180 Degree Capital Corp. Notes Average Discount of Net Asset Value Per Share to Stock Price for Eighth Month of Initial Measurement Period of Its Discount Management Program
Rhea-AI Summary
180 Degree Capital Corp. (NASDAQ: TURN) reported an average discount of 21% between its estimated daily net asset value per share (NAV) and daily closing stock price in August 2024, with a year-to-date average of 19%. The company's Board of Directors is evaluating this discount as part of its Discount Management Program, which could lead to actions such as expanding the stock buyback program, cash distributions, or a tender offer if the average daily discount exceeds 12% during specified measurement periods.
CEO Kevin M. Rendino emphasized that long-term investors support the company's belief in the potential upside of its current portfolio, despite the recent bear market for small-cap stocks. The company aims to balance addressing the trading discount with preserving long-term value creation potential.
Positive
- Implementation of a Discount Management Program to address the gap between NAV and stock price
- Support from large and long-term investors for the company's long-term strategy
- Potential for significant upside in the existing portfolio as small-cap stocks may be nearing the end of a bear market
- Strong investment performance and rising NAV during the first five years of TURN's existence
Negative
- Average discount of 21% between NAV and stock price in August 2024
- Year-to-date average discount of 19% through August 2024
- Potential for actions that could impact long-term value if the discount remains high
Insights
The news about 180 Degree Capital Corp.'s (TURN) discount management program is not significantly impactful for investors. The company is merely reporting on the ongoing status of a previously announced initiative. The average discount between NAV and stock price (
However, it's worth noting that if the discount exceeds
The management's stance against sacrificing long-term potential for short-term gains suggests a focus on preserving the company's growth prospects. This approach may appeal to long-term investors but might frustrate those seeking immediate returns from the current discount.
MONTCLAIR, N.J., Sept. 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 August 2024 and year-to-date through the end of August 2024, were approximately
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
“From conversations after we announced the Discount Management Program, we were pleased our shareholders appreciated and supported our decision to implement it,” said Kevin M. Rendino, Chief Executive Officer of 180 Degree Capital. “As I always have said, we do what we say we are going to do. On our last shareholder call, I noted that I believe our current discount to NAV is wholly inconsistent with what we believe is the potential upside within our existing portfolio as well as our actual NAV. This comment led to an outpouring of suggestions and opinions from many of our shareholders, including many of our largest and long-term investors who have been holders of TURN since Daniel and I began TURN’s transformation in 2017, if not longer. As a result of those conversations, we believe that these large and long-term investors fully appreciate our belief that our current portfolio offers significant upside potential, in part because we may be nearing the end of the bear market for small capitalization stocks. Our largest and long-term investors individually made it clear to us that they have no desire to materially trade that potential upside to chase short-term gains at this point. Based on the outreach from shareholders to us, we currently believe this opinion is shared by holders of at least a third of TURN’s outstanding stock.”
Mr. Rendino continued, “We also understand that more recent shareholders may be focused on capturing our trading discount for short-term gains through a larger tender offer or distribution, even if it means foregoing material portions of what we believe is future upside within our portfolio. We are activists and work for all shareholders. We will continue to make decisions that accrue to the benefit of all shareholders and will never sacrifice material portions of what we believe to be future potential for short-term gains. Many of our shareholders have a keen memory of the heavy lift we undertook when we took over our predecessor company that was structured as a business development company (BDC) solely focused on venture capital investments. Our first five years produced strong investment performance and a rising NAV. While historical results may not be indicative of future results, we currently believe this macro headwind of poor small cap performance versus large capitalization stocks will reverse, and we believe we are well positioned to deliver again, strong growth in NAV as we did during the first five years of TURN’s existence.”
Daniel B. Wolfe, President of 180 Degree Capital, added, “We appreciate that our largest and long-term investors remain supportive of our investment approach and share our belief that the potential future returns from our investments could lead to substantially larger growth in NAV than capturing all or a significant portion of the discount today. To be clear, the Board has not decided about ending the first measurement period early, and/or if it decides to do so, what steps might be taken amongst those mentioned previously or other available alternatives. Any decisions made will be made by the Board in the best interest of all shareholders of TURN, which is why we appreciate the thoughts and feedback Kevin mentioned above, particularly from our long-term and largest shareholders.”
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 average discount between 180 Degree Capital's NAV and stock price for August 2024?
What actions might 180 Degree Capital's Board consider if the discount remains high?
How long are the measurement periods for 180 Degree Capital's Discount Management Program?
What is the current stock buyback program limit for 180 Degree Capital (TURN)?
