SuRo Capital Corp. Second Quarter 2022 Preliminary Investment Portfolio Update
Net Asset Value Anticipated to be $9.00 to $9.50 Per Share NEW YORK, July 11, 2022 (GLOBE NEWSWIRE) — SuRo Capital Corp. (“SuRo Capital”, the “Company”, “we”, “us”, and “our”) (Nasdaq: SSSS ) today provided the following preliminary update on its investment portfolio for the second quarter ended
The share price is $6.58, and the net asset value (NAV) is between $9.00 and $9.50. That is a big discount. What is even more impressive is that of its, Market Cap of $200 million, SuRo has about $150 million in cash. The only negative I see in buying SuRo, is that most of their portfolio is private placement type companies. They need a liquidity event (an IPO or sale a private company) to realize cash from their investments. The positive is they have a lot of cash (relative to size) and this is a great time to be investing in companies. SuRo has a trailing track record of having paid a distribution. That cannot be counted on because this was sourced from liquidity events. Never the less it has been a shareholder friendly company. They are currently buying back shares in the market.
Shares outstanding are 30.3 million with 29.06 floating. Insiders own 5% of the company. Trailing P/E is about 6, but again, this number is highly dependent on liquidity events.
LOTM’s interest stems from the fact that the market seems to be finding price to rally. I like Brokers, Investment Bankers and Asset managers at a point in time like now. Previously we highlighted Sprott (SII) also an asset manager. There are rumors that the Fed “might” be close a top on it tightening cycle. There are also rumors that Russia could be close to ending the conflict in Ukraine. Rumors so be aware. One of or both of these could lower inflation expectations in the next sixty days.
In mentioning SSSS, its value situation of heavy on cash and a big discount on NAV, to borrow a hockey phrase, seems like “a free shot on goal.”
This is not a buy and own situation. It is a deep discount value trade. If you get a $1.50 to $2.00 trade in three months, take the trade and move on. Keep a 7% to 8% stop loss of cost on the position. The down side seems limited with a decent pop of 20% to 30% a three month goal. If it does not develop in the 90 day window – exit the trade. If the price falls $0.50, sell. Remember for trading you want a 3 to 1, reward to risk ratio.
We are drawn technically to SuRo by the MACD cross-over and the CMF rising signaling share accumulation as well as a positive tone to the market. Nothing showing up yet in price crossing above moving averages (MA) or MA crossing above a longer MA.
Use a tight stop of 1 to a reward of 3 ratio.
Written July 19, 2022, by Tom Linzmeier, editor of LivingOffTheMarket.com.
LOTM Research & Consulting Service
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
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