180 Degree Capital Corp. Notes Average Discount of Net Asset Value Per Share to Stock Price for Tenth Month of Initial Measurement Period of Its Discount Management Program

Rhea-AI Summary

180 Degree Capital Corp (NASDAQ: TURN) reported an average discount of approximately 20% between its estimated daily net asset value per share and stock price during October 2024 and year-to-date through October. The company's Board is evaluating this discount under its Discount Management Program, with two measurement periods: Jan-Dec 2024 and Jan-Jun 2025. If the average daily discount exceeds 12%, the Board will consider options including expanding its $5 million stock buyback program, cash distributions, tender offers, or other strategic alternatives.

Positive

• Board commitment to address stock price discount through various strategic options
• Existing $5 million stock buyback program in place
• Management alignment with shareholders through significant personal stock ownership

Negative

• 20% average discount to NAV in October 2024, significantly above 12% threshold
• Continued weakness in small-cap stock performance
• Portfolio companies experiencing delays in value creation initiatives

Insights

Financial Analyst

The persistent 20% discount to NAV represents a significant valuation gap, prompting the Board's consideration of shareholder-friendly actions. The company's commitment to a $5 million buyback program and potential additional capital return measures could provide near-term catalysts. However, the management's cautious approach to avoid forced portfolio liquidation at depressed valuations shows prudent long-term thinking.

The insider ownership and open market purchases at higher prices demonstrate strong alignment with shareholders. The focus on constructive activism in the small-cap space, coupled with potential interest rate easing and post-election clarity, could drive multiple expansion. The upcoming Q4 updates and mid-November shareholder call may serve as near-term catalysts for narrowing the NAV discount.

MONTCLAIR, N.J., Nov. 04, 2024 (GLOBE NEWSWIRE) -- 180 Degree Capital Corp. (“180 Degree Capital”) (NASDAQ: TURN), noted today that the average discount between its estimated daily net asset value per share (“NAV”) and its daily closing stock price during October 2024 and year-to-date through the end of October 2024, were approximately 20% and 20%, respectively.¹ This discount was approximately 15% on October 30, 2024.

As previously disclosed in a press release on November 13, 2023, 180 Degree Capital’s Board of Directors (the “Board”) has set two measurement periods of 1) January 1, 2024 to December 31, 2024, and 2) January 1, 2025 to June 30, 2025, in which it will evaluate the average discount between TURN’s estimated daily NAV and its closing stock price pursuant to a Discount Management Program. Should TURN’s common stock trade at an average daily discount to NAV of more than 12% during either of these measurement periods, the Board will consider all available options at the end of each measurement period including, but not limited to, a significant expansion of 180 Degree Capital’s current stock buyback program of up to $5 million, cash distributions reflecting a return of capital to shareholders, a tender offer, or other strategic options. We currently believe that any option selected by the Board will be chosen carefully to not jeopardize the long-term potential of TURN to create value by requiring the monetization of a significant portion of TURN’s portfolio at historically low stock prices.

“October is commonly a difficult month, particularly for small capitalization stocks, and this year continued the trend,” said Kevin M. Rendino, Chief Executive Officer of 180 Degree Capital. “We used the weakness of October that resulted from what we believe is largely tax-loss rather than fundamental selling to position our portfolio for what we believe will be opportunities to generate value once our holdings begin to report and get back in front of investors during the remaining portion of Q4 2024. We continue to believe that the end of the information vacuum, coupled with the end of this US election cycle and likely continued easing in interest rates will lead to renewed interest in small capitalization stocks, particularly should those companies demonstrate resilience in their businesses. As we mentioned in our release on October 24, 2024, we are actively working with many of our portfolio companies toward the completion of efforts that we believe will unlock value for all stakeholders of those businesses, including 180 Degree Capital. Our work is also not all externally focused. 180 Degree Capital has valuable assets that we believe continue to be undervalued as reflected by our stock price and discount to NAV. We continue to evaluate a number of strategic options that we believe may unlock value for our shareholders as well.”

Daniel B. Wolfe, President of 180 Degree Capital, added, “We also noted in our most recent release that many of our recent constructive activism efforts began less than a year ago, and these efforts often take more time than desired to reach conclusion. We encourage our shareholders not to mistake these times as a lack of urgency on our or our portfolio companies management teams’ parts. As the largest shareholder and fifth largest shareholders of 180 Degree Capital through largely open market purchases at materially higher stock prices than today, Kevin and I are fully aligned with stockholders in the importance of value creation for our stockholders. We look forward to discussing updates from the quarter and what we are able to discuss regarding our constructive activism efforts on our next shareholder call in mid-November 2024.”

About 180 Degree Capital Corp.

180 Degree Capital Corp. is a publicly traded registered closed-end fund focused on investing in and providing value-added assistance through constructive activism to what we believe are substantially undervalued small, publicly traded companies that have potential for significant turnarounds. Our goal is that the result of our constructive activism leads to a reversal in direction for the share price of these investee companies, i.e., a 180-degree turn. Detailed information about 180 and its holdings can be found on its website at www.180degreecapital.com.

Press Contact:
Daniel B. Wolfe
Robert E. Bigelow
180 Degree Capital Corp.
973-746-4500
ir@180degreecapital.com

Mo Shafroth
RF Binder
Morrison.shafroth@rfbinder.com

Forward-Looking Statements

This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company's current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see the Company's securities filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company's business and other significant factors that could affect the Company's actual results. Except as otherwise required by Federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The reference and link to the website www.180degreecapital.com has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release. 180 is not responsible for the contents of third-party websites.

1. Daily estimated NAVs used for the discount calculation outside of quarter-end dates are determined as prescribed in 180’s Valuation Procedures for Level 3 assets. Non-investment-related assets and liabilities used to determine estimated daily NAV are those reported as of the end of the prior quarter.

FAQ

What is the current discount between TURN's NAV and stock price as of October 2024?

The average discount between TURN's estimated daily NAV and stock price was approximately 20% during October 2024 and year-to-date through October 2024.

What actions will TURN's Board take if the discount remains above 12%?

The Board will consider options including expanding the $5 million stock buyback program, cash distributions, tender offers, or other strategic alternatives if the discount exceeds 12% during the measurement periods.

What are the measurement periods for TURN's Discount Management Program?

The measurement periods are January 1, 2024 to December 31, 2024, and January 1, 2025 to June 30, 2025.