Kingdom Capital Advisors, a private investment firm, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The firm started the business four years ago with a clear goal of investing in overlooked microcap companies that yield exceptional returns. Despite significant challenges in 2025, including a bankruptcy in January, a key investment losing customers in May, and a cyberattack on the largest holding in June, the firm achieved a 17.45% return net of fees, illustra ...

Core Viewpoint - U.S. stock futures are showing positive movement, particularly with Nasdaq 100 futures increasing by approximately 1% on Friday, while Outlook Therapeutics Inc faces significant stock decline due to FDA's response on its biologics license application [1]. Company Specifics - Outlook Therapeutics Inc (NASDAQ:OTLK) experienced a sharp decline of 60.9%, dropping to $0.62 in pre-market trading after the FDA issued a complete response letter regarding its ONS-5010/LYTENAVA application for treating wet age-related macular degeneration, indicating that the application cannot be approved in its current form [2][1]. - Intelligent Bio Solutions Inc (NASDAQ:INBS) saw a decrease of 19.2%, falling to $7.70 in pre-market trading following the announcement of a $10 million private placement priced at-the-market under Nasdaq rules [3]. - Net Lease Office Properties (NYSE:NLOP) shares dipped by 8.9% to $23.50 in pre-market trading [3]. - Progressive Corp (NYSE:PGR) tumbled by 5.8% to $214.60 in pre-market trading [3]. - Old Republic International Corp (NYSE:ORI) slipped by 4.8% to $43.42 in pre-market trading [3]. - Cango Inc – ADR (NYSE:CANG) fell by 4% to $1.44 in pre-market trading [3]. - Xeris Biopharma Holdings Inc (NASDAQ:XERS) decreased by 3.6% to $7.57 in pre-market trading after a previous gain of over 7% on Wednesday [3]. - Biohaven Ltd (NYSE:BHVN) fell by 2.6% to $11.00 in pre-market trading [3]. - RealReal Inc (NASDAQ:REAL) slipped by 2.3% to $15.41 in pre-market trading [3].

Core Viewpoint - Net Lease Office Properties (NLOP) announced the sale of six office properties for approximately $75.8 million and declared a special cash distribution of $5.10 per common share, totaling around $75.6 million, payable on January 20, 2026 [1][2]. Group 1: Property Sales - NLOP sold six office properties for gross proceeds of approximately $75.8 million [1]. - The properties sold include: - Securitas Electronic Security, Inc. in Plymouth, MN for $5.654 million, with an annual base rent (ABR) of $1.218 million and a size of 182,250 square feet [2]. - JPMorgan Chase Bank, N.A. in Tampa, FL for $13.650 million, with an ABR of $1.934 million and a size of 135,733 square feet [2]. - A vacant property in Oak Creek, WI for $2.576 million, previously occupied by Master Lock Company, LLC [2]. - Cohesity Inc. in Roseville, MN for $14.625 million, with an ABR of $2.255 million and a size of 136,125 square feet [2]. - Pioneer Credit Recovery, Inc. in Moorestown, NJ for $6.250 million, with an ABR of $0.931 million and a size of 65,567 square feet [2]. - Another JPMorgan Chase Bank, N.A. property in Fort Worth, TX for $33.000 million, with an ABR of $4.850 million and a size of 386,154 square feet [2]. - The total ABR for all properties sold is $11.188 million, with a combined size of 1,026,712 square feet [2]. Group 2: Company Overview - Net Lease Office Properties is a publicly traded real estate investment trust (REIT) that focuses on owning high-quality, primarily single-tenant office properties in the U.S. [3]. - The properties are net leased to corporate tenants across various industries [3].

I analyze securities based on value investing, an owner's mindset, and a long-term horizon. I don't write sell articles, as those are considered short theses, and I never recommend shorting.I was initially interested in a career in politics, but after reaching a dead-end in 2019 and seeing the financial drain this posed, I choose a path that would make my money work for me and protect me from more setbacks. This brought me to study value investing, in order to grow wealth with risk management in mind.From 2 ...

Group 1: Snowflake Inc (NYSE:SNOW) - Snowflake reported third-quarter revenue of $1.21 billion, exceeding analyst estimates of $1.18 billion [1] - The company achieved adjusted earnings of 35 cents per share, surpassing analyst expectations of 31 cents per share [1] - In pre-market trading, Snowflake shares fell 8.6% to $241.85 [2] Group 2: Other Companies - Net Lease Office Properties (NYSE:NLOP) shares decreased by 14.7% to $25.19 in pre-market trading [4] - Symbotic Inc (NASDAQ:SYM) shares dropped 10.5% to $65.50 following a 10 million share offering announcement [4] - Capricor Therapeutics Inc (NASDAQ:CAPR) shares fell 8.4% to $27.45 after a significant increase of 371% the previous day [4] - ADC Therapeutics SA (NYSE:ADCT) shares declined 8.1% to $3.63 after reporting updated data from its LOTIS-7 trial [4] - Koninklijke Philips NV (NYSE:PHG) shares decreased by 6.8% to $26.11 in pre-market trading [4] - Omeros Corp (NASDAQ:OMER) shares fell 4.2% to $10.18 [4] - Methanex Corp (NASDAQ:MEOH) shares dropped 3.8% to $35.95 [4]

Financial Performance - Lease revenues for the three months ended September 30, 2025, were $24,099,000, down 19.3% from $29,975,000 in the same period of 2024[17]. - Net loss for the three months ended September 30, 2025, was $64,140,000, compared to a net loss of $40,274,000 for the same period in 2024, indicating an increase in losses of 59.5%[17]. - Comprehensive loss for the three months ended September 30, 2025, was $23,817,000, compared to $38,519,000 for the same period in 2024, a decrease of 38.5%[20]. - Basic and diluted loss per share for the three months ended September 30, 2025, was $4.33, compared to $2.73 for the same period in 2024, indicating a significant increase in loss per share[17]. - The net cash provided by operating activities for the nine months ended September 30, 2025, is $42,157,000, compared to $61,378,000 for the same period in 2024[29]. - The company experienced a net loss of $55,622,000 for the nine months ended September 30, 2024[29]. - As of September 30, 2025, the company reported a net loss of $40.3 million for the three months ended, compared to a net loss of $64.2 million for the same period in 2024[101]. Asset and Liability Management - Total assets decreased from $805,069,000 as of December 31, 2024, to $522,551,000 as of September 30, 2025, representing a decline of approximately 35%[13]. - Total liabilities decreased from $219,666,000 as of December 31, 2024, to $88,331,000 as of September 30, 2025, a reduction of approximately 60%[13]. - Cash and cash equivalents increased from $25,121,000 as of December 31, 2024, to $38,689,000 as of September 30, 2025, showing a growth of 53.9%[13]. - Cash and cash equivalents increased to $38.7 million as of September 30, 2025, compared to $25.1 million as of December 31, 2024[43]. - Total cash and cash equivalents and restricted cash amounted to $41.1 million as of September 30, 2025, down from $68.4 million as of December 31, 2024[43]. - The fair value of non-recourse mortgages, net, was $47.1 million as of September 30, 2025, down from $111.3 million at December 31, 2024[76]. - The company’s scheduled mortgage debt principal payments total $47.1 million as of September 30, 2025, with $25.2 million due in 2025[97]. Impairment and Real Estate - Impairment charges on real estate for the three months ended September 30, 2025, were $50,892,000, up from $34,164,000 in the same period of 2024, reflecting a 48.9% increase[17]. - The company reported impairment charges of $133,629,000 related to real estate for the nine months ended September 30, 2025[29]. - The total impairment charges for real estate during the nine months ended September 30, 2025, amounted to $184.6 million, compared to $133.6 million for the same period in 2024[75]. - The company recognized impairment charges totaling $25.7 million on three properties during the three months ended September 30, 2025[79]. - The estimated fair value of a property in Houston, Texas, was determined to be $73.2 million, leading to an impairment charge of $81.6 million due to its carrying value being not fully recoverable[78]. - The company recognized a loss on the sale of real estate amounting to $3.4 million during the nine months ended September 30, 2025, due to a lowered estimated purchase price[66]. Distributions and Shareholder Returns - The company declared distributions of $3.10 per share, totaling $45,924,000[26]. - The company declared a special cash distribution of $3.10 per share in August 2025, totaling approximately $45.9 million, paid on September 3, 2025[100]. - The total distributions to noncontrolling interests amounted to $271,000 for the nine months ended September 30, 2025[29]. - The company reported a total of 14,814,075 shares outstanding as of September 30, 2025, which is consistent with the previous period[17]. Operational Highlights - The company’s total assets include 59 office properties acquired during the spin-off from W. P. Carey Inc.[33]. - As of September 30, 2025, the portfolio comprised 32 properties net leased to 36 corporate tenants, totaling approximately 5.4 million leasable square feet with a weighted-average lease term of 4.3 years[34]. - For the three months ended September 30, 2025, total operating lease income was $24.1 million, a decrease from $30.0 million in the same period of 2024[59]. - Lease termination income for the three months ended September 30, 2025, was $5.0 million, compared to $0.7 million for the same period in 2024[61]. - The company entered into a lease termination agreement with a tenant, resulting in a lease termination fee of $13.0 million, of which $4.8 million was recognized in the third quarter of 2025[60]. - The KBR, Inc. property in Houston, Texas, generated lease revenues of $6.9 million for Q3 2025, with reimbursable tenant costs of $(2.1) million[190]. - Tenant KBR, Inc. accounted for 27% of total revenues, while JPMorgan Chase Bank, N.A. accounted for 13%[191]. Risk Factors - The company anticipates potential risks related to fluctuating interest rates and macroeconomic conditions that could impact future performance[9]. - The company is exposed to interest rate risk, which could adversely affect profitability and the value of its real estate investment portfolio[183]. - The company’s interest rate cap agreements aim to limit exposure to interest rate movements, with a notional amount of $150.9 million as of September 30, 2025[90]. - The company sold all international investments during the nine months ended September 30, 2025, mitigating foreign currency exchange rate risk[187]. Debt and Financing - The company had a non-recourse mortgage loan with a principal balance of $25.2 million that was not repaid on its maturity date of January 6, 2025, accruing default interest at an annual rate of 5.0%[95]. - The company recognized a net loss on extinguishment of debt of less than $0.1 million during the nine months ended September 30, 2025, from prepaying three non-recourse mortgage loans totaling $24.5 million[96]. - The company’s weighted-average fixed interest rate for non-recourse mortgage notes payable was 8.2% as of September 30, 2025[94]. - The company reported total derivatives not designated as hedging instruments with a fair value of $0 at September 30, 2025, compared to $10,000 at December 31, 2024[85]. Future Outlook - The company plans to adopt the new income tax disclosure standards effective January 1, 2026, which is not expected to have a material impact on its consolidated financial statements[47].

Core Insights - Alluvial Capital Management's fund achieved a 15.5% increase in Q3 2025, resulting in a year-to-date return of 33.6%, marking its third-best quarterly performance in nine years [1] - The fund's investor letter highlighted Net Lease Office Properties (NYSE:NLOP), which has seen a one-month return of -0.88% and a 52-week decline of 3.56% [2] - The fund holds an 11% allocation to real estate investment trusts in out-of-favor sectors, with Net Lease Office Properties not responding positively to improved sentiment around office properties [3] Company Performance - Net Lease Office Properties (NYSE:NLOP) closed at $29.27 per share on October 28, 2025, with a market capitalization of $433.608 million [2] - The trust is currently marketing its largest asset, a one million plus square feet office building in central Houston, and has multiple vacant properties for sale [3] - The trust trades at a cap rate of nearly 18% and $87 per square foot of real estate, excluding properties encumbered by mortgages [3] Hedge Fund Interest - Net Lease Office Properties (NYSE:NLOP) was held by 11 hedge fund portfolios at the end of Q2 2025, down from 15 in the previous quarter [4] - While the potential of Net Lease Office Properties is acknowledged, certain AI stocks are considered to offer greater upside potential with less downside risk [4]

Group 1: Portfolio Performance - Kingdom Capital Advisors' portfolio compounded at 21.06% (net of fees) since inception, outperforming the Russell 2000 TR (4.60%), S&P 500 TR (11.46%), and NASDAQ 100 TR (13.48%) [1] - The portfolio recovered from significant drawdowns experienced from November 2024 to June 2025 [1] Group 2: Net Lease Office Properties (NYSE:NLOP) - Net Lease Office Properties (NYSE:NLOP) had a one-month return of -1.24% and a 52-week loss of 7.17%, with shares closing at $28.60 on October 10, 2025, and a market capitalization of $423.683 million [2] - Since the initial acquisition, the company has divested 22 of 59 properties, repaid all corporate-level debt, and paid dividends equal to about 20% of the initial cost basis [3] - The company is expected to pay additional dividends soon, which could reduce the cost basis to zero on those purchases [3] Group 3: Hedge Fund Interest - Net Lease Office Properties (NYSE:NLOP) was held by 11 hedge fund portfolios at the end of Q2 2025, down from 15 in the previous quarter [4] - While acknowledging the potential of NLOP, the company believes certain AI stocks offer greater upside potential and less downside risk [4]

Group 1 - F.I.L.A. SpA experienced a decline during the quarter due to an analyst downgrade [4] - The decline was attributed to uncertainties in the US market [4]

Core Viewpoint - The company Net Lease Office Properties (NLOP) is projected to achieve "net debt zero" and commence distributions in 2025, as previously forecasted in an update published in January [1]. Group 1 - NLOP is the largest position for the author, indicating significant confidence in its future performance [1]. - The forecast made in January regarding NLOP's financial status and distribution plans has been confirmed as the target date approaches [1].