180 Degree Capital Corp. Notes Average Discount of Net Asset Value per Share to Stock Price for Fifth Month of Initial Measurement Period of Its Discount Management Program
180 Degree Capital Corp. (NASDAQ: TURN) has reported an average discount of 18% between its daily net asset value (NAV) per share and its closing stock price in May 2024, with a year-to-date discount of 20%. This figure was 19% on May 31, 2024. The company has a Discount Management Program in place, which will evaluate the discount over two measurement periods, and may consider options like stock buybacks, cash distributions, or tender offers if the average discount exceeds 12%. CEO Kevin M. Rendino noted improvements in May 2024 for microcapitalization stocks, despite heightened volatility in their portfolio holdings. President Daniel B. Wolfe affirmed their long-term investment strategy, aiming for returns over 100% in one to three years.
- Reported an average discount of 18% between NAV and stock price in May 2024, showing some level of alignment between the two values.
- Improvement in microcapitalization stocks and 180 Degree Capital's holdings in May 2024.
- Strong performance from portfolio holding Synchronoss Technologies, Inc. (SNCR), which beat all analyst estimates in Q1 2024.
- Company's long-term investment strategy focused on returns over 100% in one to three years.
- Potential for material value appreciation and growth in NAV due to anticipated catalysts in 2024 and beyond.
- Year-to-date average discount between NAV and stock price was 20%, a significant gap.
- High volatility in portfolio holdings, with frequent stock price fluctuations despite positive performance.
- Persistent issues with thinly traded stocks contributing to unpredictable stock movements.
- Company faces a challenge to reduce the discount to below 12% to avoid further interventions like stock buybacks or tender offers.
Insights
180 Degree Capital Corp. is currently experiencing a notable discrepancy between its net asset value (NAV) per share and its closing stock price, with an average discount of approximately 18% in May 2024 and 20% year-to-date. This discount triggers a concern, as a high NAV discount can indicate market skepticism about the company's valuation or prospects. While the company has established a Discount Management Program to address this, the effectiveness of such measures remains to be seen.
The company's strategy includes options like stock buybacks and cash distributions if the discount persists, which can be positive for shareholders as it often aims to boost stock prices. However, it's essential to understand that such corporate actions do not inherently resolve the underlying issues causing the discount.
From a financial perspective, investors might find value in the company’s detailed disclosure of volatility and performance, particularly with holdings like Synchronoss Technologies. This transparency is beneficial for assessing risk and understanding the company’s operational context. Yet, the wild fluctuations in stock prices of core holdings could be a red flag for risk-averse investors.
The stock market’s perception of 180 Degree Capital seems to be marred by high volatility and a lack of confidence in its portfolio holdings, despite those holdings reporting positive business results. The company's emphasis on microcapitalization stocks, which are typically more volatile and less liquid than larger stocks, exacerbates these challenges.
For retail investors, it’s vital to weigh the potential high returns promised by the company against the inherent risks associated with volatile microcap stocks. The company's long-term strategy is to generate returns over a one-to-three year holding period, suggesting that investors need to be patient and prepared for short-term fluctuations.
Understanding the broader market environment and the specific challenges faced by 180 Degree Capital can provide insights into the risks and rewards of investing in such a specialized investment firm. The detailed analysis provided by the company regarding the price movements of Synchronoss Technologies, for example, highlights the importance of due diligence and staying informed about individual portfolio companies.
MONTCLAIR, N.J., June 03, 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 May 2024 and year-to-date through the end of May 2024, were approximately
As previously disclosed in a press release on November 13, 2023, 180 Degree Capital’s Board of Directors 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
“May 2024 was an overall improvement from April 2024 for both microcapitalization stocks and 180 Degree Capital’s holdings,” said Kevin M. Rendino, Chief Executive Officer of 180 Degree Capital. “This improvement was coupled with heightened volatility, particularly for many of our portfolio holdings that are relatively thinly traded. For example, Synchronoss Technologies, Inc. (SNCR) reported a positive Q1 2024 that beat all analyst estimates across the board. Here are the daily percent changes in SNCR’s stock price over the three weeks post its earnings report on May 9, 2024: +
“We are investors, not traders,” continued Daniel B. Wolfe, President of 180 Degree Capital. “We seek to generate returns of greater than
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 was the average discount between NAV and stock price for TURN in May 2024?
What actions will 180 Degree Capital consider if the average discount exceeds 12%?
What was the discount between NAV and stock price on May 31, 2024?
How did Synchronoss Technologies, Inc. (SNCR) perform in Q1 2024?
What is TURN's long-term investment strategy?
