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spk04: Good morning. Welcome to ARIES Capital Corporation's first quarter, March 31, 2024 earnings conference call. At this time, our participants are in a listen-only mode. As a reminder, this conference is being recorded on Wednesday, May 1, 2024. I will now turn the call over to Mr. John Stilmar, partner of ARIES Public Markets Investor Relations.
spk11: Thank you. Let me start with some important reminders, comments made during the course and webcast and the company documents contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in the SEC filing. ARIES Capital Corporation assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results. During this conference call, the company may discuss certain non-GAT measures as defined by SEC Regulation G, such as core earnings per share. The company believes that Core EPS provides useful information to investors regarding financial performance because it's one method the company uses to measure its financial condition and results of operation. The reconciliation of GAP net income per share, the most directly comparable GAP financial measure, to the Core EPS can be found in the accompanying slide presentation for this call. In addition, reconciliation of these measures may also be found in our earnings release file this morning with the SEC on Form 8K. Certain information discussed in this conference call and the accompanying slide presentation, including information related to portfolio companies, was derived from third-party sources and has not been independently verified, and accordingly, the company makes no representation or warranty with respect to this information. The company's first quarter ended March 31, 2024 earnings presentation can be found on the company's website at .ariescapitalcorp.com by clicking on first quarter 2024 earnings presentation link of the home page of the investor resources section. Aries Capital Corporation's earnings release and Form 10Q are also available on the company's website. I'll now turn the call over to Kip DeVere, Aries Capital Corporation's Chief Executive Officer.
spk08: Kip? Thanks, John. Hello, everyone, and thanks for joining our earnings call today. I'm here with our co-presidents Mitch Goldstein and Court Schnabel, our Chief Operating Officer Jana Markowitz, our Chief Financial
spk03: Officer Scott Lem and other members of the management team. I'd like to start by welcoming Scott to his first earnings call
spk08: with me and his new role as Chief Financial Officer. Scott's been with us for quite a while as a key business leader within our finance and accounting team. He's been at Aries for more than 20 years, so having him join us as our newly appointed CFO is great. We look forward to his continued contributions to Aries Capital. Scott and his promotion is just another example of our culture continuing to promote our strongest players and shows the depth of the talent that exists at Aries. We still believe this differentiates us from other companies in the market. Now we'll move on to our results. This morning we reported another quarter of strong core earnings of 59 cents per share. Our core earnings per share increased .5% from the prior year and were well above our 48 cents per share first quarter regular dividend. These results were driven by continued strong, attractive investment environment and the beneficial impact of higher base rates and attractive credit spreads. The strength of our earnings and the positive valuation momentum in our portfolio has also supported solid growth in our net asset value per share after paying a healthy level of regular dividends. Our NAV, which increased 6% year over year, reached another record of $19.53 per share. In the first quarter of 2024, while merger and acquisition activity levels remain relatively low, our share in the business continues to remain very strong. The banks are more active again and this is generally good for all market participants as the increased availability of capital typically brings out more M&A and adds confidence to companies seeking financing for transactions. The firming of the credit markets, the aging of significant amounts of private equity dry powder and the continued pressures from LPs to return capital are all factors that support higher levels of activity. We're seeing signs of a pickup in transaction activity as evidenced by the $1.2 billion of commitments we've closed in the second quarter to date. While current market conditions are more competitive, this is not a new phenomenon for us. We have navigated many competitive markets over the past two decades. 2021 was the most recent that was similar. In these environments, we believe that our expansive direct origination capabilities that span the entirety of the middle market from the low, middle and upper segments become even more valuable. And having a very large portfolio also helps to drive new investment activity. We continue to find attractive investments with compelling returns at historically lower levels of relative risk. And specifically for our originations in the first quarter, the weighted average LTV was below 40%. All is nearly a half a turn below our weighted average over the past two years. Furthermore, the originated yield per unit of leverage, which we view as one measure of the risk adjusted return in the current rate environment, was 10% above the recent two-year average. Our credit fundamentals across our portfolio are also indicating health and strength. Our portfolio companies showed organic EBITDA growth over the last 12 months of 10%, which is remarkable in today's economic environment. Interest coverage levels remain stable to slightly improve and leverage levels tick down. The annual EBITDA growth of our portfolio companies is more than double the annual growth of the companies in the S&P 500, which we source from data provided by S&P. On a final point, and as Scott will discuss further, the current market environment does enable us to raise capital more efficiently. So far this year, we've been active as an issuer in the unsecured notes market and the secured bank and CLO markets. We've issued in all these markets in what we believe are the tightest pricing levels amongst the BDCs. With that, let me turn the call over to Scott to provide more details on our financial results and to further thoughts on our balance sheet.
spk06: Thanks, Kip. I'm excited for the opportunity to serve as Area's Capital's CFO. This morning we reported gap net income per share of 76 cents for the first quarter of 2024 compared to 72 cents in the prior quarter and 52 cents in the first quarter of 2023. As Kip stated, we also reported quarter earnings per share of 59 cents for the first quarter of 2024 compared to 63 cents in the prior quarter and 57 cents in the first quarter of 2023. Our investment income in the quarter was primarily driven by the continued benefits of higher base rates and structuring fees due to an improving investing environment. Our structuring fees decreased from the fourth quarter of 2023 given the usual seasonality in our business. They increased meaningfully from the first quarter of last year. Our stockholders' equity ended the quarter at $11.9 billion or $19.53 per share, a new record high for us, which is a 1.5 percent increase per share over the prior quarter and nearly a 6 percent increase per share from a year ago. Our total portfolio at fair value at the end of the quarter was $23.1 billion, up from $22.9 billion at the end of the fourth quarter, largely driven by net unrealized gains from portfolio for the quarter. The way to average yield on our debt and other income producing securities at amortized costs was 12.4 percent at March 31, 2024, which was down slightly from 12.5 percent at December 31, 2023, but higher than the 12 percent at March 31, 2023. In terms of our capitalization and liquidity, we have had a fairly active start to the year, making sure we are able to continue supporting our investment opportunities. So far this year, we have amended, extended, or raised over $7 billion of financing for ARCC. More specifically, in the first quarter, we issued 1 billion of unsecured notes at market-leading spreads and successfully settled our maturing $400 million of convertible notes in almost all newly issued shares, allowing us to retain the capital and further bolster our permanent equity capital base. In March, we also extended each of the revolving period and maturity date for our SMBC funding facility by three years. Post-quarter end, we renewed our largest revolving credit facility for another year, pushing it to a full five-year maturity with the same pricing and terms. We also lowered the pricing on our BNP funding facility to so far plus 250 basis points. Finally, just last week, we priced our first on-balance sheet CLO in nearly 18 years. The blended pricing through the double-way tranche on the $476 million of notes was SOFR plus 186 basis points, which we believe is one of the tightest executions amongst issuers in this part of the market. Closing is expected in the next few weeks, subject to customary closing conditions. This transaction allows us to further diversify our sources of committed debt financing at pricing levels currently below other forms of secured funding available in the market. Our overall equity position remains strong with approximately $6.3 billion of total available liquidity, including available cash and pro forma for all the post-quarter end transactions previously mentioned. We also ended the first quarter with a -to-equity ratio net of available cash of 0.95 times, as compared to 1.02 times a quarter ago and our lowest net leverage ratio since the end of 2019. We believe our significant amount of dry powder positions, as well, to continue supporting our portfolio company commitments, remain active in the current investing environment, and eliminate any refinancing risk with respect to this year's remaining term debt maturities. Moving on to the dividend, we declared a second-quarter 2024 dividend of 48 cents per share. This dividend is payable on June 28, 2024, to stockholders of record on June 14, 2024, and is consistent with our first quarter 2024 dividend. In terms of our taxable income spillover, we currently estimate that we ended 2023 with approximately $635 million, or $1.05 per share, for distribution to stockholders in 2024. This estimated spillover level is more than two times our current regular quarterly dividend, which we believe helps bring stability to our dividend. I will now turn the call over to Mitch to walk through our investment activities.
spk14: Thanks, Scott. I'm going to spend a few minutes providing more details on our investment activity, our portfolio performance, and our positioning for the first quarter. I will then conclude with an update on our post-quarter end activity backlog and pipeline. In the first quarter, our team originated approximately $3.6 billion of new investment commitments across 61 transactions. We continue to find compelling investments with attractive risk-adjusted returns, despite some more competitive market conditions. We are generating double-digit yields with a weighted average LTV on our senior loan commitments at levels below five times debt to EBITDA. Excluding the $1.6 billion of loans on transactions we originated and distributed as agents, our commitments nearly tripled from the first quarter of 2023. The breadth of our sourcing capabilities allowed us to find value in companies with EBITDA from less than $15 million to over $600 million. Our extensive market coverage of companies of all sizes across the market enables us to source transactions in segments where we are seeing less competition or where we believe that we have a strong competitive advantage. Shifting to the portfolio, we ended the first quarter with a $23.1 billion portfolio at fair value, which grew 1% from the prior quarter and 9% from the prior year. The median EBITDA of our portfolio is $79 million, which reflects our presence in both the core middle market and the upper middle market. The weighted average LTM EBITDA growth of our portfolio of 10% that Kip mentioned is also broad-based. Importantly, in our portfolio, the size of a company has not been a driver of performance. Companies in our portfolio with $25 to $50 million of EBITDA have similar to or even higher growth rates as compared to companies with over $100 million of EBITDA. We believe company and industry selection, as well as our underwriting process, drive these types of positive results. In fact, our view is based on a study done by the ARIES quantitative research group that found that industry selection could account for approximately 500 basis points of difference in total for senior U.S. loan returns over more than a decade of investing. With respect to our credit performance, our weighted average portfolio grade of 3.1 remained unchanged from the prior quarter's level. Our non-accrual at cost ended the quarter at 1.7%, up slightly from the prior quarter, but lower than the same quarter a year ago. Our current non-accrual levels remains well below our .9% historical average since the great financial crisis and the KBW BDC average of .8% for the same period. Our non-accrual rate at fair value remained consistent with last quarter at 0.6%, which continues to be well below historical levels for our company. Another indicator of stable credit performance is the fact that our portfolio companies with a risk rate of one or two declined quarter over quarter. And finally, our portfolio quality is also reinforced by the substantial amount of equity invested in our companies, primarily by large and well-established private equity firms. At the end of the first quarter, the weighted average loan to value in the portfolio was 43%, which we believe gives us strong downside protection in our loans. As the market is starting to see more dispersion results among managers, we believe our outperformance and credit position, including our significant diversification, differentiates us from our competition. Our strong and growing portfolio is well diversified across 510 different companies that span the market. The number of companies in our portfolio has increased 9% over the past year and 48% over the past five years, and the average hold size is only .2% at fair value. Excluding our investments in Ivy Hill and the SDLP, which we believe are well diversified on their own, no single investment accounts for more than 2% of the portfolio at fair value, and our top 10 largest investments totaled just 11% of the portfolio at fair value. We believe this degree of diversification further adds to the credit strength of our portfolio as it reduces the impact to the overall portfolio from any single negative credited event at an individual company. And finally, we have had an active start to the second quarter. From April 1st through April 24th, 2024, we made new investment commitments totaling $1.2 billion, of which $1.1 billion were funded. We exited or were repaid on $249 million of investment commitments, which resulted in us earning $1 million of net realized gains. As of April 24th, our backlog and pipeline stood at roughly $1.3 billion. Our backlog contains investments that are subject to approvals and documentation and may not close, or we may sell a portion of these investments post-closing. I will now turn the call back over to Kip for some closing remarks.
spk08: Thanks a lot, Mitch. In conclusion, we believe that the company is well positioned to navigate the opportunities ahead of us. At Aries Capital, we've navigated a variety of market environments, credit cycles, and interest rate cycles over our 20-year history with a cumulative average return on equity in the double digits. In our opinion, this is a very good time to be invested in a high quality company focused on private credit. Our portfolio is performing well, and we believe that the potential returns on our investment remain compelling by historical standards. While we remain mindful of the potential for increased credit risks delivered with a higher for longer rate environment, we are highly diversified in defensively positioned companies, and our companies are demonstrating healthy and differentiated levels of growth. Our balance sheet and liquidity position remain strong, which we believe allows us to take advantage of this compelling new investment environment. Overall, we are confident that the factors that have driven our historical performance remain firmly in place, and as a result, we remain optimistic about our future prospects. As always, we appreciate you joining us today. We look forward to speaking with you next quarter. With that, operator, we can open the line for questions.
spk04: Thank you. At this time, if you'd like to ask a question, please press star, then one, on your touchtone phone. If you'd like to withdraw your question, please press star, then two. Please note, as a courtesy to those who may wish to ask a question, please limit yourself to one question and a single follow-on. If you have additional questions, you may re-enter the queue. The investor relations team will be available to address any further questions at the conclusion of today's call. And we'll take our first question today from John Hecht with Jeffries.
spk05: Morning, guys. Thanks for taking my questions. Hey, John. Good morning. Thinking about a lot of activity in the quarter, both on the deployment and repayment side, I'm wondering, Kip, can you give us kind of an update on the syndicated and liquid of own markets and how they're influencing activity with you guys and elsewhere in the market?
spk08: Sure, John. I mean, I think it's not a huge driver, frankly, of what we're doing. There's been a lot of press, I'd say, about the banks returning to the market and perhaps a more risk-on way to try to arrange an underwrite, syndicate, more traditional leverage finance transactions. So that's certainly picked up. I think if you look specifically at our activity, I think it was about 70% of our new deals were coming from the existing portfolio, a little bit lower on the kind of new platform side, which was a little bit surprising for us. But as I mentioned, the prepared remarks were pretty optimistic that a handful of factors remain in play that should compel pretty good transaction activity this year.
spk05: Okay. And then you had, obviously, a lot of, again, deployment and repayment activity and the capital structuring fees, as a percentage that were a anything to read on outside, or is that just a function of the mix of originations?
spk08: It's more mixed than anything, although I will say we've noticed a little bit of pressure on upfront fees on new deals in the market simply because there aren't as many of them. So it's one of the levers that a borrower can pull to a certain degree to try to achieve more attractive financing, but it's more mixed than anything else.
spk06: It's also to add real quick, the numbers are deals. So the true regionation was probably closer to the $2 billion. You sort of have to back that number up. Yeah, exactly.
spk05: What was that? The true origination was what?
spk06: About 2 billion, because about a billion and a half was us as our role of agent fronting for some deals.
spk08: Gotcha. Okay. It happens from time to time. Yeah, it happens from time to time, just depending on what a syndicate composition looks like, confunded closing. It's sort of a technical point, but when you evaluate it, just make sure you look at the math in that light. Okay, perfect.
spk04: Thanks. Thanks, John. Our next question will come from Phinney and O'Shea with Wells Fargo.
spk13: Hey, everyone. Good morning. Hi, Kip. How are you? Can you talk about the environment for second lien, if the reduced exposure there is more market related or your portfolio positioning, and if that should continue or if applicable, your ability to replace that with other forms of junior and structured equity? There's a lot of that at the portfolio, but wondering if there are adequate volumes there, if second lien meaningfully recedes? Thanks.
spk08: I'm going to have the court follow on a couple of thoughts on my side. I would say, look, when last year came around and the private credit players, us included, really were representing new deals in the market, almost everything that we were doing was getting done as a unitron, regardless of size. And that second lien, which has been a larger part of our investing effort, is just frankly not as prevalent in the market in terms of the mix of new deals. Does that come back if some large deals actually get done as first lien in the syndicated market where we can provide junior capital? Maybe, I guess, we'll wait and see. As you know, second lien investing tends to emphasize much, much larger companies and is very often in line with the syndicated first lien. And that transaction just really hasn't been prevalent in the market, I'd say, for the last, call it three, six, nine months, and we'll see where we go from here. The only other thing I'd add, and I'll take it to court if he wants to add on, is we are seeing a lot of really good companies, to your point about junior capital investing and structured equity and all of that, that are performing well but simply don't have the amount of cash flow they expected. So you see some senior lenders that are probably saying, wow, with higher rates, I'm not really deleveraging the way I was hoping to. And frankly, on the other side, the equity is looking for an extension of duration to accomplish what they want to achieve from an IRR perspective. So there is, we think, a pretty interesting opportunistic credit pipeline and funnel to do some of these deleveraging junior capital deals. Hopefully that answers the question, court, if you have anything to add. No, I think
spk02: you covered it all. Obviously, the return opportunities in the first lien market are super attractive. So regardless of the fact that there aren't as many second lien opportunities right now, we're not too bothered by that, given the other opportunities that the market's showing us, but certainly more function of what the market is giving rather than a purposeful change on our part.
spk13: Awesome, thanks. And I get a small follow-up, maybe sort of related. We noticed the special opportunities or ASOF group was moved over to credit, presumably, under your domain KIP. Is there any anticipated change there? Maybe if you can go over your historical collaboration or co-investment with that unit and how might that change going forward?
spk08: Thanks. Yeah, it plays into the comment that I made about opportunistic credit. And I guess all I'll say is there's been a lot of collaboration over the years. And frankly, because that business was changing, I'd say a little bit, and it's an opportunity to look more credit-facing and less like it should be attached to our private equity efforts. It was just a pretty simple move for us that we made kind of around year-end that became formal here at the end of the first quarter.
spk13: Thanks so much.
spk04: Thanks, Ben. Our next question will come from Melissa Waddell with JPMorgan.
spk09: Good morning. Appreciate you taking my question. Notice that dividend income was substantially higher in the quarter over quarter. As we think about the dividend income stream going forward, should we think about that as being aligned with the direction and change in interest rates and really consider that as much a floating rate piece of the portfolio?
spk08: Yeah, I think most share of that dividend income. But I'd say for this quarter it's higher because we actually took on a kind of one-time dividend from one of our equity investments. So that's probably why you see it pick up. I don't think there's a big change there away from maybe that one-time event, but we obviously benefit from having a diversified equity portfolio that can deliver dividends from time to time.
spk09: Okay. And then I was hoping to follow up on one of the things that Scott touched on. Scott, hi. Welcome. I look forward to working with you. The CLO issuance post-quarter end, I think you mentioned it's been a while since you've done something like that. I was hoping you could talk about the CLO issuance as part of the funding strategy and next going forward. What role can that play? When will you collect that versus other secured or unsecured? Thank you.
spk06: Yeah, sure. So I think one of our main themes for capital raising is diversity. And I think it's a pretty compelling opportunity for us. The spreads in that market are very attractive relative to other forms of secure financing. So I think as we're seeing also just as assets have moved from the BSL side to the private credit, the flow of debt capital in the CLO market is also moving that way. So it may have lost ends for us to tap that market, diversify funding sources at a pretty attractive spread. And going forward, I think it's definitely part of our playbook now.
spk04: Our next question will come from Casey Alexander with CompassPoint.
spk15: Yeah, hi. Good morning and thank you for taking my question. Scott did not mention, traditionally you guys mentioned what the spillover income is, but he didn't mention that. I was wondering what that number is unless I missed it, which could be. But you continue to pile up the spillover income quarter over quarter. At what point in time do you be forced to make some special distributions?
spk08: Yeah, I mean, you know, look over the history of the company case, I appreciate the question. We've obviously done specials in a whole host of different ways. And we tend to really want to look at it on an annual basis because it's a tax calculation that we can really true up at the end of the year. And that's typically when we make determinations. But we're in a little bit of a tricky position, as you can probably appreciate, because while we have loads of earnings in excess of the regular dividend, the trajectory for rates going forward is reasonably uncertain. I think if you asked around a table, folks would have very different views. So combining that with the fact that we really aren't in a position, in my opinion anyway, where we want to put the company in a place where it would have to reduce its regular dividend, we just feel better materially out earning it today and building the NAV. So hopefully that answers the question. But it's a little bit tricky in a world where the rate environment change quickly. We obviously want to recognize the much more substantial earnings power of the company when we increase the dividend to the 48. But yeah, it's something we talk about a lot. When's the right time? Do we get credit for specials? Do we not? All of that's very much in the dialogue with the management team and our board.
spk15: That's my only question. Thank you. Okay. Thanks.
spk04: Our next question will come from Paul Johnson with KPW.
spk07: Good afternoon or good morning. Thanks for taking my question. You touched on my question in terms of just kind of pressure on fee income. But is that something that you think you've experienced more on deals that you've refinanced in the market or are you also seeing a little bit of fee compression on new platform deals as well?
spk02: Yeah, it's Court Schnabel here. I would say it's primarily on existing transactions. New transactions are seeing some fee pressure. But as was mentioned before, the mixed shift this quarter, I think we were 72% of our originations were to the incumbent borrowers. And that was really the big driver of the numbers that you're seeing there. There is definitely some pressure across all fronts. But as is normally the case, existing portfolio companies don't deliver the same kind of fees as new borrowers do.
spk03: Appreciate that. And one last question I had, just kind of higher level, but I was wondering, kind of get your thoughts on
spk07: a feature, a loan feature that we've heard more about, portability, if that's something that you've offered in any of your loans, if that's something that you come across. But any kind of thoughts on that feature would be nice to hear. Thanks.
spk08: Yeah, we've agreed to do it a couple of times. You put a lot of guardrails, obviously, around when that financing can forward to what counterparty would we be continuing to be involved with, what would be the fees, loan documentation, all sorts of other stuff. I actually think that's more of a feature, frankly, of last year where the financing environment felt more complicated. So having the value of an incumbent group kind of move over with a new equity check in a sponsor to the financing market feel uncertain. I wouldn't say that the financing markets feel particularly uncertain today. So my guess is the request for portability asks would go down. But we'll see where we go from here.
spk07: Appreciate it. That's helpful. Congrats on a good quarter. Thanks, guys. Thanks.
spk08: Appreciate
spk07: the questions.
spk04: Our next question will come from Mark Hughes with TruList.
spk10: Yeah, thank you. Good morning. You mentioned earlier in the call that your quantitative group determined that industry selection got you 500 basis points or could account for 500 basis points at off performance. How stable is that over time, those industry groups that migrate or is that pretty steady?
spk14: I think this is Mitch, by the way. Yeah, our group, if you look at how they did the analysis, it was over an extended period of time in our portfolio. And if you have been following us for as long as we've been doing this, our industry groups that where we tend to invest has been pretty stable. So they were able to get that analytics through our portfolio over a very extended period of time.
spk10: And is it that the industry groups that you focused on have been reasonably stable? And that's okay. If you look at our business services,
spk14: our health care services, the industries where we have messed really haven't changed a lot. We don't invest in cyclical businesses. We don't invest in low margin businesses. So they were able to have a significant amount of data with which to make that analysis out of.
spk10: Yeah. Okay. Appreciate that. And then the exit seemed low for April. Anything to that or just happened to be lower?
spk03: Yeah, I don't think there's anything to it. It's just a single month of data. So I wouldn't take too much away.
spk08: Very good. Thank
spk04: you.
spk12: Thank you.
spk04: Our next question will come from Eric Swick with Hobby Group.
spk16: Good morning. I wanted to start just maybe a quick follow up. You mentioned earlier there's some uncertainty, I think, as we all know, with regard to the future direction of interest rates. And just looking at slide five, percentage of fixed rate investments in the portfolio is up a little bit year over year, not a huge change by any means. But curious if that's reflective at all of either your preference or borrower preference to maybe do floating versus fixed given their belief in the direction of interest rates or maybe that's more kind of natural migration from quarter to quarter.
spk08: Yeah, I don't think there's anything particularly targeted there. I will say when we do some of our floating and fixed rate and frankly have a mix of both. But yes, I think you're right. One borrower today may say I want fixed because I think we're higher for longer and another borrower may say the exact opposite. So there's nothing particularly intentional there and different situations just lead to different outcomes. I wouldn't take too much away.
spk02: Nothing intentional around the small change quarter to quarter, but
spk03: definitely intentional in terms of having some fixed in
spk02: the
spk03: portfolio, which
spk02: I think is a differentiator for us versus others in the market and just gives us more ballast to operate through all different kinds of environments. Some of that fixed rate, I'll just mention the junior capital time back to his comment about some of the opportunistic situations we're seeing for the levering balance sheets right now, given the higher rates. A lot of those are also fixed rate opportunities. So that's probably driving a little bit of that, that take up that you're seeing.
spk16: Thanks. I appreciate the color there. And just a bit of a follow up as well on kind of your funding strategy today. You noticed or mentioned how active you've been in the first part of the year on the unsecured debt market. The spreads have been very attractive and tight for you. So you're up to about, I guess, 78% of unsecured debt to total debt at this point. And I wonder if you could just kind of refresh your bigger picture view of, you know, over time, what your preferred mix is. And it sounds like, you know, as you know, it is well, CLOs have kind of reentered the picture as well.
spk00: So this here's your overall kind of bigger picture of the unsecured debt. Yeah, I think we're always. So. Our investment. Is very important to us and. Yeah, I mean, taking that and definitely a big component of that is, is making sure. Majority. The unsecured. Person in it, you know, we're probably a little heavier on security. Third. At the moment, then we would normally, but I think we're. Happy the levels right now and, you know, like, you know, doing CLO and. And all of this information. This information is to do when we actually put on this document. That cell phone and. I'll start with part of our recommendation, part of our playbook, so we'll continue to surprise you. We'll see everything. Great. Thanks for taking my questions. Any more questions? I'm sorry, Jay. Thank you. Great. Thanks for taking my questions. Okay. As a reminder, press star 1 if you have a question. Press star 1. Our next question will come from Robert Dodd with Raven James. Good morning. Last quarter, you gave us an update
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