Earnings Call Transcript - SSSS Q3 2020

Operator, Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to SuRo Capital’s Third Quarter 2020 Earnings Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. This call is being recorded. I’d now like to turn things over to Adam Bates. Please go ahead.

Adam Bates, Chief Executive Officer

Thank you for joining us on today’s call. I am joined today by the Chief Executive Officer of SuRo Capital, Mark Klein; and Chief Financial Officer, Allison Green. Please note that a slide presentation that corresponds to today’s prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events & Presentations. Today’s call is being recorded and broadcast live on our website, www.surocap.com. Replay information is included in our press release issued today. This call is the property of SuRo Capital and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in today’s earnings press release regarding forward-looking information. Statements made in today’s conference call and webcast may constitute forward-looking statements, which relate to future events or future performance or financial condition. These statements are not guarantees of our future performance or future financial condition or results and involve a number of risks, estimates and uncertainties, including the impact of the COVID-19 pandemic and 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. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including, but not limited to, those described from time to time in the company’s filings with the SEC. Management does not undertake to update such forward-looking statements unless required to do so by law. To obtain copies of SuRo Capital’s latest SEC filings please visit our website at www.surocap.com or the SEC’s website at sec.gov. Now I would like to turn the call over to Mark Klein.

Mark Klein, Chief Executive Officer

Thank you, Adam. We are pleased to share the results of SuRo Capital’s third quarter 2020. These are obviously unprecedented times we are living through, and society is facing tremendous challenges. We at SuRo Capital would like to again thank the frontline workers and responders who have put themselves at risk throughout the COVID-19 pandemic. We are fortunate to report that our employees and their families remain healthy and continue to function remotely. I will discuss how our portfolio is faring during the ongoing COVID-19 pandemic and volatility surrounding the election and highlight how a few of our larger positions have even experienced degrees of business acceleration during these uncertain times. To conclude, I will hand the call over to Allison Green for a brief financial overview. At the conclusion of our remarks, we will open the call for questions. Let’s start with Slide 3. This quarter, SuRo Capital reported its highest dividend adjusted net asset value per share since September of 2015. At September 30, 2020, net asset value was $12.46 per share, adjusted for dividends declared during the quarter of $0.40 a share and increase from $11.84 per share at June 30, 2020. Net asset value totaled approximately $253 million at quarter’s end compared to $192 million in the second quarter. Please turn to Slides 4, 5 and 6 for a review of notable developments in our investment portfolio in the third quarter and subsequent to quarter’s end. We continue to take initiatives to drive shareholder value. On October 28, SuRo Capital’s Board of Directors declared a $0.25 per share dividend to stockholders. This dividend was driven by year-to-date monetizations in SuRo Capital’s investment portfolio and has made in addition to the $0.25 per share dividend declared by SuRo Capital’s Board of Directors on September 25 and paid in October. Based on ongoing activity in our investment portfolio, we anticipate declaring an additional dividend by year-end. Additionally, on October 28, SuRo Capital’s Board of Directors authorized a $10 million increase to our share repurchase program. This brings the total amount allocated to share repurchases to $50 million inclusive of the $10 million Modified Dutch Tender Offer that SuRo Capital effectuated in the fourth quarter of 2019. During the third quarter, SuRo Capital executed an at-the-market offering raising approximately $51 million before fees at a weighted average price of $13.36 per share. This capital raise was quite accretive to our NAV per share. We have not issued any stock since September 28, which was two days prior to the Palantir direct listing. Later in the call, Allison will provide additional details on the dividends, the current status of the share repurchase program and the results of our Q3 at-the-market offering. SuRo Capital’s top five positions as of September 30 were Coursera, Palantir, Course Hero, Nextdoor and OZY Media. These positions accounted for approximately 71% of the investment portfolio. As of September 30, our top 10 positions accounted for approximately 89% of the portfolio. Now I would like to discuss notable developments in a few of our largest positions. First, I want to highlight our investment in Palantir, our second largest position. On September 30, Palantir executed a direct listing and began trading on the New York Stock Exchange. The direct listing comes after Palantir announced it had confidentially submitted a draft registration statement on its Form S-1 with the SEC in early July. Consistent with Palantir’s lock-up agreement 20% of Palantir shares were freely tradable upon the execution of Palantir’s direct listing. Consistent with our view of monetizing our public securities, we sold a portion of our unrestricted shares on September 30 and the remaining freely tradable shares shortly after quarter's end. We continue to hold the remaining restricted 80% of our Palantir Class A common stock, and we’ll evaluate further monetization of this investment after the lock-up period expired. I would like – and now next, I would like to note that our investments in online learning through our positions in Coursera and Course Hero represent one-third of our investment portfolio. From recent media reports as well as earnings reports from public online learning companies, it is evident the COVID-19 pandemic has continued to spark surges in demand for online education. We continue to believe the effects of the pandemic have accelerated a long-term structural change in how education is being and will be consumed with a clear transition towards online education. On July 17, Coursera, our largest position, announced that it has raised $130 million in Series F financing. The round was led by NEA, and we participated with a $2.8 million pro rata follow-on investment. The round also included existing investors, Kleiner Perkins, Seek Group, Learn Capital and others and brought the company’s cash balance to more than $300 million according to the company’s announcement. The information in online publication reported the round values Coursera at approximately $2.5 billion. According to pitch book, Coursera had last raised $103 million in April 2019 at a $1.56 billion pre-money valuation. Coursera continues to take initiative to support students and universities during the COVID-19 pandemic. In March 2020, in response to COVID-19, Coursera launched a Campus Response Initiative providing every university in the world with free access to Coursera’s course catalog to Coursera for Campus. Since this launch, Coursera has activated more than 10,000 programs for colleges and universities reaching more than 1.4 million students. Additionally, Coursera launched a Workforce Recovery Initiative to help governments combat unemployment. Since the launch, Coursera has activated more than 220 programs for governments across 70 countries and 25 U.S. states. In June of 2020, Coursera announced it was extending college and university students’ free access to over 3,800 courses, 150 guided projects, 400 specializations and 11 professional certificates on the Coursera platform. Through September 30, students could enroll at no cost in the program, which includes online instruction from the world’s top universities and professional certificates from leading industry educators like Google and IBM. With 70% of the world’s students impacted by campus closures, the program allows students to continue learning outside of the classroom. Combined, these programs have benefited more than 200,000 learners. As reported in August 2020, in a Tech Crunch article, Course Hero, our third largest position, raised a new $70 million tranche of its Series B capital at a $1.1 billion pre-money valuation. This round brings the total primary capital raise in Course Hero Series B round to $80 million. According to an EdSurge report, this financing included investments from TPG, Goldman Sachs Asset Management and others. The report also indicated that Course Hero has over 1 million subscribers each paying between $10 and $40 per month and that Course Hero surpassed $100 million in revenue last year. EdSurge previously reported in February that Course Hero had raised $10 million of the initial Series B round led by NewView Capital at the $1.1 billion pre-money valuation. NewView Capital has also contributed $30 million to the company’s employee tender program. Due to the impact of the COVID-19 pandemic and related quarantines and school closures, with less in-person student access to teachers or study groups, students have increasingly turned to online learning supplements for their studies, including Course Hero’s online document library. Chegg, a key competitor to Course Hero, noted in its October 2020 earnings call that its research indicates more than two-thirds of the U.S. undergraduates who were asked about their experiences during the recent lockdown would welcome more online education after the pandemic ends. Additionally, the research found that approximately half of the professors now feel online education is an effective teaching method and feel better prepared to teach online. This is up from roughly 35% of the professors in May. Students turned to Chegg in record numbers during the quarter with expectations for this trend to continue throughout the year, regardless of what college campuses will look like. We believe Course Hero is similarly positioned to capitalize on this long-term trend towards online learning. In response to the pandemic, Course Hero has offered educators pre-access to its document library of more than 40 million teaching and learning resources. In October of 2020, Course Hero announced a partnership to enable students affected by COVID-19 to access microgrants of up to $500. Through this partnership, Course Hero distributed funds to 1,000 students in institutions across the country. In July of this year, Course Hero also announced the launch of an educator exchange, where college faculty can earn income by uploading and sharing teaching, learning, and study materials with peers and students. This exchange further expands Course Hero’s efforts to partner with faculty by providing a platform where the value of lecture notes, practice tests, and teaching materials can be recognized and shared. Nextdoor, our fourth largest position, is an outstanding platform that serves over 219,000 neighborhoods across 11 countries. We believe Nextdoor has tremendous upside to continue to monetize its hyper-localized user base in the $161 billion United States local advertising market. According to Second Measure, Nextdoor had over 100 million visitors to its platform in September 2020, up nearly 30% year-over-year. As reaching local audiences through digital advertising channels has become one of the most important mobile marketing trends, we believe Nextdoor has reached a critical mass of users and that it is highly valuable to advertisers. Nextdoor’s traction has continued during the COVID-19 pandemic as the company has launched Nextdoor groups and Nextdoor help maps to provide healthy individuals an opportunity to support neighbors in need. Segmented by six general investment themes, the top allocation of our investment portfolio is education technology, representing approximately 45% of the investment portfolio at fair value. Big data and cloud was the second largest category representing approximately 26% of the portfolio. Our financial technology and services category accounted for approximately 11% of our portfolio at fair value. Our social and mobile category accounted for approximately 10% of our portfolio and marketplaces accounted for approximately 9% of our investment portfolio at fair value. As previously discussed, we have brought in our focus beyond our core equity strategy into private credit and into pre-SPAC merger pipes. We continue to see a high volume of attractive opportunities across each of these areas. A few industries of focus include e-commerce and retail, financial technology, food technology, and transportation and logistics. As such, we’re excited to announce that we have invested $10 million in Blink Health. Additionally, we have a couple of other investments in the final stages of closing. Please turn to Slide 7. Blink Health is a pharmaceutical technology platform that enables consumers to access the medicines they need at prices they can afford. The company is focused on disrupting the traditional pharmaceutical supply chain to provide better data to manufacturers and, more importantly, better prices to consumers. The existing supply chain is unnecessarily complex and rewards middlemen for providing little value to the end consumer. As a result, the existing supply chains reliance on middlemen has raised drug prices for consumers. Blink aims to disrupt the existing supply chain model by negotiating directly with pharmaceutical manufacturers and keeping a continued focus on lowering the end cost for consumers while also providing critical data to the key players in the supply chain. Blink Health’s B2B software platform alongside their online pharmaceutical marketplace creates value throughout the supply chain by eliminating the need for traditional middlemen in the market. The company is focused on the entire prescription market, unlocking savings on both generic and branded drugs for both cash and insurance-based claims. Given the recent success of GoodRx’s IPO in September, we believe the public market is excited about companies focused on lowering drug costs. While Blink competes with a number of players in the pharmacy PBM and telemedicine spaces, Blink Health is uniquely positioned to succeed as they continue to use a software and tech-enabled approach to create a new customer experience and supply chain for prescriptions. As Blink Health is a well-capitalized and capital-efficient provider of its pharmacy as a service platform, we believe this investment presents a compelling opportunity to participate in the disruption of the existing pharmaceutical market. Last week, we closed on an investment in the Series A and Series C preferred stock that we believe gives us significant upside in the future of Blink Health. Not only does the company have the financial backing to continue to develop its product suite, but we believe Blink Health’s ability to compete against large pharmacy chains alongside their value add to health systems and drug manufacturers uniquely positions them to succeed. Looking ahead, we believe that SuRo Capital is well positioned to deliver long-term shareholder value. We are executing against a disciplined growth investment strategy with strong tailwinds, and we believe the fundamentals of our portfolio are strong. Thank you for your attention. And with that, I will turn the call over to Allison.

Allison Green, Chief Financial Officer

Thank you, Mark. I would like to follow Mark’s update with a more detailed review of our financial results as of September 30, 2020. Our recently declared dividends, the expansion and status of our share repurchase program, the results of our at-the-market offering, our continued expense reduction initiative, and our current liquidity position. We are pleased to report we ended the third quarter with an NAV per share of $12.46 adjusted for $0.40 per share and dividends declared during the quarter. It breaks out the NAV per share as of quarter end is shown on Slide 8 and it’s consistent with our financial reporting. In sum, the increase in NAV per share during the third quarter was largely driven by $0.80 per share of net unrealized appreciation of our portfolio investment, approximately $0.24 per share attributable to our at-the-market capital raise, and approximately $0.12 per share in net realized gains from the exit or sale of investments in our portfolio. These increases to NAV per share were partially offset by $0.40 per share in dividends declared during the quarter and at $0.13 per share decrease in net investment loss; and in that $0.01 per share decrease attributable to the conversion of 1,780,000 or just under 5% of our 4.75% convertible senior notes due March 2023. On July 29, our board of directors declared a dividend of $0.15 per share paid on August 25 to shareholders of record on August 11. This dividend was related to investment activity in 2019 and brings the total dividends declared related to 2019 investment activity to $0.47 per share. All dividends attributable to 2019 had been categorized as net realized capital gains for tax purposes. On September 25, our board of directors declared a dividend of $0.25 per share paid on October 20 to shareholders of record on October 5. This dividend is related to current year investment activity and is expected to be categorized as net realized capital gains for tax purposes. Subsequent to quarter end, on October 28, our board of directors declared a dividend of $0.25 per share payable on November 30 to shareholders of record on November 10. This dividend is also related to current year investment activity and is expected to be categorized as net realized capital gains for tax purposes. As Mark noted, we anticipate paying an additional dividend to those noted here closer to year-end. Please refer to Slide 9, as I reviewed the current status of the share repurchase program. During the third quarter, the company did not repurchase any shares as our at-the-market offering was active. As Mark mentioned earlier, we were pleased to announce that on October 28, our board of directors authorized an additional $10 million expansion of the share repurchase program. This brings the total allocation by our board of directors to the share repurchase program to $40 million. This is in addition to the $10 million 2019 Modified Dutch Auction Tender Offer. Subsequent to quarter end, we repurchased 371,283 shares of our common stock for approximately $3.1 million, since the inception of the share repurchase program in August 2017 to date. We have repurchased 4,823,332 shares of our common stock for approximately $30.4 million. Excluding the $10 million Modified Dutch Auction Tender Offer effectuated in the fourth quarter of 2019, considering share repurchases to date and the recent additional allocation by the board of directors, this leaves approximately $9.6 million for future repurchases under the program. As of today, between the share repurchase program and the 2019 Modified Dutch Auction Tender Offer, SuRo Capital has repurchased 6,272,607 shares of common stock for approximately $40.4 million since the inception of the share repurchase program in August 2017. This represents over 28% of the shares outstanding at that time. On July 29, the company entered into an at-the-market sales agreement with BTIG, JMP Securities, and Ladenburg Thalmann to issue and sell up to $50 million in aggregate amount of shares of our common stock via an at-the-market capital raise or ATM Offering. On September 23, we increased the maximum amount of shares available to be sold through the ATM Offering to $150 million from $50 million. We primarily intend to use the net proceeds from the ATM Offering to make investments in portfolio companies in accordance with our investment objective and strategy. During the third quarter, we issued and sold 3,808,979 shares under the ATM Offering at a weighted average price of $13.36 per share for gross proceeds of $51 million and net proceeds of $49.9 million after deducting commissions to the agents on the shares sold. The last day of sales was September 28, prior to the Palantir direct listing on September 30, and no additional shares have been issued or sold since September 28. As of today, up to approximately $99.1 million in aggregate amount of the shares remain available for sale under the ATM Offering, but we have no current intention of issuing additional shares of common stock under this ATM Offering at this time. During the third quarter, we continued to see the cost-saving effects from the internalization of the management of SuRo Capital. As previously discussed, as an internally managed BDC, we have a significantly reduced cost structure. Upon termination of the investment advisory agreement on March 12, 2019, we no longer pay management fees each month as management is now employed directly by the BDC and we no longer accrue an incentive fee. Total operating expenses for the third quarter were approximately $3 million. This represents a decrease of approximately 17% in operating expenses from $3.6 million during the third quarter of 2019, adjusted for stock-based compensation expense. When compared to our last third quarter as an externally managed entity, the third quarter 2020 total operating expenses of $3 million represent a nearly 34% decrease from total operating expenses before waivers of $4.6 million in the third quarter of 2018. The adjusted total operating expense for the first nine months of 2020 or year-to-date was $9.2 million adjusted for the impact of accounting guidance that requires acceleration of the recognition of all unrecognized compensation costs related to stock-based compensation in the event of a cancellation of such stock-based compensation without a repurchase exchange or replacement. This accelerated cost recognition upon cancellation of approximately $2 million of stock-based compensation in Q2 is offset in the equity section of the balance sheet. The adjusted total operating expenses of $9.2 million for the first nine months of 2020 is compared with $12.6 million in the first nine months of 2019, adjusted for the reversal of the incentive fee accrual, and $16.3 million in total operating expense before waivers for the first nine months of 2018. This year, we were fully externally managed. The continued decrease in operating expenses is primarily due to the elimination of management fees and incentive fees and costs under the prior administration agreement and further supported by ongoing expense reduction initiatives, separate from the inherent savings of the internalized management structure. We anticipate operating expenses to further decrease in 2020 as we will be fully internalized for the entire year, and costs related to the internalization have generally been absorbed in 2019. Together, we believe our ongoing meticulous efforts to reduce operating expenses and the meaningful cost savings we are realizing as an internally managed BDC will have continued positive impacts on NAV. We remain diligent about managing our expense base moving forward. Finally, I would like to review SuRo Capital’s current liquidity. We ended the quarter with approximately $107.3 million of liquid assets, including $60.3 million of cash, $7.2 million of unrestricted marketable public securities, and $39.5 million of public securities subject to lock-up restrictions. Our cash balance of $60.3 million as of September 30 consisted primarily of proceeds generated via the at-the-market offering and the monetization of various portfolio positions during the year. The $7.2 million of unrestricted marketable public securities and $39.5 million of public security subject to lockup restrictions held as of September 30 represent our shares in Palantir. During the third quarter, we sold a portion of our unrestricted shares in Palantir, not included in the $7.2 million held at quarter end for approximately $4.1 million in net proceeds, realizing approximately $3 million in gains. Subsequent to quarter end, we sold our remaining unrestricted shares for approximately $7.6 million in net proceeds, realizing approximately $5.4 million in gains. That concludes my comments. We would like to thank you for your interest and support of SuRo Capital. Now I will turn the call over to the operator to start the Q&A session.

Operator, Operator

Thank you. We’ll hear first today from Jon Hickman with Ladenburg.

Jon Hickman, Analyst

Hello. Thanks for taking my question. Could you tell us the valuations for Coursera and Course Hero were at $2.5 billion and then $1.1 billion respectively. Could you tell us how you value those positions as of September 30?

Mark Klein, Chief Executive Officer

Hi, Jon and thank you for your call and thanks for your ongoing support. As you know we don’t comment on the values of the company simply on our positions and what our positions are worth, but not as they relate to total corporate value. With that said, we utilize a range of evaluation metrics, including among other variables, the last round of evaluation. We overlay other items such as secondary trading and the waterfall and capital structure. So I know I’m not answering your question directly, but typically, our evaluation is something slightly lower or maybe more than slightly lower, but typically lower than the last round that was raised.

Jon Hickman, Analyst

Yes. Don’t you put a private discount on that from the last round?

Mark Klein, Chief Executive Officer

We do a series of things in our evaluation work that I know you and I have discussed in length. But we apply our heuristics to our evaluations, including but not limited to the last round trading in the secondary markets, if those variables aren’t there, then public comps.

Jon Hickman, Analyst

Okay. And then, I think I read recently that Nextdoor was contemplating an IPO. Was there anything you could say about that that’s already public?

Mark Klein, Chief Executive Officer

I mean, Jon, there was a Bloomberg article approximately two weeks ago by the SPAC reporter at Bloomberg, who stated that she believed that Nextdoor was in conversations with one or several SPACs at valuations between $4 billion and $5 billion, as a value of the company. That’s what we’ve read. That’s probably what you’ve read and that’s all we know or can comment on.

Jon Hickman, Analyst

Okay. And then, I’m sorry, I have one last question. The Blink business model, they make money, they deal directly with the manufacturer and then they take a cut between that in the consumer. Is that how they do it?

Mark Klein, Chief Executive Officer

Yes. But their value proposition predominantly is you as the consumer, when your doctor wants to recommend a drug, that when they ask for your pharmacy, you give them Blink, they then enter it into the Blink system. You can then go and determine which pharmacy and you get pricing in which pharmacy you want it to be either delivered from or picked up from. One of the real advantages is that they provide is that since they work with both the generics and the name-brand equivalents. They get the same pricing and the appropriate pricing and the lowest pricing at a given pharmacy, as opposed to having to run around to go to Walgreens for one thing and perhaps your local pharmacy for something else.

Operator, Operator

Question next today from Andrew Harte with BTIG.

Andrew Harte, Analyst

Hi, good evening. Good, how are you? Thanks. I’m wondering if you can give us an update on what the pipeline might look like for future credit investments. And then as a follow-up, maybe when we can expect to see some investments in any SPAC acquisitions, pre-merger SPAC acquisitions.

Mark Klein, Chief Executive Officer

Well, obviously, we’ve just disclosed, we always disclose in our prepared remarks. We have evaluated in this quarter, the better part of 60 different portfolio companies with a fair amount of them credit opportunities. The credit work is extensive to have it there; it's bespoke. So we’re creating term sheets to do that, which is a much longer process than an equity being offered at a price or a negotiation on such. We have several credit investments in various stages of being completed. We have term sheets out on a few of them and we have further more advanced dialogues on some of them. That said, on the SPAC pipe side, we are very active in looking at those; obviously, there’s been an immense amount of activity in the SPAC from both the underwriting and the announcement of SPAC transactions. We’ve gone down the path on quite a few; I’d say one, several we’ve gotten very deep down the path on a couple. We may be able to announce that we’ve completed one or two as we end the calendar year.

Operator, Operator

We’ll hear next from Ron Levine with Ron Levine Associates.

Ron Levine, Analyst

Yes. This is Ron Levine. Mark, my question pertains to Coursera. If you have a comment on its current profitability or any thought they may have of going public.

Mark Klein, Chief Executive Officer

Thanks. And thanks for your question, Ron. Obviously, there’s been a fair amount in the public domain about Coursera, given where they are in size and saturation. There have been articles written about that may or may not go public. So to the degree that we comment, we will simply comment on what’s in the public domain, which leads the investment public to believe that they are headed towards a public offering. The timing of that remains uncertain.

Ron Levine, Analyst

Okay. Second question, do you have any feeling as to why the stock sells at such a discount to the NAV, especially in light of the changes that the current management team has made, which I really appreciate very much and congratulate?

Mark Klein, Chief Executive Officer

Thanks, Ron. I mean, I’d say a few things, right. We’ve experienced our share price volatility over the last six months, dating back to the onset of COVID, which has been unprecedented for our stock. Obviously, with Palantir coming public and given the publicity around Palantir and the excitement around that, there was a much broader base interest in our company as investors began to realize through various publications, articles, and analysts that Palantir was a large position in our portfolio. Our stock was bid up sharply. However, investment public viewed it somewhat disappointingly. We then had the same rush of folks that ran in and bid our stock up then became the sellers of our stock. Our stock decreased fairly indiscriminately, I believe. Hopefully, today’s an indicator that the stock has begun to recover, and even over the last few days, the selling has subsided. I believe we’ve had a bit of a turnover in our shareholder base. I believe talking to a lot of our shareholders that they now realize that this is an interesting vehicle and our net asset value makes a lot of sense. The portfolio was far broader than merely Palantir, and we still own 80% of our Palantir, having considerable value that will be created. I anticipate the discount as being primarily a function of volatility in the stock. The actions that we continue to take—we took advantage of it. The idea of the stock trading down to low of $8, where our NAV was $12.46 was an excellent opportunity for our Board to expand our buyback. If we can buy back stock at a discount, the stock would have to increase by 50% to get back to our NAV, which is trading at a 37% discount. Consequently, we were able to create shareholder value by reducing the number of shares at that level. I don’t believe there will continue to be significant discounts because our portfolio continues to include companies that are demonstrating their value. We will have monetizations within our portfolio. We are seizing opportunities to make investments such as in Blink and other transactions occurring. So I just believe with our approach, we’re not the old GSV, if you will. I think you saw that our stock trading above NAV for the first time in about eight years occurred due to improving conditions. I suspect the stock will trend back upwards towards NAV now that shareholders' base is sturdier and volatility is lessening.

Operator, Operator

We’ll hear next from a Private Investor.

Unidentified Analyst, Private Investor

Hi, thank you for taking my call. I’m just curious if the organization has ever considered creating its own SPAC to maybe take some of those smaller positions public, if they were interested, or if that’s something that can be possible.

Mark Klein, Chief Executive Officer

We’re not in the business of creating SPACs for ourselves. There are many good sponsors out there. I think our opportunity to invest in pipes that they create for deals that they’re creating is a very interesting pre-IPO strategy for us. I believe we will have opportunities to participate on the founder's equity side if we choose to put risk capital with SPACs, but it’s not in our mandate to create SPACs ourselves. We won’t do that. We will participate alongside other sponsors either in pipes or maybe at some point in time in their founder's equity as well.

Operator, Operator

At this time, I would like to turn things back to management for any closing remarks.

Mark Klein, Chief Executive Officer

Thank you all for your time, and obviously, we are in an extremely interesting time in the country between the election and the pandemic. We really appreciate the time you’re spending with us and the support that many of you have expressed directly to us and management. So thank you all very much, and please try to stay healthy. Thank you, bye.

Operator, Operator

And that will conclude today’s conference. Again, we thank you all for your participation, and you may now disconnect.