180 Degree Capital (TURN) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's NAV declined by 8% in Q1 2022 to $9.81, with cash and liquid securities decreasing from $76.7 million to $64 million, equating to $6.19 per share [6][10][49] - Pro forma cash per share, including proceeds from the Petra sale, would have been $7.31, with Petra adding $1.12 per share to cash [7][15] Business Line Data and Key Metrics Changes - The private portfolio increased in value by $3.3 million or $0.32 per share, primarily due to rights related to the acquisition of Petra Pharma Corporation [37] - The public portfolio underperformed, with significant declines in several holdings, notably Quantum Corp, which reduced NAV by $0.50 per share [25][28] Market Data and Key Metrics Changes - The Russell Microcap Index declined over 30% since November, indicating a challenging market environment [10] - The company noted that the current market conditions are characterized by a "risk-off" sentiment, impacting the performance of public holdings [8][28] Company Strategy and Development Direction - The company aims to transform its asset mix, with a goal of having 83% of its portfolio in cash and public securities following the completion of the D-Wave SPAC transaction [34][42] - The management emphasized a focus on public market investing and maintaining a lean cost structure to enhance investment performance [43][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future price appreciation opportunities as valuations are significantly lower than during the pandemic [13][14] - The company believes it is well-positioned to capitalize on market recovery and generate significant returns for shareholders [14][35] Other Important Information - The company has dramatically reduced its operating expenses, with Q1 2022 expenses at approximately $860,000 compared to $1.3 million per quarter in 2016 [43][44] - The market is currently discounting the value of the private portfolio by approximately 80%, indicating a significant gap between market perception and actual value [50] Q&A Session Summary Question: Thoughts on hedging given the current macro environment - Management has not hedged during the current period and believes the time to concentrate on investments is now, rather than hedging [56][58] Question: Prospects for AgBiome and potential IPO - Management is optimistic about AgBiome's future, noting its strong market position and recent hiring of senior managers [60][62] Question: Update on third-party capital raising initiatives - Management indicated they are managing more money than three months ago but are cautious about taking on capital that does not align with their investment strategy [72][76] Question: Consideration of share buybacks with incoming funds - Management is open to discussing share buybacks but emphasizes the importance of maintaining permanent capital for future investment opportunities [84][88]