180 Degree Capital Corp. Reports Net Asset Value per Share (“NAV”) of $5.16 as of March 31, 2024

Rhea-AI Summary

180 Degree Capital Corp. (NASDAQ:TURN) reported an increase in its Net Asset Value per Share (NAV) to $5.16 as of March 31, 2024, up from $5.02. This growth was driven by a 4.7% gross total return in their public portfolio. Despite market pressures on microcapitalization stocks since mid-March 2024, the company views this period as an opportunity to realign and strengthen their portfolio. TURN's unique strategy involves constructive activism and a concentrated portfolio of 10-15 microcap companies. Long-term performance shows varying results with a notable 196.3% gross total return since Q4 2016. However, NAV declined by 37.7% since inception.

The company also highlighted the ongoing disparity between large-cap and microcap stocks, considering it a chance for long-term value creation. A conference call to discuss the results and developments is scheduled for May 14, 2024, at 9am ET.

Positive

• NAV increased to $5.16 from $5.02 as of March 31, 2024.
• TURN achieved a 4.7% gross total return in its public portfolio during Q1 2024.
• The company is proactively realigning its portfolio in response to market softness.
• TURN's gross total return since Q4 2016 stands at 196.3%.
• The strategy includes constructive activism and a focused portfolio of 10-15 microcap companies.

Negative

• NAV has declined by 37.7% since inception.
• TURN's public portfolio gross total return for the 3-year period up to Q1 2024 is down 36.4%.
• The NAV change from Q1 2023 to Q1 2024 shows a decrease of 20.9%.
• Stock price change shows a decline of 42% over the past 3 years.
• Market pressures on microcapitalization stocks have continued since mid-March 2024.

Insights

Financial Analyst

The release of the Net Asset Value (NAV) per share for 180 Degree Capital Corp. provides critical insight into the company’s current financial health and operational efficiency. As of March 31, 2024, the NAV is reported at $5.16, up from $5.02 in the previous quarter. This is a positive trend reflecting a gross total return of +4.7% from their public portfolio. However, it's important to note that despite this quarterly improvement, the broader historical performance has significant downsides, with a -20.9% drop in NAV year-over-year and a -51.3% fall over three years. This discrepancy highlights the volatile nature of microcapitalization investments, which can often experience sharp fluctuations.

For retail investors, the increase in NAV is a positive short-term signal. However, the historical context suggests the need for caution. It's worth considering that the company’s ability to leverage market softness to realign its portfolio can potentially yield long-term gains, especially given their constructive activism strategy.

Market Research Analyst

The dynamics of the microcap market, as described by 180 Degree Capital’s CEO and President, are intricately tied to broader market trends and investor sentiment. The ongoing pressure on microcapitalization stocks since mid-March 2024, despite positive reports from many portfolio companies, suggests a broader market skepticism or liquidity constraints impacting these smaller stocks. The strategy of focusing on a concentrated portfolio of 10-15 microcap companies and utilizing constructive activism can be effective, but it’s not without risks.

Investors should understand that microcaps are typically more volatile and less liquid than large-cap stocks. The company’s approach of doubling down on high risk/reward profiles during market downturns can offer substantial upside but can also exacerbate losses if the market conditions worsen or if specific investments underperform. The historic performance data reveals both the potential for significant gains and the reality of substantial drawdowns.

Legal Expert

180 Degree Capital's strategy involves a significant degree of constructive activism, which often includes engaging with management teams to influence corporate governance and strategic direction. This approach can enhance value by improving operational performance and aligning management interests with shareholders. However, it also carries legal and regulatory risks, especially if there are disagreements with management or other shareholders. Activism can lead to legal battles, proxy fights, or regulatory scrutiny, all of which can be costly and distract from the company’s core operations.

For retail investors, understanding the legal landscape in which 180 Degree Capital operates is essential. Constructive activism has the potential to unlock value, but it also introduces additional layers of complexity and risk that need to be carefully weighed.

MONTCLAIR, N.J., May 13, 2024 (GLOBE NEWSWIRE) -- 180 Degree Capital Corp. (NASDAQ:TURN) (“180 Degree Capital” and the “Company”), today reported its financial results as of March 31, 2024, and noted additional developments from the second quarter of 2024. The Company also published a letter to shareholders that can be viewed at https://ir.180degreecapital.com/financial-results.

“The first quarter of 2024 continued overall positive trends both in terms of increases of our net asset value per share (“NAV”) and microcapitalization-focused indices,” said Kevin M. Rendino, Chief Executive Officer of 180 Degree Capital. “Our +4.7% gross total return in our public portfolio was the primary contributor to the growth of NAV from $5.02 to $5.16. As we noted in our press release on May 1, 2024, the pressure on microcapitalization stocks that began in mid-March 2024 has continued through the second quarter of 2024 to date in the face of strong reports by many of our portfolio companies. We are actively using this period of market softness to align our portfolio with those companies that we believe are in the best positions to perform during this period and to create outsized value for stockholders as capital returns to risk assets. We are also expanding our constructive activism engagements to help our companies be prepared for a favorable market environment for microcapitalization stocks, while making sure that their businesses are well-managed and well-positioned during the current market softness.”

“We continue to view the dislocation between large capitalization stocks and microcapitalization stocks as an opportunity for long-term value creation for TURN’s stockholders,” added Daniel B. Wolfe, President of 180 Degree Capital. “Our permanent capital provides the ability to take advantage of such periods where other funds may be forced to sell due to redemptions and/or lack of inflows of capital. We have used such periods in the past to double-down on those positions that we believe have outsized risk/reward profiles. TURN is a unique investment opportunity for those investors interested in a concentrated portfolio of approximately 10-15 microcapitalization companies overlaid with our constructive activism. We do not believe there is another publicly traded entity that has this combination of attributes.”

The table below summarizes 180’s performance over periods of time through the end of Q1 2024¹:

	Quarter	1 Year	3 Year		5 Year	Inception to Date
	Q1 2024	Q1 2023- Q1 2024	Q1 2021- Q1 2024		Q1 2019- Q1 2024	Q4 2016- Q1 2024
TURN Public Portfolio Gross Total Return (Excluding SMA Carried Interest)	4.7%	-8.1%	-36.4%		39.6%	196.3%
TURN Public Portfolio Gross Total Return (Including SMA Carried Interest)	4.7%	-8.1%	-34.7%		48.9%	215.7%
Change in NAV	2.8%	-20.9%	-51.3%		-37.7%	-26.5%
Change in Stock Price	4.6%	-14.7%	-42.0%		-23.1%	3.6%
Russell Microcap Index	4.7%	17.8%	-14.0%		39.4%	55.2%
Russell Microcap Growth Index	6.0%	13.3%	-32.2%		17.8%	36.3%
Russell Microcap Value Index	3.5%	19.6%	-0.2%		54.6%	67.8%
Russell 2000 Index	5.2%	19.7%	-0.4%		47.4%	72.3%

Mr. Rendino and Mr. Wolfe will host a conference call tomorrow, Tuesday, May 14, 2024, at 9am Eastern Time, to discuss the results from Q1 2024 and developments to date during Q2 2024. The call can be accessed by phone at (609) 746-1082 passcode 415049 or via the web at https://www.freeconferencecall.com/wall/180degreecapital. Additionally, slides that will be referred to during the presentation can be found on 180 Degree Capital’s investor relations website at https://ir.180degreecapital.com/ir-calendar.

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 Degree Capital and its holdings can be found on its website at www.180degreecapital.com.

Press Contact:
Daniel B. Wolfe
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 Degree Capital is not responsible for the contents of third-party websites.

1. Past performance is not an indication or guarantee of future performance. Gross unrealized and realized total returns of 180 Degree Capital's cash and securities of publicly traded companies are compounded on a quarterly basis, and intra-quarter cash flows from investments in or proceeds received from privately held investments are treated as inflows or outflows of cash available to invest or withdrawn, respectively, for the purposes of this calculation. 180 Degree Capital is an internally managed registered closed-end fund that has a portion of its assets in legacy privately held companies that are fair valued on a quarterly basis by the Valuation Committee of its Board of Directors, and 180 Degree Capital does not have an external manager that is paid fees based on assets and/or returns. Please see 180 Degree Capital's filings with the SEC, including its 2023 Annual Report on Form N-CSR for information on its expenses and expense ratios.

FAQ

What was the NAV of 180 Degree Capital Corp. (TURN) as of March 31, 2024?

The NAV of 180 Degree Capital Corp. (TURN) was $5.16 as of March 31, 2024.

How did 180 Degree Capital Corp.'s public portfolio perform in Q1 2024?

In Q1 2024, the public portfolio of 180 Degree Capital Corp. achieved a 4.7% gross total return.

What is the long-term gross total return of TURN's public portfolio since Q4 2016?

Since Q4 2016, TURN's public portfolio has achieved a gross total return of 196.3%.

How has TURN's NAV changed since inception?

Since inception, TURN's NAV has declined by 37.7%.

What has been the change in TURN's stock price over the past 3 years?

Over the past 3 years, the stock price of TURN has declined by 42%.

What opportunity does TURN see in the current market for microcap stocks?

TURN sees the current market softness in microcap stocks as an opportunity for long-term value creation for its stockholders.

When is the conference call to discuss 180 Degree Capital Corp.'s Q1 2024 results?

The conference call to discuss 180 Degree Capital Corp.'s Q1 2024 results is scheduled for May 14, 2024, at 9am ET.