Core Viewpoint - Marlton Partners L.P. is advocating for significant changes in the governance of 180 Degree Capital Corp. due to the company's underperformance and persistent discount to net asset value (NAV) since Kevin Rendino took over as Chair and CEO in 2017 [1][2][3] Performance Metrics - Since 2017, 180 Degree Capital's net asset value has decreased by 37.3%, while its benchmarks, including the Russell Microcap, Russell Microcap Value, and Russell 2000 Indices, have increased by 59.2%, 70.5%, and 82.1% respectively [1][2] - As of November 2024, the fund's discount to NAV was at -26%, which translates to over $12.5 million in potential value for shareholders if eliminated [1][2] Shareholder Engagement - Marlton Partners first engaged with 180 Degree Capital in October 2023, proposing a Discount Management Program to address the NAV discount, but received an evasive response from the company [1][2] - A request for a meeting with the Lead Independent Director was ignored, highlighting a lack of engagement from the board [2][11] Governance Issues - The current board has not demonstrated accountability, with no independent director purchasing stock in over six years, except for a minor purchase by one director [2][11] - Marlton Partners is nominating three new director candidates to replace long-serving directors who have overseen the company's decline [12][13] Proposed Solutions - Marlton recommends implementing a formal proposal to provide shareholders an exit at NAV, which could include distributing publicly traded securities as a dividend in-kind [8][9] - The firm emphasizes the need for a binding commitment from management to return capital to shareholders at NAV [10][14]

Core Insights - 180 Degree Capital Corp. reported an average discount of approximately 21% between its estimated daily net asset value (NAV) per share and its daily closing stock price for November 2024, and 20% year-to-date through the end of November 2024, with a specific discount of 26% noted on November 29, 2024 [1][2] Discount Management Program - The Board of Directors has established two measurement periods from January 1, 2024, to December 31, 2024, and from January 1, 2025, to June 30, 2025, to evaluate the average discount between NAV and stock price [2] - If the average daily discount exceeds 12% during these periods, the Board will consider options such as expanding the stock buyback program up to $5 million, cash distributions, or other strategic alternatives [2] Performance Highlights - In November 2024, the NAV increased by approximately 26%, driven by the successful sale of Brightcove, Inc. for about $233 million, translating to $4.45 per share, compared to a cost basis of $2.55 per share [3] - The company actively managed its portfolio, increasing positions on weakness and monetizing its stake in Quantum Corporation, which saw a price surge from $2.96 to $21.77 per share [3] - The management and Board hold a 12.7% ownership position, indicating alignment of interests in driving stock price increases and shareholder value [3] Historical Performance - Since its inception in 2017 through November 30, 2024, the gross total return on public portfolio holdings was approximately +212%, significantly outperforming the Russell Microcap Index, which had a total return of +79% [3] - The decline in NAV of approximately 31% over the same period was primarily due to decreases in the legacy private portfolio, while public market performance has been the main source of value creation [3] Company Overview - 180 Degree Capital Corp. is a publicly traded closed-end fund focused on investing in undervalued small publicly traded companies, aiming for significant turnarounds through constructive activism [4]

Core Insights - 180 Degree Capital Corp. reported an average discount of approximately 21% between its estimated daily net asset value (NAV) per share and its daily closing stock price for August 2024, and 19% year-to-date through the end of August 2024, with a specific discount of 25% noted on August 30, 2024 [1][2] Discount Management Program - The Board of Directors has established two measurement periods for evaluating the average discount between TURN's estimated daily NAV and its closing stock price: January 1, 2024 to December 31, 2024, and January 1, 2025 to June 30, 2025 [2] - If the average daily discount exceeds 12% during these periods, the Board will consider options such as expanding the stock buyback program up to $5 million, cash distributions, or a tender offer [2] Shareholder Sentiment - The CEO noted that shareholders have expressed support for the Discount Management Program, emphasizing that the current discount to NAV is inconsistent with the potential upside of the existing portfolio [3] - Long-term investors have indicated a preference for maintaining potential upside rather than pursuing short-term gains through immediate distributions or tender offers [3] Investment Strategy - The company focuses on investing in undervalued small publicly traded companies with turnaround potential, aiming for a significant increase in share price through constructive activism [4] - The management believes that the current macroeconomic conditions for small-cap stocks may be nearing a reversal, positioning the company for strong growth in NAV similar to its performance in the first five years of its existence [3]

Company Overview - 180 Degree Capital Corp. is a publicly traded registered closed-end fund focused on investing in undervalued small publicly traded companies with potential for significant turnarounds [1] - The company's strategy involves providing value-added assistance through constructive activism to achieve a reversal in share price direction, referred to as a 180-degree turn [1] Recent Developments - On July 24, 2024, it was announced that the Chief Executive Officer and Co-Portfolio Manager, Kevin M. Rendino, was involved in an accident and is currently receiving treatment [5] - The prognosis for his recovery is positive, and the company is providing updates as more information becomes available [5] - Business operations at 180 Degree Capital remain fully operational under the management of Daniel B. Wolfe, the President and Co-Portfolio Manager [5]

Core Insights - 180 Degree Capital's Board of Directors has established two measurement periods to evaluate the average discount between TURN's estimated daily NAV and its closing stock price, with potential actions if the discount exceeds 12% [1] - The company is optimistic about the potential catalysts for its portfolio holdings, particularly Synchronoss Technologies, which has recently retired preferred stock and debt, leading to significant cost savings [2][8] - The average discount between estimated daily NAV and stock price was approximately 16% in June 2024 and 19% year-to-date through June 2024, indicating a challenging market environment for microcapitalization stocks [6][7] Company Strategy - 180 Degree Capital is focused on constructive activism to help its portfolio companies achieve value-creating catalysts, actively participating in board activities and strategic decisions [8] - The company aims to reverse the direction of share prices for undervalued small publicly traded companies through its investment strategy and activism [8] Market Context - The current market is characterized by a concentration in a few mega-cap stocks, reminiscent of the dot-com bubble, which has negatively impacted microcapitalization stocks [7] - The management team of 180 Degree Capital continues to purchase its own stock, indicating confidence in the future appreciation of NAV [7]

Core Insights - 180 Degree Capital emphasizes constructive activism through its investment in Synchronoss Technologies, Inc. (SNCR), highlighting the potential for value appreciation due to strategic management collaboration and upcoming catalysts [1][2][5] - SNCR has successfully retired its Series B Preferred Stock and $19.7 million of Senior Notes, funded by a new $75 million term loan, resulting in a significant improvement in its capital structure and cost savings [2][5] Company Overview - 180 Degree Capital Corp. is a publicly traded closed-end fund focused on investing in undervalued small public companies, aiming for significant turnarounds through constructive activism [3] Financial Impact - The recent transactions by SNCR are expected to improve its capital structure by $7.3 million and generate approximately $10.6 million in pre-tax cost savings, enhancing its ability to generate free cash flow in the future [2][5]

Core Viewpoint - 180 Degree Capital Corp. emphasizes the need for SCOR's Board to take decisive actions to enhance stakeholder value, particularly in light of the significant decline in SCOR's share price, which has dropped by 90% under the current Board's oversight [9]. Group 1: Board Governance and Actions - The Board of SCOR is encouraged to conclude ongoing issues and publicly announce decisions to demonstrate seriousness in governance [3]. - The recent addition of Matt McLaughlin to SCOR's Board is seen as a potential catalyst for improved governance and decision-making [8]. - There is disappointment regarding the Board's inability to resolve critical issues affecting SCOR's stock value, despite the addition of new members [9]. Group 2: Recommendations for Improvement - Recommendations include significantly lowering director compensation, which totaled nearly $900,000 in cash and $2.3 million in total for 2023, to align with similar-sized public companies [10]. - The Board should be reduced in size to include only those who provide critical value, with a maximum of one director per preferred holder [10]. - Preferred stockholders are urged to accept dividends in common stock at a premium to retain cash for business investments, which could positively impact common stock prices [10]. Group 3: Transparency and Accountability - SCOR's Board is called to provide transparency regarding the processes for potential special dividends, especially as the amount may decrease to less than $50 million [10]. - If the Board remains dysfunctional, hiring external parties for governance improvement is suggested, including management consulting firms or investment banks [10]. - The current Board leadership is under scrutiny, with calls for a new chairperson to facilitate decision-making and address the ongoing decline in stock value [11]. Group 4: Commitment to Value - 180 Degree Capital asserts that SCOR's business and proprietary data assets are valuable and worth fighting for, despite current market perceptions [12]. - There is hope for near-term changes driven by contributions from all Board members, with a commitment to hold them accountable for progress [12].

Core Insights - 180 Degree Capital Corp. reported an average discount of approximately 18% between its estimated daily net asset value (NAV) per share and its daily closing stock price for May 2024, and 20% year-to-date through the end of May 2024, with a specific discount of 19% noted on May 31, 2024 [1][2] - The Board of Directors has established two measurement periods to evaluate the average discount to NAV, with potential actions including stock buybacks, cash distributions, or tender offers if the discount exceeds 12% [2] - The CEO highlighted an overall improvement in May 2024 for microcapitalization stocks and the company's holdings, despite heightened volatility, particularly for thinly traded stocks [3] Company Performance - Synchronoss Technologies, Inc. (SNCR), a portfolio holding, reported a positive Q1 2024, exceeding analyst estimates, but experienced significant stock price volatility post-earnings report [3] - The company aims for returns greater than 100% over a one-to-three year holding period, emphasizing that short-term volatility does not reflect the long-term health of its portfolio companies [3] Investment Strategy - 180 Degree Capital focuses on investing in undervalued small publicly traded companies, aiming for significant turnarounds through constructive activism [4] - The company believes there are material catalysts ahead in 2024 and beyond that could lead to value appreciation and growth in NAV [3]

Financial Data and Key Metrics Changes - The company reported a 3% increase in net asset value (NAV) during Q1 2024, with cash and public securities rising by 5.4% in the quarter [27][28] - The average discount between TURN's estimated NAV per share and its daily closing price was approximately 14% in April 2024 and 20% year-to-date through the end of April [42] Business Line Data and Key Metrics Changes - Potbelly increased by about $2.5 million or $0.25 per share in Q1 2024, with a 6.4% growth in same-store sales driven by traffic growth [29] - Synchronoss reported a strong first quarter and reiterated guidance for 2024, indicating a positive transformation into a cloud-only business [34] Market Data and Key Metrics Changes - The Russell Microcap Index has been down 30% from its highs, reflecting a challenging environment for microcap stocks since November 2022 [15][19] - Despite the risk-off environment, many parts of the economy are showing resilience, with healthy employment levels [19][20] Company Strategy and Development Direction - The company is focused on finding investments that can materially increase in value to enhance NAV and positively impact stock price [24][39] - The management has set two evaluation periods for the discount management program, considering options like stock buybacks if discounts exceed 12% [40][41] Management's Comments on Operating Environment and Future Outlook - The management noted that the current environment is characterized by higher interest rates and a risk-off sentiment among investors, but they believe this presents opportunities for their portfolio [19][32] - The company anticipates that the market will eventually normalize, leading to significant upside potential in their holdings [32] Other Important Information - Arena Group defaulted on payments related to its Sports Illustrated license, leading to a significant drop in stock value [30][37] - Lantronix secured an additional purchase order from a smart grid customer, indicating potential growth opportunities [22] Q&A Session Summary Question: What is the outlook for the company's stock price in relation to NAV? - The management expressed hope that if the stock continues to trade at a significant discount to NAV, they will take advantage of that situation to benefit shareholders [45] Question: Are there any concerns regarding the current market environment? - The management acknowledged concerns but emphasized that the pessimistic sentiment has created opportunities for investment [32] Question: What actions will be taken if the discount to NAV remains high? - The board will consider options such as expanding the stock buyback program or cash distributions to shareholders if discounts exceed 12% [41]

Financial Data and Key Metrics Changes - The net asset value (NAV) per share increased from $4.91 to $5.02, driven by a 7% gross total return in the public portfolio [3][13][30] - The discount of NAV to stock price was approximately 26% at the end of January 2024, which was about 8% higher than at the end of 2023 [13][30] Business Line Data and Key Metrics Changes - Synchronoss completed the sale of its noncore messaging and digital businesses, transitioning to a cloud-focused business model with high margins [23][27] - Comscore experienced a 36% increase in stock price during the quarter, despite missing top-line estimates, as it exceeded EBITDA estimates [59] Market Data and Key Metrics Changes - The Russell 2000 index finished 2023 not far from its 25-year low relative to the Russell 1000, indicating a significant valuation gap between small and large-cap stocks [6][18] - Microcap companies underperformed the Nasdaq-100 by over 4,600 basis points in 2023, despite strong macroeconomic trends [18][41] Company Strategy and Development Direction - The company aims to engage constructively with existing boards and management teams to unlock value through various strategies, including capital structure resolution and operational improvements [21][22] - The focus for 2024 is on constructive activism and anticipated catalysts at portfolio companies to drive value creation [41][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the U.S. economy and the potential for interest rate reductions, which could benefit investments in 2024 [41][42] - The company believes that many holdings are trading at historically low valuations, providing a long runway for value appreciation [20][41] Other Important Information - Potbelly reported strong growth exceeding expectations and announced a new credit facility for financial flexibility [27] - The company is preparing for a competitive proxy campaign to support a director nominee for Comscore, indicating a proactive approach to governance issues [32][25] Q&A Session Summary - No questions were raised during the Q&A session, indicating either a comprehensive presentation or a lack of participants [55][56]