180 Degree Capital Corp (NASDAQ:TURN) Q2 2024 Earnings Conference Call August 20, 2024 9:00 AM ET
Company Participants
Daniel Wolfe – President, Chief Financial Officer and Chief Compliance Officer
Kevin Rendino – Chairman and Chief Executive Officer
Daniel Wolfe
[Starts Abruptly]
our second quarter 2024 financial Results Update Call. This is Daniel Wolfe, President and Portfolio Manager of 180 Degree Capital. Kevin Rendino, our Chief Executive Officer — Portfolio Manager, and I would like to welcome you to our call this morning. [Operator Instructions]
I would like to remind participants that this call is being recorded and that we will be referring to a slide deck that we have posted on our Investor Relations website at ir.180degreecapital.com under Financial Results.
Please turn to our presentation. This presentation may contain statements of a forward-looking nature related to future events. Statements contained in this presentation that are forward-looking events are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 herein.
Please see the company’s filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the company’s business that could affect the company’s actual results. except as otherwise required by federal securities laws, 180 Degree Capital Corp undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties.
It now gives me a special pleasure to turn over the call to Kevin.
Kevin Rendino
Thanks, Daniel, and good morning, everyone. First off, I want to thank everyone for your generous thoughts and well wishes following my unfortunate accident a few weeks ago. And of course, Daniel and our Board for navigating turn through that announcement. The bottom line is I’m better, have been back working the last couple of weeks, and I’m very excited about that.
While I’m not excited to have lived through this very difficult market for the asset class that we invest in. And despite this horrendous market for small caps versus the NVIDIAs of the world, working on behalf of our shareholders is truly my happy place and I look forward to talking or seeing you all.
In terms of the slides and in terms of the quarter itself, our stock price unfortunately declined 11.7%. Our NAV declined 12.8%. Our stock price as a percentage of our NAV was 83% to 84%, although as you can see from our absurd current price of $3.37, it trades at a 25% discount of our June 30 end NAV, the widest value that is the widest margin it’s traded out since we started this seven years ago.
Our cash and public related securities declined from $51.7 million or $45.5 million. Our public portfolio net value decreased by approximately $5.6 million from the prior quarter. Our largest decreases in value were Potbelly, D-Wave, Quantum, Quantum Computer and comScore. Our largest increases in value were Synchronoss, Graycove, and Mama Creations. We had new positions in Aviat and Hudson, and we exited positions in Mama’s Creations and Rhyme.
Our private portfolio declined slightly from the prior quarter, although it’s essentially gone and the entire future of our company resides in our ability to generate returns in our public portfolio. Everyone knows how brutal this period has been for small caps. They underperform when economic data has been weak when everyone is convinced the recession is on the horizon and why would I want to own small caps in that environment. And then at the same time, they underperforming economic data is strong, convincing everyone that inflation will never recede and the Fed won’t cut rates anytime soon. It’s been a maddening period since really November of 2021.
Since November of 2021, the S&P is up 22%, while the Microcap index is literally down 25% and over that same period, the widest margin you can see in history. But you all know that — and we have talked about it almost every quarter for the last three years. So instead of continuing to talk about that, I’d like to talk to you about some of our positions and the constructive activism we have instituted for a number of our holdings.
To say the obvious, it’s been — become one of the most absurd stock markets that I’ve seen in the last 36 years having been in the asset management business. And I only need to look at Potbelly this year as a testament to that. after a wonderful turnaround off the COVID lows led by the new senior executive management team, Bob Wright and Steve Cirulis, the stock went from $1.50 near the COVID lows to almost $14 a share against the backdrop of strong comps, robust EBITDA and a new franchising strategy which hopefully will get the company to have 2,000 stores over the next seven to 10 years.
This year, despite essentially beating comps, EBITDA, cost savings, and new franchise agreements. And most continued good news, the stock has been cut in half, as you can see on the chart in the slide deck. It’s declined to $7 from $14 to a price that has allowed the company to trade at 6.5 times enterprise value to EBITDA when many of the competitors trade at 17 times or so.
You would look at the stock price and assume the company is missing, losing share and not being able to grow their franchising strategy, hardly been the case. It’s just an example of a small cap company performing like almost any other small-cap stocks that doesn’t have an AI business that goes down despite what has been very, very good news in 2023. We still own it. It’s one of our biggest holdings. We’re constructive on their ability to generate significant shareholder return over the upcoming years and eventually sell themselves to either a private equity firm or strategic at some point in the next couple of years. But again, it’s gone from $14 to $7 for no reason.
Lastly, as part of our — what we think are differentiated parts of our process is our constructive activism strategy. And we have ramped that up significantly on many of our holdings recently. And you can see that also in our slide deck after the Potbelly slide. Let me talk about two of them.
Synchronoss, we have actively worked with management to improve their investor relations and their balance sheet as well as assisting with ongoing strategic alternatives evaluation, the company has returned to top line revenue growth and generation of material free cash flow. The improvement of the balance sheet through the opportunistic refinancing, deleveraging this past quarter has helped the stock price as well. And for sure, we’ll get the receipt of a $28 million tax refund.
We were asked to buy this Board to join this Board in November of last year. We’ve been very busy since we’ve been on the board, helping the management team run their business and also work on fixing their balance sheet and their investor relations and the stock has gone from essentially 5% to 12% since we joined. This is a great example for us of our collegial collaborative activism that we do we didn’t demand to go on the board. Instead, we were asked to go on the board by the company as they saw that we had some skill sets that they could better use. And it’s been a great partnership since we joined the Board in November, and you can see that from the stock price.
The second one I wanted to talk to before I turn it over to Daniel is comScore, which has been the complete opposite of Synchronoss. We’ve written a number of public letters, which you’ve seen. We continue to pressure the preferred stockholders to demonstrate alignment with all stakeholders it’s an awful board with a bunch of masters of the universe people that have no idea how to make a decision for the benefit of shareholders, whether it’s Charter, Cerberus or Liberty, they’ve all failed.
The independent directors like Bill Livek, who’ve been a part of this business for years and years and years with no strategic benefit, have no business being on the board anymore. We did nominate Matt McLaughlin as a Board member and the company did agree to put him on the board. We will continue to pressure the board to do the right thing, to align themselves with shareholders and to fix the share price. They did recently announce that the pick of the annual dividends, which started last year would actually have reduced interest rate from 9.5% to 7.5% and it did remove one liquidity overhang instead of taking cash, they got it in dividends. preferred dividends and more stock, which is better than the company spending out cash when they need the cash to grow the business.
So we’ll continue our what I would consider to be slightly hostile activism that this company needs. We will stand for all common shareholders by calling this management team — this board out, whether that’s privately or publicly, and you can continue to see us leading that pressure on the company as we go forward, and we’ll come up with hopefully a reason why this company will do the right thing for common shareholders with that pressure.
Let me turn it over to Daniel, who wants to talk about some of our other holdings and our activism.
Daniel Wolfe
Thanks, Kevin. I’m going to continue running through a few more names on slides four to six before handing it back to Kevin to cover the discount management program update. We talked about Intevac a lot in the past as a refresher, Intevac, or the symbol is IVAC develops tools that are critical for the manufacturing of hard disk drives and it has a new tool that is bringing the market called the TRIO that aims to more uniformly coated glass and plastic surfaces used in everyday electronic devices as well as other applications.
IVAC reported a stronger-than-expected quarter for Q2 2024 from its hard disk drive business, given a cyclical upswing of that industry, led by adoption of its new Hammer platform that enables the manufacturing of a new class of high-density disk drives.
IVAC also has approximately 72% of its market capitalization in cash, which it plans to maintain through at least 2024, while it pushes adoption of its Nutria platform. This platform is in testing with large blast coating company in Asia that works with the largest consumer electronic companies.
So for IVAC, the market is currently valuing its $45 million to $50 million annual recurring hard disk drive business at approximately 0.6 times revenue and its TRIO business at zero or you can swap within those numbers and apply any value to Trio, but it will reduce the value of the hard disk drive business. Given its clean balance sheet, the protection of its cash on hand and the speaking hard disk drive business that is in a cyclical upswing. We like our downside protection, and we believe there is material upside if TRIO starts to gain traction in the market.
Aviat Networks or AVNW, is a new position that we established in the quarter. AVNW designs installed microwave routers, switches, antenna systems and network management tools as well as offers network optimization, life cycle support and managed network services. Solutions are most often found enabling private networks and deployment of Internet connectivity to areas where it is cost prohibitive to lay of optical fiber optic cables. We’ve gotten to know its CEO over a number of quarters and have been impressed by his overall execution, turning around a historically broken company.
In Q1 ‘24, Aviat recorded a weaker-than-expected quarter due unforeseen issues with one large customer that was part of its acquisition of Pason that closed in Q4 ‘23. This was the first time in a long time that the CEO and his team missed guidance, which resulted in a material decline in the stock to prices that were very attractive to us, particularly given the fact that the balance sheet has net cash the company generates cash, and it continues to grow on all operating metrics. We also believe Aviat has a better handle on its acquisition and is set up to resume its trend of exceeding expectations.
Turning to Lantronix. This is our latest example of where we believe constructive activism can lead to material appreciation and value. We have been investors in Lantronix for a long time, and we have traded around our position throughout this time. Recently, we’ve got to know Lantronix’ new CEO, Saleel Awsare through multiple conversations, discussing both his and our expectations for the business. Lantronix is a really good company with a solid foundation that experienced significant growth in fiscal ‘24, that is fiscal ‘24, that ended June 30, ‘24, and is now set up to build on that foundation into the future.
As we spend more time with Saleel, we believe that he could benefit from additional skill sets on his Board of Directors, particularly around how to build an IoT business as a microcapitalization public company. Our former portfolio company, Adesto Technologies went through a similar growing pains until a successful acquisition by Dialog Semiconductor. So we thought that former members of that business could be helpful to Saleel.
We’ve made introductions of Adesto’s former CEO, Narbe Daracovian; and former Board member, Kevin Palatnik, to Saleel, Lantronix and then entered into a cooperation agreement whereby Lantronix agreed to nominate Narbe and Kevin to Lantronix’ Board of Directors at this next annual meeting, which will take place likely in November ‘24. This is a great example of how we work with management teams and boards collaboratively most of the time rather than compatibly to achieve outcomes that we believe will be in the interest of all stakeholders of the company, including 180 Degree Capital.
Lastly, I would like to talk a little bit about Commercial Vehicle Group or CVGI. CVGI makes components primarily for commercial vehicles, including wire harnesses, seats, plastics and aftermarket parts. CVGI is another example of a company that we have treated around our position as it went through a successful turnaround led by its former CEO, where costs were rational as contracts renegotiated, and the overall approach to running the company was changed to be more proactive rather than reactive.
After a comprehensive search, James Ray, a member of CVGI’s Board, was appointed CEO of the company. James brings a strong operational background and deep knowledge of the company through this leadership position. Shortly after his appointment, the cyclical industries in which CVGI serves an experience weakness, particularly among its customers in agriculture and instruction.
While we initially believe this weakness was captured and was near bottom as of the end of Q1 ‘24, it continued to decline in Q2 ‘24, leading to further reduction in guidance and expose some inefficiency inefficiencies in CVGI’s business that resulted in some unforeseen restructuring costs.
The Q2 ‘24 report results in a substantial decline in the stock to levels that we believe are both unwarranted given the manageable debt-to-EBITDA ratio of approximately 2 times even with the reduced EBITDA guide. The company continues to generate cash and pay down debt along with using funds from pending non-core asset sales to further reduce debt. CVGI’s business is based on long-term contracts and is, therefore, relatively sticky even though there can be some delays due to overall end market cyclicality.
We believe the improvements in this business being implemented by James and his management team will set CVGI up to generate even higher than historical EBITDA margins in the future as its end markets recover, particularly agriculture and construction in the future years.
We hope these summaries provide a window into how we think about our investments and the catalysts that we believe that can drive material value appreciation in the future should they occur. These slides provide our thoughts on all of our portfolio holdings at the end of Q2 ‘24, and we’d be happy to dive in to any of them with you at any time.
Lastly, I would like to note we include additional detail on our trading during the quarter as well as operational metrics in appendix at the end of our slide deck on our website. We’re not going to go through those slides right now, we would happy to discuss them any time.
I’ll now turn the call back over to Kevin.
Kevin Rendino
Thanks, Daniel. Finally, a quick update on our discount management program that we announced early in the year, late last year. The discount management program is comprised of two measurement periods, January 1, 2024, to December 31, 2024, and then January 1, 2025, to June 30, 2025.
If the average discount of our equity during each management period is greater than 12%, 180 Degree Capital’s Board of Directors will consider all available options, including, but not limited to, a significant expansion of our current stock buyback program up to $5 million. Cash distributions reflecting a return of capital to shareholders or a tender offer.
You can see in the chart that we have here through July 21, 2024, the average daily discount is approximately 19%. And as I said earlier, given where our share price is this morning, it’s closer to 25%, which is ludicrous if you ask me. And quite frankly, while this will be a Board decision, I am because of the share price itself, the potential upside of our portfolio at some point and the discount wondering why I’m waiting to the end of the year to ask the Board to do something rather than ask the Board today.
So I would — it’s not a promise, but I stand by on that as we are very sensitive to where our share price is trading and the opportunity to do this may be better now than it will be at the end of the year. But time will tell on that, and stay tuned for that, as I said.
With that, Daniel, I think that’s done with our formal comments. We’d be happy to take any questions by anybody right now.
Question-and-Answer Session
A – Daniel Wolfe
Thank, Kevin. [Operator Instructions] Hi Adam, go ahead.
Unidentified Analyst
Yes, good day Kevin. I apologize. Good day, Kavin and Daniel. I hope you are okay, I had a minor technical difficulty there. I hope you can hear me okay.
Kevin Rendino
Good morning. We can.
Unidentified Analyst
Great. Kevin, great to hear you search zipper. It’s really, really good thing. [Technical Difficulty] about three of your holdings we can draw you out a little bit from them. On comScore, obviously, you’ve been in there for quite a while, I’d call it quite energetically active with the Board for a while. Your professors on the board. From here, what does the value capture and exit trajectory options that look like [Technical Difficulty]? I’d like to ask about the Intevac and [Technical Difficulty]
Kevin Rendino
Are you cutting on a little bit? I think you asked on comScore. Look, it’s been a horrendous ownership by us. We believed at the end of the day that those three preferred holders were better — would be better for the business than the prior situation that comScore had because they’re in the business and they wanted to own the business. What I’ve seen, unfortunately, is in activity and self-serving behavior rather than working for the benefit of not just themselves but common shareholders.
Look, they’ve done a number of things that we wanted them to do. They haven’t done the preferred dividend or the special dividend that was available to them. They took their last dividend in stock instead of cash, which was good. They hired John, who up until the last quarter has done a really, really good job. I’d say we did not do a good job last quarter at all in terms of the guidance and the rest. They cut their comp.
The Board cut their comp. So they’ve done some things, but they haven’t done the most important thing. And so for us, the business should trade at 1 times revenue, which is sort of $370 million. And with $220 million or so of preferred getting the first money in some sort of sale, that leaves $150 million or so for common shareholders. And I think there’s 5 million shares out. So you can do the math on that. It’s infinitely higher than where less sale is.
I mean it’s — this price is so ludicrous to me, but they deserve it because they’ve been option in their ability to actually just make decisions that common shareholders want. So we’re just going to continue doing what we’ve done you could expect us doing that either privately or publicly. Why do I care? If I embarrass a bunch of Board members that have really heard common shareholders. it’s just very infuriating to say the least.
But the value is there. I mean they have an excellent product. They have a good position within the industry. The data they provide for companies is useful and many of them need it. And with a market cap right now of $35 million or something like that, it’s just an absolutely absurd valuation, considering that it should trade at 1 times revenue and 10 times EBITDA. So that’s our story here. It’s a triple from here, Adam.
Unidentified Analyst
No, understood. Okay, so let’s which gears to two better managed and governed companies, Intevac and Hudson. Intevac — Nigel has done a nice job operationally, I think, would both agree during his tenure, and he’s done a very good job on the custom-facing, they got TRIO to market with Corning. They have some good initial traction there. They haven’t been consistently active in telling their story. And with the end markets for HDD from all the research we do actually seeing more than a cyclical upswing here, but maybe a secular upswing due to AI adoption how energetic are you with them in trying to — I mean they have a full-time IR, how are they going to get out there and tell their story.
Daniel Wolfe
It’s a great question. Thanks for asking. We do spend a lot of time with Nigel. I think the issue for Intevac around the hard disk drive, and I agree with you that there is a potential for a secular upswing given the need for various storage mediums, especially as — if you’re storing something and flash is expensive. And so you need to have complementary storage alongside flash, not just using flash. So and you need it to be more adaptable and more accessible than tape.
So at the end of the day, our disk drives definitely is a really good option to include in any solution. The problem for hard disk drive for Intevac is really — I mean, unless they start selling a lot of lean tools, which those — I think that’s upside. I think there is the potential for that. It’s not like the industry is going through a massive capacity expansion, but they do need to upgrade their tools.
So we’re looking at about a $45 million to $50 million and maybe it could be a little bit higher business every year, $50 million business every year, it’s almost like an annuity, but you’re not going to see a ton of growth there, most likely. I mean it’s possible, but that’s not I don’t think anyone is looking at Intevac along those sites. It really comes down to the TRIO tool. And so that’s why we like the downside protection.
For the upside, the Trio tool is a completely — potentially a completely game-changing platform for the deposition of a variety of new coatings on especially consumer electronics, but other materials as well with much higher uniformity and at cost savings for the manufacturers, that really drum coders don’t provide, which is the only all their alternative option to deposit these types of coatings. So that is the upside.
And if TRIO takes off, then this — they’re addressing a market that could be — have a TAM in the $500 million to $1 billion or even more. It just depends on how diverse of tools that they end up getting their systems into. So that’s — as we look at — and we do believe that they are close hopefully, to being adopted to have an adoption of their 204 manufacturing for a consumer electronic device as a first entry point into the market.
And then I think it can grow from there. But they need to show that. They need to prove that. And that’s what everybody is waiting for because Corning — it has been a little bit of the goalpost getting moved and we need that to stop happening and we need them to actually get those tools adopted, which we do think it has the — they’re on the right trajectory to do so, but we need to see it happen. Once they have that happen, I think the market will be more receptive to the story.
Unidentified Analyst
Yes. No, I mean, I think that’s fair of Intevac. Obviously, we have a very similar investment thesis. But when he first came in Nigel would tell the story quite a bit more and then they obviously had the operational pushouts from HDD clients, and they kind of went internally focused for a while, which is understandable. And now those seem to be kind of reversing. So do you think that you guys get out and tell their story quite a bit more over the next year than they have over the last 1.5 years?
Kevin Rendino
I think you could imagine, we don’t have tolerance for companies that report earnings, and you don’t hear from them again for — until they report the next earnings. So we will — we did this with Synchronoss as well. We felt like they needed a new Investor Relations function, which we felt for a long time. I guess maybe we waited for — until we were on the board to push the envelope on that.
And they actually did recently changed their IR. So we’re not afraid to go to management and suggest that they’re being not reflected well by either an IR firm or they’re not reflecting best for themselves. So you could imagine that we were going to be on them for that because I just don’t have tolerance for that.
Daniel Wolfe
I think the other thing that I would say, Adam, is up until recently, Nigel was kind of a one-man show from an external perspective, and they just hired a new CFO, who I think will provide additional bandwidth for being able to get out and make sure the story is getting told. But we — as Kevin said, we will make sure that they also hear from us that they need to make sure to do that.
Unidentified Analyst
Great color. And then finally, on Hudson, I mean, Brian has built a nice company here over a while, the CFO agree on paper looks like an upgrade time will tell in reality. But do you guys have any sense there? Are there any governance issues that you all have uncovered? Or is it really just truly kind of solid management market leader, volume stories there and eventually pricing recovers. And you get a double or more kind of investment thesis? Or is there anything more on the governance side you think is an opportunity there?
Kevin Rendino
Daniel, I’ll let you answer that question. The one thing I’d say is you were the one who actually got this name on our brains a while ago, probably at the same price and then it obviously maybe even lower, went a lot higher last year. And we waited for its pullback to initiate a position, which is what we did last quarter in the sort 7-ish range. Daniel, go ahead.
Daniel Wolfe
Yes. I think we — so I’ve enjoyed conversations with the company. I think that they are running the business the right way, haven’t found anything that causes us concern along those sides did get to chat with the new CFO recently and I think he will bring a lot of new capabilities to the company, both internally and externally. I think you will show well. And so I’m encouraged by that. I think for Hudson, part of their issue is it’s — a lot of the stuff is not completely in their control. And it’s going to be driven by pricing dynamics, but the way they run their business, they’ll be able to take advantage of those pricing dynamics very quickly.
I think the other piece that I like — that we like about Hudson is if nothing changes, absolutely nothing in terms of pricing, and they did exactly the same business next year. they will actually make more money from a P&L perspective because with — as they burn off higher price inventory they will start — and so in ‘25, the inventory that they’re going to be using against their sales, is going to be significantly lower cost. And so you’ll see that flow through the P&L very quickly.
And that’s, again, with no change in the market. And there are dynamics as we all know, around the restrictions on virgin new HFCs being produced. And so — and there are mandates coming on the reclaim side and using reclaim within certain government industry — government and other industries. And so there are a lot of potential tailwinds. We’ve been lagging into the stock slowly to some extent because the timing is the question around there. We do believe it will happen. But there are a lot of extraneous factors around the cost side that they don’t control, but they are running their business to run profitably regardless of whether those costs remain depressed as they are right now.
Kevin Rendino
The only thing I’d say — sorry, no governance issues. But I will tell you from the time we started the thing I think we reason why we passed the first time we felt like every time we talk to them, they were being so secretive about their business, we actually couldn’t understand it. And we didn’t understand why they were being so secretive. They were not very forthcoming with their answers and we feel like they’ve gotten a little more receptive to having, I’d say, better conversations about their business so we can understand it a little more.
Unidentified Analyst
Terrifically helpful call. Thank you.
Kevin Rendino
Thanks Adam for everything.
Daniel Wolfe
Thanks Adam. Our next question comes from [David Malee] [ph]. Hi, David.
Unidentified Analyst
Good. How are you Daniel. Hey, Kevin and then welcome back. Glad you’re doing well.
Kevin Rendino
Thanks, David. I appreciate your emails, and I appreciate you saying that today. Happy to be back.
Unidentified Analyst
Good, good. I have a question about sort of the pipeline of new ideas. I know for me, there’s — I have too many ideas. So I’m wondering if the market is down, are you looking at new opportunities, both in terms of seeing things that are cheap and also where you think constructive activism could be helpful. And how are you balancing that versus staying concentrated and knowing the names that you are in and have a good thesis on all of them.
Kevin Rendino
Yes. Great question. One of my great things that I’ve utilized since 1990 was the definition of a bear market is when you run out of money before you run out of good ideas. And just like you, I have so many good ideas and not a lot of money to invest in them. So it’s one of the reasons why we love Mama’s Creations, it’s been — it was a great stock for us. It was from 250 to 750. But one the reasons why we sold it was because we wanted to own Aviat, and we wanted to own Hudson. So you’ve got to find the money from some place. And so there’s been a bit of portfolio adjusting from some of our bigger holdings in order to find those new positions.
So yes, our pipeline is probably as long as yours. It’s just a matter of what am I going to do? I’m not selling Potbelly here for the reasons I mentioned earlier. Synchronoss were on the board. It’s actually working for the first time in a long time. comScore, I’m not selling here. And those are gigantic holdings for us. I want to own more Lantronix. I want to own more CVGI. They’re sitting at Lowe’s. We’re not going to find the money from there. Brightcove is another one. It’s and absolutely idiotic valuation. I think it trades at 4 times or 5 times EBITDA.
Daniel Wolfe
And like $0.2 revenue.
Kevin Rendino
It’s crazy. It’s the same. So I want to own more of that, but I’ve got to find the money from other places. So — that’s our frustration as I’ve got more ideas than I do capital.
Unidentified Analyst
Makes sense. Okay, thanks a lot. Appreciate it.
Kevin Rendino
Thanks, Dave.
Daniel Wolfe
And I’m seeing no other questions in the queue.
Kevin Rendino
With that, I can’t, on the one hand, tell you how disappointed I am with our performance in the last — since the Fed started raising rates, and it’s been a maddening market one that we think creates a tremendous amount of opportunity going forward. But I am thrilled to be here today, given what happened to me a month ago. So — and I’m determined and I told you earlier in this call that my happy place is working on behalf of shareholders and coming in every day with a glass half-filled view and thinking that this market is so ridiculous in terms of the haves and the have-nots.
And — we’re not in a recession. The economy is pretty good. The companies that we own are performing pretty well from a fundamental perspective. We’ve had some we’ve had some missteps like Quantum, for example. But by and large, most of our holdings have done quite well in this environment, and we’re not getting rewarded. But I do think that we are going to get rewarded. I’ve seen marks like this before, whether it was for value stocks, 1998, 2000 during the head of the dot-com frenzy when companies like Allstate and Philip Morris were trading at Lowe’s will chair.com was trading at 100 times revenue, whatever dotcom it was or 2008, the subprime mortgage meltdown where it never felt like we were ever going to get out of that period. And of course, the S&P got to 656 and that was the bottom.
So COVID is another one. We were down, what, 20%, 30% during the beginning parts of that, and it felt like that was never going to end. And then, of course, we went through a great couple of years after that. So I’m happy to be back. It’s happy to hear from all of you. Thank you again for your well wishes. And we are determined to get the turn back to the place that it was three years ago when we had unbelievable performance, and we feel we’re going to have that again here in the next few years.
Daniel Wolfe
Thank you, everyone, for participating. Feel free to reach out any time if you have any questions. Otherwise, we look forward to speaking with you next quarter. Take care.
Operator
Good-bye.