SuRo Capital(SSSS)2025-03-12 12:16Investment Strategy and Focus - The company aims to maximize total return primarily through capital gains on equity investments, with a secondary focus on income from debt investments[15]. - The company has adopted a disciplined investment strategy focusing on high-growth sectors such as software-as-a-service, artificial intelligence, and financial technology[16]. - The company believes that access to high-growth private technology companies is a key value proposition for shareholders[30]. - The company focuses on late-stage companies with shorter time horizons to expected liquidity compared to traditional venture capital funds[31]. - The company seeks to create a varied portfolio of non-controlling equity investments to minimize the impact of downturns in specific companies[36]. - The company has identified six key investment themes, including software-as-a-service and artificial intelligence, which have produced significant numbers of high-growth companies[39]. - The company operates as an internally managed, non-diversified closed-end management investment company, enhancing transparency for stockholders[20]. - The company maintains a diverse portfolio, with private portfolio companies representing 91.6% of total investments as of December 31, 2024[48]. Financial Performance - As of December 31, 2024, the fair value of the total portfolio investments is 184,081,249 as of December 31, 2023, representing a growth of 13.5%[48]. - Total Investment Income for 2024 was 6,596,780 in 2023[462]. - Net Investment Loss for 2024 was (13,439,609) in 2023, indicating a slight increase in losses[467]. - Net Change in Unrealized Appreciation/(Depreciation) of Investments was 30,453,935 in 2023[467]. - Total Operating Expenses decreased to 20,036,389 in 2023, a reduction of 7.0%[462]. - Net Change in Net Assets Resulting from Operations was 5,066,822 in 2023[467]. - The net asset value (NAV) of the investment portfolio is determined quarterly, reflecting the fair value of investments[50]. - The net asset value per share fell to 7.99 in 2023, indicating a decrease of approximately 16.4%[456]. - The net assets decreased to 203.36 million in 2023, representing a decline of about 22.5%[456]. Compliance and Regulatory Requirements - The company is subject to diversification requirements as a RIC for U.S. federal income tax purposes, limiting investments in any single investment company to no more than 5% of total assets[61]. - The company must maintain at least 70% of its gross assets in qualifying assets to comply with the 1940 Act, impacting its investment strategy[68]. - The company has adopted a code of ethics to ensure compliance with federal securities laws and to manage personal investment transactions by its personnel[77]. - The company is required to conduct periodic examinations by the SEC to ensure compliance with the 1940 Act, which may affect operational transparency[66]. - The company has elected to qualify as a Regulated Investment Company (RIC) for U.S. federal income tax purposes, which requires distributing at least 90% of its investment company taxable income annually[93]. - The company must meet the 90% Income Test, deriving at least 90% of its gross income from qualifying sources, to maintain RIC status[97]. - The company is subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless it meets specific distribution requirements[95]. - The company may face limitations on distributions due to asset coverage ratio requirements and financial covenants under loan agreements[99]. Investment Valuation and Classification - The company applies fair value accounting, with the majority of its investments classified as Level 3, indicating a high degree of judgment in valuation[511]. - The fair value of the company's investments may fluctuate significantly due to the inherent uncertainty of valuation, especially for those without readily available market values[521]. - The Board of Directors applies various valuation methodologies for investments without market quotations, including comparisons to secondary market transactions and analysis of financial ratios[519]. - The company engages independent valuation firms to appraise 100% of its investments without readily available market quotations[520]. - The company conducts a quarterly review of fair value hierarchy classifications, with reclassifications impacting Level 3 reported as transfers at the beginning of the measurement period[515]. Portfolio Composition - The company holds a 10% membership interest in the CW Opportunity 2 LP, with a fair value of 17,638,247, accounting for 11.19% of net assets[474]. - Preferred shares in Learneo, Inc. have a total fair value of 15,092,515, representing 9.58% of net assets[474]. - Whoop, Inc. holds preferred shares valued at 14,027,713, which is 8.90% of net assets[474]. - Total portfolio investments amounted to 209,380,742, representing 132.88% of net assets[480]. - The largest investment is in StormWind, LLC, with preferred shares valued at $12,535,875, accounting for 6.16% of net assets[491]. Employee and Operational Structure - As of December 31, 2024, the company had ten employees, all located in the United States[24]. - The company has a source of permanent equity capital, allowing for long-term investments in portfolio companies without the pressure of returning capital on a defined schedule[4]. - The company must offer significant managerial assistance to portfolio companies, enhancing its role in the management and operations of its investments[72].