SuRo Capital Corp. Reports First Quarter 2024 Financial Results
SuRo Capital Corp. reported a net asset value of $7.17 per share as of March 31, 2024. The company made $35 million in new investments year-to-date, deployed capital in various new portfolio companies, and conducted a modified Dutch Auction tender offer to repurchase 2.0 million shares of common stock. SuRo Capital continues to focus on enhancing shareholder value and believes the market undervalues its portfolio.
SuRo Capital Corp. reported a net asset value of $7.17 per share as of March 31, 2024.
The company deployed a significant amount of capital in the last four months, adding new portfolio companies and investing in opportunities like Supplying Demand, Inc., Canva, Inc., and CW Opportunity 2 LP.
SuRo Capital's focus on enhancing shareholder value includes a modified Dutch Auction tender offer resulting in the repurchase of 2.0 million shares of common stock.
Net investment loss of $3.2 million and a decrease in net asset value by $21.6 million for the quarter ended March 31, 2024.
A net realized loss on investments of $0.4 million and a net change in unrealized depreciation of $18.4 million affecting financial results.
Stock-based compensation of $0.4 million contributing to the decrease in net asset value for the quarter.
Insights
Upon examining the financial results of SuRo Capital for the first quarter of 2024, a decline in net asset value (NAV) per share is evident. This reduction from $7.99 at the end of the previous year to $7.17 indicates a potential red flag for investors concerned with asset devaluation. However, significant capital deployment into new investments, such as Liquid Death, Canva and a specialized investment vehicle (CW Opportunity 2 LP), suggests a strategic growth focus. While the innovative nature of these companies, especially in tech and CPG sectors, could offer long-term upside potential, the current NAV discount raises questions about immediate market sentiment towards SuRo Capital's portfolio.
The company's modified Dutch Auction tender offer and its Share Repurchase Program signal a proactive approach to manage market undervaluation and enhance shareholder value. The purchase of shares at a substantial discount to NAV could be accretive to the remaining shareholders, although it may also indicate management's acknowledgment of overvaluation or a lack of better investment opportunities. Moreover, the liquidity position, consisting of cash and short-term treasuries, remains robust, offering flexibility for future investments or buybacks. However, investors should consider the potential impact of ongoing repurchases on the company's liquidity and its ability to fund new investment opportunities.
The investment in trending sectors such as design software (Canva, Inc.) and AI cloud computing (CoreWeave, Inc.) reflects SuRo Capital's alignment with high-growth markets. Canva's impressive user base and CoreWeave's specialized AI infrastructure position these companies as attractive assets within SuRo's portfolio. Additionally, SuRo's exit from positions like Nextdoor Holdings with a realized loss, contrasted with a gain from PSQ Holdings warrants, illustrates the inherent volatility and speculative nature of venture capital investments.
Of particular interest is the concentration of the portfolio's value in its top five investments, accounting for 51.1% of the portfolio's fair value. This high level of concentration can introduce significant risk, as the portfolio's performance becomes heavily reliant on the success of a few companies. Potential investors should weigh the prospects of these leading investments against the diversification benefits of a more evenly distributed portfolio.
Net Asset Value of
Completed
NEW YORK, May 08, 2024 (GLOBE NEWSWIRE) -- SuRo Capital Corp. (“SuRo Capital”, the “Company”, “we”, “us”, and “our”) (Nasdaq: SSSS) today announced its financial results for the quarter ended March 31, 2024. Net assets totaled approximately
“We are pleased to share that we have deployed more capital in the last four months than in any period in the last two years. During the first quarter, we added one new portfolio company through a
“With these exciting new additions to our portfolio, and over
“As we have consistently demonstrated, SuRo Capital is committed to initiatives that enhance shareholder value, and we believe the market is currently undervaluing our portfolio. Given the discount our stock has traded at compared to net asset value per share, we believe our recent modified Dutch Auction tender offer was an efficient and accretive deployment of capital. As announced in the first quarter and executed subsequent to quarter-end, the modified Dutch Auction tender offer resulted in the purchase of 2.0 million shares of common stock for
Investment Portfolio as of March 31, 2024
At March 31, 2024, SuRo Capital held positions in 38 portfolio companies – 35 privately held and 3 publicly held, some of which may be subject to certain lock-up provisions – with an aggregate fair value of approximately
Top Five Investments as of March 31, 2024
| Portfolio Company ($ in millions) | Cost Basis | Fair Value | % of Total Portfolio | |||||
| Learneo, Inc. | $ | 15.0 | $ | 43.0 | 24.6 | % | ||
| ServiceTitan, Inc. | 10.0 | 13.4 | 7.7 | |||||
| Blink Health, Inc. | 15.0 | 11.6 | 6.6 | |||||
| Locus Robotics Corp. | 10.0 | 10.9 | 6.2 | |||||
| StormWind, LLC | 6.4 | 10.6 | 6.1 | |||||
| Total | $ | 56.4 | $ | 89.5 | 51.1 | % | ||
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Note: Total may not sum due to rounding.
First Quarter 2024 Investment Portfolio Activity
During the three months ended March 31, 2024, SuRo Capital made the following investment, excluding short-term US treasuries:
| Portfolio Company | Investment | Transaction Date | Amount |
| Supplying Demand, Inc. (d/b/a Liquid Death) | Series F-1 Preferred Shares | 1/18/2024 | |
During the three months ended March 31, 2024, SuRo Capital exited the following investments, excluding short-term US treasuries:
| Portfolio Company | Transaction Date | Quantity Sold | Average Net Share Price(1) | Net Proceeds | Realized Gain/(Loss) |
| Nextdoor Holdings, Inc.(2) | Various | 112,420 | |||
| PSQ Holdings, Inc. (d/b/a PublicSquare) – Public Warrants(3) | Various | 100,000 | |||
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(1) The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.
(2) As of February 23, 2024, SuRo Capital had sold its remaining Nextdoor Holdings, Inc. public common shares.
(3) As of March 31, 2024, SuRo Capital held 2,296,037 remaining PSQ Holdings, Inc. (d/b/a PublicSquare) public warrants.
Subsequent to quarter-end through May 8, 2024, SuRo Capital made the following investments, excluding short-term US treasuries:
| Portfolio Company | Investment | Transaction Date | Amount |
| Canva, Inc. | Common Shares | 4/17/2024 | |
| CW Opportunity 2 LP | Class A Interest | 5/7/2024 | |
First Quarter 2024 Financial Results
| Quarter Ended March 31, 2024 | Quarter Ended March 31, 2023 | ||||||||||||||
| $ in millions | per share(1) | $ in millions | per share(1) | ||||||||||||
| Net investment loss | $ | (3.2 | ) | $ | (0.13 | ) | $ | (4.2 | ) | $ | (0.15 | ) | |||
| Net realized gain/(loss) on investments | (0.4 | ) | (0.02 | ) | 0.2 | 0.01 | |||||||||
| Net change in unrealized appreciation/(depreciation) of investments | (18.4 | ) | (0.73 | ) | 8.6 | 0.30 | |||||||||
| Net increase/(decrease) in net assets resulting from operations – basic (2) | $ | (22.1 | ) | $ | (0.88 | ) | $ | 4.6 | $ | 0.16 | |||||
| Stock-based compensation | 0.4 | 0.06 | 0.4 | 0.04 | |||||||||||
| Increase/(decrease) in net asset value(2) | $ | (21.6 | ) | $ | (0.82 | ) | $ | 5.0 | $ | 0.20 | |||||
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(1) Based on basic weighted-average number of shares outstanding for the relevant period.
(2) Total may not sum due to rounding.
Weighted-average common basic shares outstanding were approximately 25.4 million and 28.4 million for the quarters ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there were 25,353,284 shares of the Company’s common stock outstanding.
SuRo Capital’s liquid assets were approximately
Modified Dutch Auction Tender Offer
On February 14, 2024, our Board of Directors authorized a modified Dutch Auction tender offer (the “Tender Offer”) to purchase up to 2.0 million shares of our common stock at a price per share not less than
Share Repurchase Program
Under the Share Repurchase Program, the Company may repurchase its outstanding common stock in the open market, provided it complies with the prohibitions under its insider trading policies and procedures and the applicable provisions of the Investment Company Act of 1940, as amended, and the Securities Exchange Act of 1934, as amended.
Since inception of the Share Repurchase Program in August 2017, SuRo Capital has repurchased over 6.0 million shares of its common stock for an aggregate purchase price of approximately
Conference Call and Webcast
Management will hold a conference call and webcast for investors at 2:00 p.m. PT (5:00 p.m. ET) on May 8, 2024. The conference call access number for U.S. participants is 866-580-3963, and the conference call access number for participants outside the U.S. is +1 786-697-3501. The conference ID number for both access numbers is 6890583. Additionally, interested parties can listen to a live webcast of the call from the "Investor Relations" section of SuRo Capital’s website at www.surocap.com. An archived replay of the webcast will also be available for 12 months following the live presentation.
A replay of the conference call may be accessed until 5:00 p.m. PT (8:00 p.m. ET) on May 15, 2024 by dialing 866-583-1035 (U.S.) or +44 (0) 20 3451 9993 (International) and using conference ID number 6890583.
Forward-Looking Statements
Statements included herein, including statements regarding SuRo Capital's beliefs, expectations, intentions, or strategies for the future, may constitute "forward-looking statements". SuRo Capital cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements. All forward-looking statements involve a number of risks and uncertainties, including the impact of any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy, that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Risk factors, cautionary statements, and other conditions which could cause SuRo Capital's actual results to differ from management's current expectations are contained in SuRo Capital's filings with the Securities and Exchange Commission. SuRo Capital undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.
About SuRo Capital Corp.
SuRo Capital Corp. (Nasdaq: SSSS) is a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock. SuRo Capital is headquartered in New York, NY and has offices in San Francisco, CA. Connect with the company on X, LinkedIn, and at www.surocap.com.
Contact
SuRo Capital Corp.
(212) 931-6331
IR@surocap.com
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
| March 31, 2024 | December 31, 2023 | ||||||
| ASSETS | |||||||
| Investments at fair value: | |||||||
| Non-controlled/non-affiliate investments (cost of | $ | 140,167,986 | $ | 147,167,535 | |||
| Non-controlled/affiliate investments (cost of | 22,871,704 | 24,931,333 | |||||
| Controlled investments (cost of | 11,975,881 | 11,982,381 | |||||
| Total Portfolio Investments | 175,015,571 | 184,081,249 | |||||
| Investments in U.S. Treasury bills (cost of | 29,621,913 | 63,810,855 | |||||
| Total Investments (cost of | 204,637,484 | 247,892,104 | |||||
| Cash | 50,814,399 | 28,178,352 | |||||
| Escrow proceeds receivable | 236,303 | 309,293 | |||||
| Interest and dividends receivable | 137,657 | 132,607 | |||||
| Deferred financing costs | 577,900 | 594,726 | |||||
| Prepaid expenses and other assets(1) | 467,149 | 494,602 | |||||
| Total Assets | 256,870,892 | 277,601,684 | |||||
| LIABILITIES | |||||||
| Accounts payable and accrued expenses(1) | 1,270,583 | 346,308 | |||||
| Dividends payable | 44,700 | 152,523 | |||||
| 73,834,474 | 73,745,207 | ||||||
| Total Liabilities | 75,149,757 | 74,244,038 | |||||
| Net Assets | $ | 181,721,135 | $ | 203,357,646 | |||
| NET ASSETS | |||||||
| Common stock, par value | $ | 253,533 | $ | 254,458 | |||
| Paid-in capital in excess of par | 248,883,867 | 248,454,107 | |||||
| Accumulated net investment loss | (7,527,013 | ) | (4,304,111 | ) | |||
| Accumulated net realized loss on investments, net of distributions | (12,772,846 | ) | (12,348,772 | ) | |||
| Accumulated net unrealized appreciation/(depreciation) of investments | (47,116,406 | ) | (28,698,036 | ) | |||
| Net Assets | $ | 181,721,135 | $ | 203,357,646 | |||
| Net Asset Value Per Share | $ | 7.17 | $ | 7.99 | |||
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| (1) | This balance includes a right of use asset and corresponding operating lease liability, respectively. |
| (2) | As of March 31, 2023, the |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| INVESTMENT INCOME | ||||||||
| Non-controlled/non-affiliate investments: | ||||||||
| Interest income(1) | $ | 242,007 | $ | 49,475 | ||||
| Dividend income | 21,875 | 63,145 | ||||||
| Controlled investments: | ||||||||
| Interest income | 435,000 | 236,000 | ||||||
| Interest income from U.S. Treasury bills | 829,209 | 950,462 | ||||||
| Total Investment Income | 1,528,091 | 1,299,082 | ||||||
| OPERATING EXPENSES | ||||||||
| Compensation expense | 2,185,318 | 2,136,754 | ||||||
| Directors’ fees | 171,113 | 160,565 | ||||||
| Professional fees | 728,559 | 990,834 | ||||||
| Interest expense | 1,214,267 | 1,213,286 | ||||||
| Income tax expense | 2,100 | 529,780 | ||||||
| Other expenses | 449,636 | 489,628 | ||||||
| Total Operating Expenses | 4,750,993 | 5,520,847 | ||||||
| Net Investment Loss | (3,222,902 | ) | (4,221,765 | ) | ||||
| Realized Gain/(Loss) on Investments: | ||||||||
| Non-controlled/non-affiliated investments | (484,141 | ) | 189,343 | |||||
| Non-controlled/affiliate investments | 60,067 | — | ||||||
| Net Realized Gain/(Loss) on Investments | (424,074 | ) | 189,343 | |||||
| Change in Unrealized Appreciation/(Depreciation) of Investments: | ||||||||
| Non-controlled/non-affiliated investments | (16,395,171 | ) | (2,063,577 | ) | ||||
| Non-controlled/affiliate investments | (2,016,699 | ) | (1,320,364 | ) | ||||
| Controlled investments | (6,500 | ) | 12,032,872 | |||||
| Net Change in Unrealized Appreciation/(Depreciation) of Investments | (18,418,370 | ) | 8,648,931 | |||||
| Net Change in Net Assets Resulting from Operations | $ | (22,065,346 | ) | $ | 4,616,509 | |||
| Net Change in Net Assets Resulting from Operations per Common Share: | ||||||||
| Basic | $ | (0.87 | ) | $ | 0.16 | |||
| Diluted(2) | $ | (0.87 | ) | $ | 0.16 | |||
| Weighted-Average Common Shares Outstanding | | |||||||
| Basic | 25,393,490 | 28,378,529 | ||||||
| Diluted(2) | 25,393,490 | 28,378,529 | ||||||
__________________________________________________
| (1) | Includes interest income earned on idle cash. |
| (2) | For the three months ended March 31, 2024 and March 31, 2023, there were no potentially dilutive securities outstanding. |
SURO CAPITAL CORP. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)
| | Three Months Ended March 31, | |||||||
| 2024 | 2023 | |||||||
| Per Basic Share Data | ||||||||
| Net asset value at beginning of the year | $ | 7.99 | $ | 7.39 | ||||
| Net investment loss(1) | (0.13 | ) | (0.15 | ) | ||||
| Net realized gain/(loss) on investments(1) | (0.02 | ) | 0.01 | |||||
| Net change in unrealized appreciation/(depreciation) of investments(1) | (0.73 | ) | 0.30 | |||||
| Stock-based compensation(1) | 0.06 | 0.04 | ||||||
| Net asset value at end of period | $ | 7.17 | $ | 7.59 | ||||
| Per share market value at end of period | $ | 4.55 | $ | 3.62 | ||||
| Total return based on market value(2) | 15.48 | % | (4.74 | )% | ||||
| Total return based on net asset value(2) | (10.26 | )% | 2.71 | % | ||||
| Shares outstanding at end of period | 25,353,284 | 28,338,580 | ||||||
| Ratios/Supplemental Data: | | | ||||||
| Net assets at end of period | $ | 181,721,135 | $ | 215,043,069 | ||||
| Average net assets | $ | 202,519,594 | $ | 209,347,362 | ||||
| Ratio of net operating expenses to average net assets(3) | 9.44 | % | 10.70 | % | ||||
| Ratio of net investment loss to average net assets(3) | (6.40)% | (8.18)% | ||||||
| Portfolio Turnover Ratio | 0.18 | % | 1.24 | % | ||||
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| (1) | Based on weighted-average number of shares outstanding for the relevant period. |
| (2) | Total return based on market value is based upon the change in market price per share between the opening and ending market values per share in the period, adjusted for dividends and equity issuances. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in the period, adjusted for dividends and equity issuances. |
| (3) | Financial highlights for periods of less than one year are annualized and the ratios of operating expenses to average net assets and net investment loss to average net assets are adjusted accordingly. Because the ratios are calculated for the Company’s common stock taken as a whole, an individual investor’s ratios may vary from these ratios. |
FAQ
What was SuRo Capital Corp.'s net asset value per share as of March 31, 2024?
What investments did SuRo Capital Corp. make during the first quarter of 2024?
What was the outcome of SuRo Capital Corp.'s modified Dutch Auction tender offer?
What is SuRo Capital Corp.'s Share Repurchase Program?
