: Thank you, Sajal, and hello everyone. During the first quarter we funded debt investment totaling 28 million and had a relatively low level of prepayments and early repayments of 18 million when compared to recent quarters, which resulted in an increase to the debt portfolio
Mike: With the strong investment pipeline previously mentioned by Jim and the company's current liquidity strength, we believe we are well positioned to grow our portfolio and create long-term shareholder value.
Mike: We ended the quarter with 117 million of floating-rate, unfunded investment commitments, of which 19 million was dependent upon certain portfolio companies reaching specific milestones.
Mike: PPVG has ample liquidity to support our existing portfolio companies and satisfy our unfunded commitments.
Mike: As of March 31, 2025, the company had total liquidity of $337 million, consisting of cash, cash equivalence, and restricted cash of $42 million, and available capacity under its revolving credit facility of $295 million.
Mike: Of the 295 million of available capacity under the revolving credit facility, there was a 124 million of available borrowing base that could be drawn as of March 31, 2025.
Mike: We reduced our leverage profile during the quarter, ending with the leverage ratio of 1.10 times.
Mike: After netting the cash on our balance sheet, our net leverage stood at 0.97 times.
Mike: Given the cash we have on our balance sheet, the available borrowing base at quarter end and our target leverage range of 1.3 times to 1.4 times, we believe we have the funding capacity to meaningfully grow our investment portfolio.
[inaudible]
Turning to our operating results
Mike: For the first quarter, total investment income was 22.5 million with a portfolio yield of 14.4%.
Mike: As compared to 29.3 million with a portfolio yield of 15.4% for the prior year period.
Mike: The decrease in total investment income was due primarily to a lower average debt portfolio as compared to a year ago, while the lower portfolio yield reflected the impact of primary reduction and less accelerated pre-payment income in the quarter.
Mike: For the first quarter, total operating expenses were $11.7 million, as compared to $13.8 million for the prior period.
Mike: These expenses consisted of 6.4 million of interest expense, 3.3 million of base management fees, 602,000 of administrative agreement expenses, and 1.4 million of GNA expenses.
Mike: Due to the shareholder-friendly total return requirement under the incentives, there were no income incentives during the first quarter of 2025 and 2024.
Mike: We expect limited to no incentive he expense during the remainder of 2025.
Mike: The company's net investment income for the first quarter of 2025 was 10.7 million or 27 cents per share as compared to a net investment income of 15.5 million or 41 cents per share for the first quarter of 2024.
Mike: For the first quarter of 2025, net realized gains on investments totaled 2.3 million, resulting primarily from the partial sale of equity in one portfolio company.
Mike: During the first quarter of 2024, the company recognized net realized losses on investments of $8.8 million.
Mike: and 1.6 million on the debt investment portfolio resulting from fair value adjustments.
Mike: Offset by 2.6 million of net unrealized gains from foreign currency adjustments and 1.2 million of net unrealized gains on the existing warrant and equity portfolio resulting from fair value adjustments.
Mike: During the first quarter of 2024, the company recognized net unrealized gains on investments of 1.3 million.
[inaudible]
Mike: The company's net increase in net assets resulting from operations for the first quarter of 2025 was 12.7 million or 32 cents per share, as compared to net increase in net assets resulting from operations of 8 million or 21 cents per share for the first quarter of 2024.
Mike: As of March 31st, 2025, net asset value was $347 million, or $8.62 per share, compared to $345.7 million or $8.61 per share as of December 31st, 2024.
Mike: On April 30th, our board declared a regular quarterly dividend of 30 cents per share with a record date of June 16th to be paid on June 30th.
Mike: We continue to retain sizable, undistributed income with estimated still over income of 42.5 million, or $1.06 per share at the end of the period.
Mike: We are focused on increasing our net investment income in the coming quarters through debt investment portfolio growth and increasing balance sheet leverage.
Mike: Now, an update on our debt capital structure and balance sheet leverage.
Mike: As of quarter end, total debt outstanding was $380 million, consisting of $375 million in fixed rate investment grade term notes and $5 million drawn on our $300 million revolving credit
Mike: During the quarter, we raised 50 million an aggregate principle to a private issuance of senior [inaudible]
Mike: In March, 70 million of senior unsecured investment grade notes matured and was fully repaid.
Mike: This net reduction and fixed rate term that reduced our leverage ratio, which declined from 1.16 times as of December 31st, 2024 to 1.10 times as of March 31st, 2025.
Mike: We have three term debt maturity scheduled for March 20, 26, February 20, 27, and February 20, 28.
Mike: Later this year, we plan to evaluate refinancing options for the $200 million of notes maturing in March, 2026.
Mike: and April 2025. DBRS reaffirmed TPVG's investment grade rating and connection with the fixed rate term notes.
Mike: assigning a triple B low long-term issue rating with a stable trend outlook.
Mike: This completes our prepared remarks today, and so operator, could you please open a line for questions at this time?
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question you may press star than one on your touchtone phone.
Speaker Change: If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to symbol our roster.
Crispin Love: and our first question comes from Crispin Love from Piper Sandler. Please go ahead.
Crispin Love: Thank you. Good afternoon. First, can you share your funding's outlook for the second corner and beyond? You called out more than 50 million funding so far in the second quarter. So if you updated your 25 to 50 million dollar quarterly funding guide for 2Q or more importantly your expectations for later in the year in Apology, so if I missed that
Sajal Srivastava: Oh, hi, Chris, and this is Sajal, I'll take it. So, as we said, yes, our outlook for the first half of the year is 25 to 50 million a quarter. And so we have not changed the outlook for Q2 on a full year or started mid-year basis when we combine Q1 and Q2. So we think we'll make up.
the shortfall for Q1 here in Q2. Thank you.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: Okay, sounds good. And then just looking at the credit metrics, first quarter appears to be pretty stable. No material losses and realize or unrealize in the migration in your credit categories was pretty positive. So if you speak to your views on credit today, the outlook going forward, especially with the environment being much different today versus the end of the first quarter. [inaudible]
and I, as I said, my prepared remarks.
Speaker Change: You know, we started off the year seeing really improved market conditions in the venture market.
Speaker Change: portfolio companies, increased fundraising activity, increased investment activity by VCs, you know,
Speaker Change: Positive outlook for the capital markets and the exit environment. And so, again, expecting that to vote well for our employers and credit quality.
Speaker Change: You know, it's hard to assess that's a real time impact. So I would say, you know, we're on top of the portfolio monitoring company performance and outlook and then we'll adjust accordingly, but also as I said, listen, we have not seen an immediate impact of tariffs so far to those companies that would be impacted or have some impact. So.
Speaker Change: I think we're taking it day by day real time, but we have not seen a material impact, but I think it's hard to comment, and I'll look for the rest of the year right now, just given the volatile market conditions.
Speaker Change: Great, thank you all, makes sense and appreciate the comments, Sajal.
Speaker Change: Frank, hoping you could talk about your willingness to do share repurchase as a way to kind of bring leverage up to the target range versus making new investments and how you think about that trade-off.
Mike, do you want to take that question?
Speaker Change: Yeah, I mean, we're, as I mentioned in my prepared remarks, we have a target leverage of, you know, 1.3 to 1.4, so for us, we're looking to, as we've stated, throughout the prepared remarks, grow the portfolio, and we plan to do that with debt capital rather than repurchasing any shares that would have the same effect of bringing our leverage up.
Okay. Thank you.
Speaker Change: The next question comes from Casey Alexander from Compass Point. Please go ahead.
Casey Alexander: Yeah, and thanks for taking my questions. I've got a few here. Sajal, in that guy, normally you give us some view of what you expect. Repayments and prepayments might be during the quarter. Do you have any view of that in the second quarter?
Sajal Srivastava: Yeah, I think we, Casey, we still expect on average one to two prepayments per quarter.
Sajal Srivastava: I think as we saw in Q1 and in Q4, we're seeing these are from older ventages, so the impact from an NI-I perspective is low, so we don't expect it to materially impact an NI-I, but we still expect one to two, a quarter.
Okay, and then secondly, [inaudible]
Speaker Change: Curious how, you know, that was the sale of Revolute.
Speaker Change: This is like a multi-pronged question. Curious how you guys got in there because you're not actually employees. Did you have the opportunity to sell more? And also how did the sale compare to your fourth quarter mark on those shares?
Speaker Change: Yes, so I'd say that the great revolution launched this process, it was August of 2024 and as mentioned, it was intended to be an employee only.
Speaker Change: Transaction, and then over the course of 24, I guess based on strong investor demand, they opened it up to a very small percentage to its institutional investors.
Speaker Change: So we were able to participate through the, thanks to Revolut, allowing us and other institutional investors to...
Speaker Change: Secondary, a very, very small amount, so it was very much thanks to Revolut, and it's a very controlled...
Speaker Change: Process for Secondary. So, we don't see the opportunity on this, Revolut opens it up again, which there's been some talk in the press about potentially another secondary, but it's all speculation at this point.
Speaker Change: and then, yeah, generally, kind of on par with our Mark, maybe a little bit of transaction cost, but I believe generally in line.
Speaker Change: So the 2.3 or 2.5 million game was mostly a reversal of previously unrealized games then.
Yeah, okay, great. On outfittery, you know, it's great that it was upgraded.
Speaker Change: I thought I heard you say, I misunderstood because it sounded like the intention was for it to be repaid but then I heard extended and I'm not sure...
Speaker Change: What's what there? Whether you're using the transaction as an opportunity to exit that loan or if you're still going to be in it subsequent to the deal.
Speaker Change: Yeah, no, I mentioned my remarks. Our loan was assumed and our loan was extended. So we stayed in, it was a private to private, so these are two private companies. So it wasn't a scenario to be paid off. It was a scenario where we now have the benefit of.
Speaker Change: Security, senior security enterprise, much larger now with a strong profitability profile.
Thank you.
Thank you.
Speaker Change: Am I mistaken? Yeah, it was a, again, a coordinated consolidation of the company. So I would say it wasn't a scenario where we wanted to demand everything or had the opportunity.
Okay.
Speaker Change: and then back to the share repurchase. I mean the dividend yield on the stock is 20%. There is likely greater leverage for shareholders in a repurchase than there is in putting new money out. And you have in the past.
Speaker Change: in the few years after your initial IPO, you did do some substantial sherry purchases. I'm curious why the reluctance to do them now when the math clearly works in favor of shareholders if you do some sherry purchases.
Speaker Change: Yeah, I'll take that case and then Michael can jump in but I'll tell you is Jim talked to you know given the pipeline in the line of sight.
you know,
Speaker Change: for Paulio funding. So we can increase our leverage organically through deployment.
Speaker Change: and it's going to help achieve our objectives of portfolio diversification, obligor diversification, and growing NII. So we think given the line of sight we have to near term portfolio growth.
Speaker Change: It's a better use. And then if we don't see that portfolio growth, then exploring other options in other ways to address the dividend yield, addressing underleverd. But I think where we see the opportunity and the quality. And then we'll see.
Speaker Change: and achieving the other strategic long-term objectives for TBDG make sense to deploy in portfolio growth because, again, it also has achieved some of the other elements of the playbook that we have articulated that are in the better long-term interest of the stakeholders.
Alright, thank you for taking my questions.
Speaker Change: The next question comes from Brian McKenna, from Citizens, please go ahead.
Brian McKenna: Thanks, good evening, everyone. I appreciate all the detail on a quarter of a day's funding.
Brian McKenna: Two more questions on that front. I apologize if I missed these, but any sense of the weighted average yield on these investments? I'm curious how this compares to 13.3 percent reported in the first quarter. And then what does the sector mix of these investments look like?
Brian McKenna: and then as we look at sector rotation, I think that's even, you know, we're very proud of the company that we've added, particularly the last two quarters.
Speaker Change: We're not only the majority of our deployment has been into new obrugores,
Speaker Change: But they've also been in new sectors or in sectors that we've been underrepresented, such as AI and enterprise software and so, you know, really glad to explode and increase our exposure to those other sectors and really solid strong, verbal sectors, particularly given the ball to lead the market. Thank you very much.
Speaker Change: God, that's helpful. And I guess on the portfolio rotation, I mean, where are you in this process that, you know, is there a way to think about how much more the portfolio on a percent basis still means to be rotated, I'm just trying to take to that a little bit more as well.
Speaker Change: Yeah, I would say we still have a couple of quarters to go. I would say early in the journey, and it's not just about sector rotation, it's about portfolio scale, and so...
Speaker Change: to that increasing the earnings power, the business, to ensure coverage of the distribution. So I'd say early, hard at work.
Speaker Change: You know, we're not going to rush it. We're going to continue to be disciplined as we look at opportunity. So those are our goals, but we're not going to get there overnight. We're going to take our time and do it methodically and softly. Thank you.
Speaker Change: Okay, that's helpful. And one more follow-up if I may.
Speaker Change: You know, just a bigger picture question. So you'll feel like the industry in your business is...
Speaker Change: Finally on the other side of a pre-linked downturn here
Speaker Change: TriplePoint is operated through a number of different cycles and operating environments over the past two decades. Reflecting back a little bit on the last few years, is there anything that you've learned from this most recent downturn?
Speaker Change: Anything you maybe would have done differently from a portfolio or a business perspective and then ultimately what are you doing today to make sure you're in the best position and navigate any and all environments moving forward?
Speaker Change: It's not the way to run a credit business. So, absolutely, there's been...
of notes.
Speaker Change: Fun syndicate. I mean, every cycle there's some new elements, but I would say [inaudible]
You know.
Speaker Change: The big thing to take away for the past couple of years is, you know, we were operating in a zero interest rate environment and so we saw business models that
We're quite capital intensive that both equity investors and lenders.
Speaker Change: We're supportive of. And when the cost of capital change, the market conditions changed, it was harder than we all thought for those high-burned businesses to bring that burn back down to more reasonable levels. So I'd say that's one element. And then I think we definitely saw an element of it.
Speaker Change: Syndicate issues with non-traditional investors in the cap table and so VCs act differently than financial investors, and so, you know,
Speaker Change: The industry is a pioneer and so we're excited about what we're seeing and how we're deploying today and learning from that and managing through the current environment.
Outfall. Thanks, Sajal.
Speaker Change: Again, if you have a question, please press star then one.
Speaker Change: Our next question comes from Christopher Nolan from Latinburg Salmon. Please go ahead.
Christopher Nolan: Hey guys, what percentage of the debt investments are at their floors?
Christopher Nolan: roughly 35% yeah sorry I jumped in there yeah roughly 35 so we have 62% of the portfolio is floating and roughly 35% is at the floor
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Christopher Nolan: Alright, can you walk me through this dynamic because I'm going to go back to a douging case we're talking about these three purchases and
It makes no sense to me.
Christopher Nolan: You've got a good chunk of your investment portfolio no longer at the floor, it's across the forward curve, it's implying more than one fed-rate cut. Your 10Q shows that your earnings are impacted by lower rates.
Christopher Nolan: Your dividend yield is 20.4%, your stock is trading 32% below book.
and you want to grow the portfolio.
Rather than buy back stock.
Christopher Nolan: I mean it just seems to be a no-brainer to buy back stock and aggressively [inaudible]
Christopher Nolan: and you know, I don't mean to be honest, but it's a, this is a real, you know, it's a real question mark because, you know, who, I mean, if the board is signing off on this, you gotta ask whether they really know what they're talking about.
Christopher Nolan: Reduction and Neal, so that's the good news right of having fixed rate, sorry floating rate loans with prime floors that are locked in so so we won't see
Reduces
Christopher Nolan: I think the issue though is listen one of the challenges we have is our concentration and our chunkiness and lumpiness and so the only way to achieve that plus rotate out of sectors that may be more impacted by
Christopher Nolan: Recession or other challenging economic environments is to grow the portfolio. So it's a balance. So we're saying, as long as we continue to see and have line of sight of high-quality portfolio growth to achieve long-term objectives like portfolio diversification, sector rotation, increasing some of the other goals and objectives.
Christopher Nolan: Make Yourself More Diversified, we think that's the right to navigate in the near term and then again, but we're not suggesting in the long term that isn't an option or in the realm of possibility, but as we look to the next one to two quarters, we think that's the best use of capital. Thank you very much.
Okay. Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Jim Labe for any closing remarks. Please go ahead.
Jim Labe: Thank you, operator. As always, I'd like to thank everyone for listening and participating in today's call. We look forward to updating you and talking with you all again next quarter. Thanks again and have a nice day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.