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Operator
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Suro Capital's second quarter 2022 earnings call. During today's presentation, all parties will be in a listen-only mode. Following this presentation, the conference will be open for questions. This call is being recorded today, Wednesday, August 3, 2022. I will now turn the conference over to Mr. Jackson Stone of Suro Capital. Please go ahead, sir.
Jackson Stone
Thank you for joining us on today's call. I am joined today by the Chairman and Chief Executive Officer of Suro Capital, Mark Klein, and Chief Financial Officer, Alison Green. Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events, and 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 our 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 Serocapital's latest SEC filings, please visit our website at www.serocap.com or the SEC's website at sec.gov. Now, I would like to turn the call over to Mark Klein.
Mark Klein
Thank you, Jackson. Good afternoon, and thank you for joining us. We are pleased to share the results of Cerro Capital's second quarter 2022. As we previously mentioned, public equity market performance in the first half of 2022 was the worst first half performance in over 50 years. This decline occurs simultaneously with inflation hitting a four-decade high of 9.1% and over a 40% year-over-year decrease in the Consumer Sentiment Index to its lowest level since the inception in the 1940s. Private markets suffered as well, as numerous late-stage unicorns experienced turbulent market conditions. This turbulence has forced new financing rounds at valuations below previous capital raises, secondary trades at significant discounts, and companies lowering their internal valuations. Originally, reports of companies like Instacart cutting their internal valuation by 38% back in March were surprising. Now reports of companies like Klarna completing financing at an 85% discount to their last financing round and Stripe marking down their internal valuation by 28% have become increasingly prevalent. While we exited a significant portion of our portfolio in 2021, and have maintained over 40% of our investable assets in cash, we also experienced a challenging quarter. At the end of the second quarter, Ciro Capital had a net asset value of approximately $280 million, or $9.24 per share, down from $381 million, or $12.22 per share, at March 31st, 2022. These market dynamics, while impactful in short-term valuations, have provided us with compelling long-term investment opportunities. With over $150 million in cash at quarter's end, we remain confident and optimistic in seeking out compelling high-growth companies. Given current conditions, we believe being judicious on price when assessing potential investment opportunities is paramount to creating shareholder value. Currently, we are seeing private companies seeking primary financing at flat or discounted prices and private shareholders offering secondary sales at significantly discounted rates. Please turn to slide four. To that extent, during the second quarter, we invested $10 million in WHOOP, a wearable health device company. We were able to acquire Series C preferred shares through a secondary transaction at a significant discount to Whoop's last financing. The Whoop band provides actionable insights for users to optimize performance by offering metrics like heart rate variability and resting heart rate. The combination of Whoop's best in class software and wearable band allows the user to understand how specific lifestyle, and training behaviors may affect their recovery and ability to perform on a given day. As consumers continue to become more health conscious, we believe WHOOP sits in the heart of the broader fitness ecosystem and has a significant opportunity to become a dominant player in the health and wellness sector. Please turn to slide five. Xero Capital's top five positions as of June 30th were Course Hero, Forge Global, Blink Health, Aspiration, and Stormwind. These positions accounted for approximately 58% of the investment portfolio at fair value. Additionally, as of June 30, our top 10 positions accounted for approximately 79% of the portfolio. As previously discussed, on December 14, our largest position Course Hero announced that they raised $380 million at a $3.6 billion valuation in their Series C financing. In 2021, Course Hero completed acquisitions of LitCharts, Quillbot, CliffNotes, and Symbolab, positioning them to grow their subscriber base. Course Hero continues to make strategic acquisitions, and so far in 2022, they have acquired Netherlands-based company Scribbr. We believe Coursera's recent fundraising gives them a significant advantage to continue to acquire companies and assets at attractive valuations, particularly against the backdrop of a challenging education technology market, as reported by public companies Chegg, Coursera, and 2U. On March 22nd, Forge Global was officially listed on the New York Stock Exchange under the symbol FRGE. via a SPAC merger. The merger completed with Motive Capital Corp. brought in gross proceeds of $215 million. Since Forge's public debut, the stock has experienced extreme volatility, reaching a high of 47.5 and a low of near $4.50. Serial Capital's position is locked up until mid-September. As previously stated in our It is our objective to sell all our public positions when lockup restrictions expire and there is relative stability in a given public positions trading. We have not strayed from this approach. As customary lockup restrictions expire and markets stabilize, we will continue our active and methodical approach to liquidating these unrestricted public positions. As always, It is our intent to be as transparent as possible with respect to our dividend distributions. As a BDC, our dividends are based on net long-term realized capital gains. Presently, substantial market volatility has significantly impacted the opportunity to monetize our public positions. As a result, we intend to provide additional clarity on the timing and amount if any, of future distributions this year. As we've consistently demonstrated, Cerro Capital's Board of Directors and management are committed to initiatives that enhance shareholder value, and we believe the market is currently undervaluing our portfolio. Accordingly, on August 1, 2022, our Board of Directors authorized a modified Dutch tender offer to purchase up to $2 million shares of our common stock at a price per share between $6 and $7. This modified Dutch tender offer comes in addition to the $15 million expansion of our now $55 million share purchase program authorized by our Board of Directors in March. Assuming 2 million shares tendered, Soro Capital will have repurchased over 3 million shares or approximately 10% of our outstanding shares since the expansion of the share repurchase program in mid-March of this year. Given our stock is trading at a significant discount to net asset value, coupled with the extreme market volatility, we believe the modified Dutch auction tender to be an efficient and accretive deployment of capital. Allison will discuss the tender offer and share and purchase program in more detail later in the call. Given both public and private market volatility, we believe being patient with the public markets upon exits and the private markets upon investing, remaining prudent on price, and staying true to our investment thesis will ensure Searle Capital is well-positioned take advantage of this instability and dislocation to make compelling new investments in high-growth companies and industries and to strategically liquidate public positions to drive the greatest shareholder value. We will continue to focus on judiciously deploying our healthy cash balance to invest in great companies and deliver value for our shareholders. Thank you for your attention and And with that, I will turn it over to our Chief Financial Officer, Alison Green.
Jackson
Thank you, Mark. I would like to follow Mark's update with a more detailed review of our second quarter investment activity and financial results as of June 30th, including details on the share or purchase program and the upcoming modified Dutch auction tender offer, as well as our current liquidity position. First, I will review our investment activity. Please turn to slide six. During the second quarter, we invested a total of $11 million in new and follow-on investments. Investments during the second quarter include a $500,000 follow-on investment in Shogun's 0.5% short-term convertible note, a $500,000 investment in the Series C preferred shares of Edge Markets Inc. through Soro Capital Sports, and a $10 million investment in the Series C preferred shares of Whoop Inc. via a secondary trade. Please turn to slide seven. During the second quarter, we continued to monetize our public common shares in New Lake Capital Partners and Rover Group and began to monetize our public common shares of Rent the Runway. We sold 3,676 common shares of New Lake Capital Partners for approximately $77,000 of net proceeds, resulting in a net realized gain of approximately $3,000. As of June 30th, we have exited 45% of our NLCP position. 50,000 common shares of Rent the Runway for approximately $181,000 of net proceeds resulting in a net realized loss of approximately $578,000. As of June 30th, we have exited 15% of our rent position. And we sold 431,591 common shares of Rover for approximately $2.4 million of net proceeds resulting in a net realized gain of approximately $1.1 million. As of June 30th, we have exited 57% of our Rover position. Additionally, during the quarter, we received approximately $874,000 in distributions related to our limited partner fund investment and True Global Ventures 4+. Finally, during the quarter, we received approximately $314,000 in proceeds from 2nd Avenue related to principal repayment and interest on the 15% term loan due December 2023. Please turn to slide 8. Subsequent to quarter end through today, we have also monetized the following public positions. We began monetizing our investment in Enjoy Technology in July. July 1st to date, we sold 626,955 common shares for approximately $235,000 of net proceeds, resulting in a net realized loss of approximately $3 million. We currently hold 320,342 remaining shares of Enjoy or 34% remaining of our original position. We continue to sell our public common shares of Rent the Runway and sold 15,000 shares for approximately $51,000 of net proceeds, resulting in a net realized loss of approximately $176,000. We currently hold 274,191 remaining shares of Rent the Runway or 81% remaining of our original position. We sold 110,000 common shares of Rover for approximately $454,000 in net proceeds, resulting in a net realized gain of approximately $79,000. We currently hold 254,046 remaining shares of Rover or 30% remaining of our original position. On July 14, 2022, a final payment was received from Palantir Lending Trust SPV for the remaining 512,290 Class A common shares of Palantir Technologies, Inc. that comprise the beneficial equity interest and underlying shares. In total, on our $6.9 million structured Palantir loan, we realized a return of approximately 55%. The realized gain from Sero Capital's investment in Palantir Lending Trust SPV 1 is generated by the proceeds from the sale of shares collateralizing the repaid promissory note to Palantir Lending Trust SPV and attributable to the equity participation and underlying collateral. Finally, subsequent to quarter end, we received approximately $102,000 in proceeds from 2nd Avenue related to principal repayment and interest on the 15% term loan due December 2023. Please turn to slide 9. I will review our investment portfolio allocation by investment theme. Segmented by six general investment themes, the top allocation of our investment portfolio at quarter end is to education technology, representing approximately 37% of the investment portfolio at fair value. Financial technology and services was among the second largest category, representing approximately 34.8% of the portfolio. The marketplaces category accounted for approximately 15.2% of our investment portfolio, and approximately 10% of our portfolio is invested in social mobile companies. Cloud Big Data accounted for approximately 2.3% of the fair value of our portfolio, and sustainability accounted for less than 1% of the fair value of our portfolio as of June 30th. Please turn to slide 10. As Mark mentioned, on March 13th, our board of directors authorized a $15 million expansion of the share repurchase program to $55 million. Under this expanded share repurchase program, during the second quarter, we repurchased 855,159 shares of our common stock for approximately $6.9 million. Since the expansion on March 13th, we have repurchased a total of 1,008,676 shares of our common stock for approximately $8.3 million. Since the inception of the share repurchase program in August 2017, we have repurchased a total of 5,832,008 shares of our common stock for a total deployment of approximately $38.6 million of the $55 million authorized by the Board. Approximately $16.4 million remains authorized under the share purchase program and is currently set to expire on October 31st, 2022. As Mark previewed earlier, on August 1st, the company's board of directors authorized a modified Dutch auction tender offer to purchase up to 2 million shares of our common stock at a price per share not less than $6 and not greater than $7 in 10-cent increments using available cash. The tender offer will commence on August 8th and will expire at 5 p.m. Eastern time on September 2nd, 2022, unless extended. If the tender offer is fully subscribed, the company will purchase 2 million shares or approximately 6.6% of the company's outstanding shares of its common stock. Any shares tendered may be withdrawn prior to expiration of the tender offer. Stockholders that do not wish to participate in the tender offer do not need to take any action. Based on the number of shares tendered and the prices specified by the tendering stockholders, The company will determine the lowest per share price that will enable it to acquire up to 2 million shares of its common stock. All shares accepted in the tender offer will be purchased at the same price, even if tendered at a lower price. The tender offer is not contingent upon any minimum number of shares being tendered. The tender offer is, however, subject to other conditions which will be disclosed in the tender offer documents. In the future, the Board of Directors may consider additional tender offers or other measures to enhance shareholder value based upon a variety of factors, including the market price of the company's common stock and its net asset value. The company's Board of Directors is not making any recommendation to stockholders as to whether to tender or refrain from tendering their shares into the tender offer. Stockholders must decide how many shares they will tender, if any, and the price within the stated range at which they will offer their shares for purchase. The information agent for the tender offer is DF King, and the depository is American Stock Transfer and Trust. The offer to purchase a letter of transmittal and related documents will be mailed to registered holders and certain of our beneficial holders. Beneficial holders may alternatively receive the offer to purchase and a communication to consult with their bank, broker, or custodian if they wish to tender shares. For questions and information, please contact the information agent at thorough at dfking.com. Banks and brokers may call the information agent at 212-269-5550, and all others may call the information agent toll-free at 800-769-4414. The information in this earnings column and our corresponding press release describing the company's tender offer is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares of the company's common stock in the tender offer. The tender offer is being made only pursuant to the offer to purchase and the related materials that the company will file with the Securities and Exchange Commission and is distributing to its stockholders as they may be amended or supplemented. Stockholders should read such offer to purchase and related materials carefully and in their entirety because they contain important information, including the various terms and conditions of the tender offer. Stockholders of Suro Capital Corp. may obtain a free copy of the tender offer statement on Schedule T.O., the offer to purchase, and other documents that the company will be filing with the Securities and Exchange Commission from the Securities and Exchange Commission's website at www.sec.gov. Stockholders may also obtain a copy of these documents without charge from DF King, the information agent for the tender offer, by emailing surow at dfking.com or calling toll-free at 800-769-4414. Stockholders are urged to carefully read all of these materials prior to making any decision with respect to the tender offer. Stockholders and investors who have questions or need assistance may call DS King or email them at surow.dsking.com. Please turn to slide 11. We ended the second quarter of 2022 with an NAV per share of $9.24, which is consistent with our financial reporting. A breakdown of NAV per share as of quarter end is shown. The decrease in NAV per share from $12.22 at the end of the first quarter to $9.24 per share as of June 30th was largely driven by a $2.92 per share decrease attributable to unrealized depreciation of our portfolio of investments during the quarter, most notably a result of the broader market decline on both our public positions and those private positions valued with public company multiples. Also contributing to the decrease was a $0.13 per share decrease due to net investment loss and a 6% decrease due to realized loss on investments. These decreases in NAV per share were partially offset by an aggregate $0.13 per share increase due to capital transactions, including an $0.11 per share increase attributable to the repurchase of common stock. During the quarter ended June 30, 2022, the company repurchased 855,159 shares of Sero Capital Common Stock for approximately $6.9 million in cash under its share repurchase program. The use of cash in connection with the repurchases decreased net asset value as of quarter end. However, the reduction in shares outstanding as of quarter end resulted in an increase in the net asset value per share. Finally, I'd like to review Stero Capital's liquidity as of June 30th. We ended the quarter with approximately $169.4 million of liquid assets, including approximately $153 million in cash and approximately $16.5 million in unrestricted public securities. This does not include approximately $21.1 million in public securities subject to certain customary lockup provisions at quarter end. In total, our cash and public positions, both restricted and unrestricted, totaled $190.6 million at quarter end. The approximately $16.5 million of unrestricted public securities held as of quarter end represent our shares in Enjoy Technology, Nextdoor, New Lake Capital Partners, Rent the Runway, Rover Group, and Skillsoft, valued at the June 30, 2022 closing prices. The $21.1 million of public securities subject to lockup provisions or other sales restrictions as of quarter end include our positions in Forge, Sobel, and Kahoot, valued at the June 30, 2022 closing public share prices, less a discount for lack of marketability related to the lockup provision. As of June 30, 2022, and currently, there are 30,325,187 shares of the company's common stock outstanding. That concludes my comments. We would like to thank you for your interest and support of Stereo Capital. Now I will turn the call over to the operator to start the Q&A session. Operator?
Operator
Thank you, ma'am. For the interest of time, please limit your questions to only one. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We will wait for just a moment to allow everyone the opportunity to signal for questions. Again, press star one to ask a question. We will take the first question from John Hickman, Leidenberg. Your line is open. Please go ahead.
John Hickman
Hi. First of all, Allison, what's the net liquidity? I missed that number, including the public shares and cash.
Mark Klein
John, it's about $169 million. $169.4 million. $169.4 million.
John Hickman
Thank you again. Okay. Thank you. And then, Mark, could you opine a little bit on, so do you believe that private markets are down as much as or more than what's happened, say, in the Russell or the NASDAQ?
Mark Klein
Well, John, I think as most people have read and seen that the indices, while down sharply, don't really tell the whole story. and I think we discussed it on our last call, about over 50% of the NASDAQ is down over 50%, and something like 20-some-odd percent are down 70% or more. So, especially the small-mid-cap growth, I think there's been significant degradation in value. I think over the last month or so, we are seeing very significant breaks primary financing, and especially in the secondary market. So there is catching up that's occurring, and we're clearly seeing that in what we're looking at, including the opportunity to deploy the capital that we just did in WUP.
John Hickman
So thank you, and thank you for your ongoing... So is it safe for us to assume that we could hear more activity when you talk to us on the third quarter call?
Mark Klein
I will say that we evaluated more opportunities in this quarter than we've had in many quarters previously. We're being really, really careful of how we deploy our capital and trying to be as opportunistic as we can. But we are obviously open for business and looking to find the best opportunities to deploy the capital. Thank you.
Operator
Thank you, Mr. Speaker. It appears there is no further question at this time. I'd like to turn the conference back to you for any additional or closing remarks.
Mark Klein
Well, thank all of you for joining us today on our conference call. We appreciate your interest and support. And if there's any further questions, please reach out through our investor portal and we'll be sure to get back in touch with you. Thank you all very much. We appreciate it.
Operator
This concludes today's call. Thank you for your participation.
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