Guest MarkS Posted January 26, 2016 Share Posted January 26, 2016 Is anyone following this company. It's a closed end fund. Looks like old management was replaced by new management who apparently intends to liquidate the fund. The stock trades at about $2.11 and the fund has about $1.46 in cash and significant value in various portfolio companies. Don't know anything about the portfolio, but it looks promising. https://www.sec.gov/Archives/edgar/data/1444706/000115752316004268/a51265357.htm Thanks Mark Link to comment Share on other sites More sharing options...
Nelson Posted January 26, 2016 Share Posted January 26, 2016 This looks interesting. Cash of ~$16MM with another ~$36MM in investments as of Sept 30th. Less liabilities of ~$8MM gives us book of ~$44MM with a value of $19.55MM. (I'm going by memory here so these might be a little off). This is a very big margin of safety. This is the bad part. From the latest 10Q: "Accordingly, it is possible that an orderly monetization of our current holdings may take three to five years or more." These guys look to have a lot of tech related companies in the portfolio. If the market cools off on these things, good luck selling them in any sort of hurry. But saying all that, there does look to be a big enough margin of safety here for me to start digging deeper. I see a worse case scenario of ~50% upside over 5 years, which is not terrible. It could easily be a double in 2-3 years as a best case scenario. Thanks for the idea Mark. Link to comment Share on other sites More sharing options...
Guest MarkS Posted January 27, 2016 Share Posted January 27, 2016 Hey Nelson, Here's to hoping we make money! Thanks Mark Link to comment Share on other sites More sharing options...
eclecticvalue Posted February 6, 2016 Share Posted February 6, 2016 If you buy it at current price you are paying less than the insiders. Bulldog paid $4 for it. To liquidate the portfolio will take awhile. Perhaps a sale of the company could be a possibility. Link to comment Share on other sites More sharing options...
Nelson Posted February 7, 2016 Share Posted February 7, 2016 It has ran up from $2 to $2.55 in just a couple of weeks. Considering the risk of how long it'll take to sell off the portfolio, I'm going to stay on the sidelines unless it gets back to $2 again. Link to comment Share on other sites More sharing options...
Sunrider Posted February 7, 2016 Share Posted February 7, 2016 If you buy it at current price you are paying less than the insiders. Bulldog paid $4 for it. To liquidate the portfolio will take awhile. Perhaps a sale of the company could be a possibility. At first glance, not sure how attractive this is. Assume you realise NAV over 3 years that's about 28% p.a., depending on how they get that to you, it'll be less because of tax (e.g. if dividend as income, not return of capital). If it's 5 years, then 16.6%. However - glossing through the list of investments and quickly browsing the last report indicates that these aren't stellar companies with some deferrals of prior payment obligations, PIK, etc. yes they have a decent chunk of cash/liquid assets but all that makes me question how solid the last Q's NAV is? Any insights welcome Thanks. Link to comment Share on other sites More sharing options...
Guest MarkS Posted February 8, 2016 Share Posted February 8, 2016 I bought shares at about $2.10. I felt that the cash position limited my downside. (I'm trying to learn to worry more about the downside and let the upside take care of itself.) I agree that the companies for the most part aren't high class. But I dobut the fund would be liquidating otherwise. I'm watching for any updated 13d from Bulldog. The new management seems to be aligned with Bulldog's interests. So I'm assuming Bulldog has a good seat at the table. If the portfolio companies have a lot of current value, I suspect Bulldog will add to their position. These liquidation usually have more that one distribution. So I don't agree with the way some are calculating possible return on investment. If they make an early distribution, I will deploy those assets in another name and hopefully make additional returns. Thanks Mark Link to comment Share on other sites More sharing options...
Guest MarkS Posted March 30, 2016 Share Posted March 30, 2016 The newest filing is out. Here is a clip concerning fair value of the portfolio as of 12/31/2015: As of December 31, 2015, the cost and fair value of our portfolio company investments and Escrowed Funds was $42.1 million and $35.4 million, respectively. The following table shows the potential impact of a 15%, 20% and 25% discount in value on our holdings: Potential Impact of Discount December 31, 2015 15% 20% 25% Total portfolio company financial assets, at fair value $ 35,433,839 $ 30,118,763 $ 28,347,071 $ 26,575,379 Net assets 48,915,059 43,599,983 41,828,291 40,056,599 Net asset value per share $ 5.06 $ 4.51 $ 4.32 $ 4.14 Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 8, 2016 Share Posted April 8, 2016 If anyone is following this liquidation, the president/ceo just bought 14,200 shares. http://finance.yahoo.com/news/ceo-president-crossroads-capital-buys-163100219.html Thanks Mark Link to comment Share on other sites More sharing options...
Guest MarkS Posted May 16, 2016 Share Posted May 16, 2016 They just released today their third quarter results. Not pretty! Management marked book value down from $5.06 per share to $4.25 per share. Until the IPO market picks up it looks like dead money - at best. http://www.sec.gov/Archives/edgar/data/1444706/000114420416101912/v439744_10q.htm#a_010 Thanks Mark Link to comment Share on other sites More sharing options...
eclecticvalue Posted May 16, 2016 Share Posted May 16, 2016 They have set a plan to convert the company into a liquidating trust. And if read the MD&A section they don't expect to IPO any of the remaining companies. Also they are trying to reduce costs and cease operations. So the liquidation is going into effect. Now the question is what is the liquidation value? Link to comment Share on other sites More sharing options...
Guest MarkS Posted May 16, 2016 Share Posted May 16, 2016 Hi ecleticvalue I read the MD&A differently. Assuming approval by the shareholders, the liquidating trust will be in the same position as current management - waiting on sales, mergers or IPOs of the portfolio companies. Unless I'm missing something? Mark Link to comment Share on other sites More sharing options...
eclecticvalue Posted May 16, 2016 Share Posted May 16, 2016 waiting on sales, mergers or IPOs of the portfolio companies. Unless I'm missing something? Mark I think there will be sales and mergers. But no IPO because I read in that section they don't expect to IPO any of the companies in the next 12 months. But I could be wrong though. Link to comment Share on other sites More sharing options...
brendanb22 Posted July 18, 2016 Share Posted July 18, 2016 Anybody still closely following this? Looks like bulldog was officially elected to the board Link to comment Share on other sites More sharing options...
Guest MarkS Posted July 18, 2016 Share Posted July 18, 2016 I had sold my position. But I need to revisit. Bulldog already had his people running the place. So i'm not sure if this will be enough to change my mind. Nevertheless, thanks for the update Brendab22. Mark Link to comment Share on other sites More sharing options...
eclecticvalue Posted July 18, 2016 Share Posted July 18, 2016 I still am. The next step is the shareholder vote to liquidate the company which I think will pass. I will vote with my shares. I am hoping they sold some investments last quarter or this current quarter. If they raise more cash from the sale of investments. I think they will buyback or tender shares. Link to comment Share on other sites More sharing options...
AJB96 Posted August 3, 2016 Share Posted August 3, 2016 I have a position in this company and I thought I'd share my notes with the board: Crossroads Capital (XRDC) Crossroads is a failed venture capital firm that owns a group of 12 businesses. Once shareholders approve the plan of liquidation they will convert to a liquidating trust and the stock will no longer trade. Stock price: $2.05 Market cap: $19.8m Cash net of all liabilities: $13.25m ($1.33 per share) Market cap minus net cash: $7m ($.72 per share) Managements valuation of the businesses they own: $2.88 / share ($27.85m). At the current price of $2.05, subtracting net cash of $1.33, I'm paying $.72 for the businesses that are currently valued at $2.88 per share. The value of the businesses they own have to decline by 75% before I'd lose a penny. Additionally, management has an incentive to lowball the valuation (especially since they are buying stock). Crossroads is valuing their investment in Metabolon at a 21% markup over what they paid in the August 2011 subscription for the series D convertible preferred stock. Harris and Harris, a publicly traded business development company, is valuing the same series of preferred stock at 57% above the subscription price. The businesses they own do $4.3m/ in annual EBITDA. Taking the market cap of $19.8m and subtracting cash net of all liabilities - I'm paying $7m for the businesses they own. The businesses only need to be sold for 1.6x EBITDA to break even at the current price. They are low quality businesses (that's why they are liquidating) but this is a very low hurdle. The company is controlled by Bulldog Investors. An activist fund with a good track record. They have an incentive to get the liquidation done quickly and maximize proceeds for investors. The CEO also recently bought stock at $2.60 a share. Another good sign. Risks/ things to consider: - The stock is very illiquid and once the plan is approved by shareholders the company will convert to a liquidating trust and the stock will no longer trade. - The liquidation could take longer than expected. However, with Bulldog Investors leading the company they have a strong incentive to act quickly. - Expenses are running at around $500,000 per quarter which cuts into the liquidation proceeds. The majority of these costs will disappear once they delist and convert to a liquidating trust. Link to comment Share on other sites More sharing options...
Jurgis Posted August 3, 2016 Share Posted August 3, 2016 - The stock is very illiquid and once the plan is approved by shareholders the company will convert to a liquidating trust and the stock will no longer trade. Out of curiosity: has anyone held a stock that converted to liquidating trust in IRA? What happens then? Does Fido (or whoever your broker is) keep the nontrading liquidating trust stock and your account still receives all the remissions from the trust directly? Or is it more complicated? Link to comment Share on other sites More sharing options...
Sunrider Posted August 30, 2016 Share Posted August 30, 2016 Hi Alex I'm not sure what you mean with insiders purchasing - the last few transactions were quite a few sales and the last purchases I see were earlier this year ... looks like they wrote down the book more and are now selling? Your views? Thanks! I have a position in this company and I thought I'd share my notes with the board: Crossroads Capital (XRDC) Crossroads is a failed venture capital firm that owns a group of 12 businesses. Once shareholders approve the plan of liquidation they will convert to a liquidating trust and the stock will no longer trade. Stock price: $2.05 Market cap: $19.8m Cash net of all liabilities: $13.25m ($1.33 per share) Market cap minus net cash: $7m ($.72 per share) Managements valuation of the businesses they own: $2.88 / share ($27.85m). At the current price of $2.05, subtracting net cash of $1.33, I'm paying $.72 for the businesses that are currently valued at $2.88 per share. The value of the businesses they own have to decline by 75% before I'd lose a penny. Additionally, management has an incentive to lowball the valuation (especially since they are buying stock). Crossroads is valuing their investment in Metabolon at a 21% markup over what they paid in the August 2011 subscription for the series D convertible preferred stock. Harris and Harris, a publicly traded business development company, is valuing the same series of preferred stock at 57% above the subscription price. The businesses they own do $4.3m/ in annual EBITDA. Taking the market cap of $19.8m and subtracting cash net of all liabilities - I'm paying $7m for the businesses they own. The businesses only need to be sold for 1.6x EBITDA to break even at the current price. They are low quality businesses (that's why they are liquidating) but this is a very low hurdle. The company is controlled by Bulldog Investors. An activist fund with a good track record. They have an incentive to get the liquidation done quickly and maximize proceeds for investors. The CEO also recently bought stock at $2.60 a share. Another good sign. Risks/ things to consider: - The stock is very illiquid and once the plan is approved by shareholders the company will convert to a liquidating trust and the stock will no longer trade. - The liquidation could take longer than expected. However, with Bulldog Investors leading the company they have a strong incentive to act quickly. - Expenses are running at around $500,000 per quarter which cuts into the liquidation proceeds. The majority of these costs will disappear once they delist and convert to a liquidating trust. Link to comment Share on other sites More sharing options...
AJB96 Posted August 30, 2016 Share Posted August 30, 2016 Hi Sunrider, When I wrote the post the only insider transactions were purchases. Since then there has been one sale by an insider. https://finance.yahoo.com/quote/XRDC/holders?p=XRDC https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001444706&type=&dateb=&owner=only&count=40 Alex Link to comment Share on other sites More sharing options...
hooplaer23 Posted August 30, 2016 Share Posted August 30, 2016 The company announced a few days ago that it has engaged Setter Capital to try to sell some or all of its portfolio on the secondary market, but the question is whether there will be buyers for these holdings and if so would the company receive anything close to where these investments are currently marked. Link to comment Share on other sites More sharing options...
EricSchleien Posted September 30, 2016 Share Posted September 30, 2016 http://www.prnewswire.com/news-releases/crossroads-capital-announces-portfolio-company-shutdown-300332004.html Link to comment Share on other sites More sharing options...
EricSchleien Posted December 6, 2016 Share Posted December 6, 2016 http://finance.yahoo.com/news/crossroads-capital-announces-disposition-shares-222900661.html Link to comment Share on other sites More sharing options...
EricSchleien Posted December 8, 2016 Share Posted December 8, 2016 More selling at fair value :) https://finance.yahoo.com/news/crossroads-capital-announces-disposition-shares-131500351.html Link to comment Share on other sites More sharing options...
muscleman Posted January 3, 2017 Share Posted January 3, 2017 At the end of 2016 Q3, the NAV has decreased to 30 Million. The good investments (Ones that they marked value up from the initial costs) are sold around the value they marked to. The remaining ones that they marked down may be sold for less than what they think is worth. Good investments are easier to sell than crapy ones. So if I buy now, I may get a 50% upside but maybe less. Downside is small if they can stop the expenses by converting to a liquidation trust. However if the not so good investments are sold at a price less than the mark down value then the upside will be less too. Link to comment Share on other sites More sharing options...
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