Gladstone Investment Corp (GAIN) 2011 Q1 法說會逐字稿

Good morning and welcome to the Gladstone Investment Corporation's first quarter ended June 30, 2011 shareholders conference call.

All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.

I now would like to turn the conference over to David Gladstone. Mr. Gladstone, please go ahead.

All right, thank you Keith for that nice introduction. Good morning to all of you. This is David Gladstone, Chairman, and this is the quarterly conference call for shareholders and analysts for Gladstone investment. Our trading symbol is GAIN. Thank you all for calling in. We are happy to talk to shareholders again this quarter and would like to see some of you come by and see us in McLean, Virginia. We are just outside of Washington DC. So if you're in this area, come by, say hello; you'll see a great team working. I'm sure you'll agree with me that they are the best team in the business.

Also, I'd like to see all of you at our annual shareholders meeting. We will be meeting this Thursday, August 4, at 11 a.m. The annual meeting will take place at the Sheraton Premier. That's in Tyson's Corner, 8661 Leesburg Pike, Vienna, Virginia, so it's just not too far from our offices. We had to change offices -- change hotels because the one that we normally go to is being renovated.

Now, I'd like to read the statement about forward-looking statements. This conference call may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Security Exchange Act of 1934, including statements with regard to the future performance of the Company. These forward-looking statements inherently involve certain risks and uncertainties even though they are based on our current plans, and we believe those plans to be reasonable. There are many factors that may cause our actual results to be materially different from any future results that are expressed and implied by the forward-looking statements, including those risk factors listed under the caption "Risk Factors" in our periodic filings as filed with the Securities and Exchange Commission. All those can be found on our website at www.GladstoneInvestment.com, and the SEC website.

The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as the results of new information, future events or otherwise.

We always begin with the President. Our president is David Dullum. He is also a director of the Company. He'll cover a lot of ground, so Dave, go ahead.

Good morning all.

To briefly review the business objective for GAIN is being an investor in bio transactions of lower middle market businesses, in particular those companies with annual cash flow, or EBITDA as we call it, of between $3 million and $12 million. We partner with the management teams and private equity sponsors and provide an important and necessary portion of the capital structure in these transactions.

Our investments are in the form of subordinated debt combined with an equity feature. This approach provides the investing structure of generating income for dividend distributions to our shareholders on a current basis and future capital gains to enhance the overall returns to our shareholders.

We also may find opportunities to provide capital in support of business owners and management teams who are not seeking to sell their company outright, but to take some money out of their company by selling us an equity and debt stake in their business. And there may be situations where the owners of a business have a capital need to strengthen their balance sheet for growth.

We continue in a very favorable environment for our type of financing. As a result, our current investing activity has shown good progress along with a growing backlog of good opportunities.

As to the fund activity, the quarter ended June 30, we made a new investment of about $16.4 million in a company called Mitchell Rubber in California, where we provided subordinated debt of $13.6 million and $2.8 million in equity, in partnership with the existing CEO to buy out a former partner of his. We also deployed $6.1 million in some of our existing portfolio companies and we received $3.1 million in repayments.

In April of this year, 2011, we recapitalized our investment in Cavert Wire in which we received gross cash proceeds of $5.6 million from the sale of our common equity to the management team who owned the remaining equity, resulting in a realized gain to us of $5.5 million in addition to $2.3 million in a partial redemption of our preferred stock and $0.7 million in preferred dividends. At the same time, we invested $5.7 million in new subordinated debt in the Cavert transaction. This transaction, along with the exits I've previously mentioned of [J Stores] and A. Stucki in the prior fiscal year is consistent with our plan and goals to achieve current income from the debt investments and capital gains from the equity portion of our portfolio.

Our two syndicated loans that existed at the beginning of the quarter, Fifth Third Processing Solutions and Survey Sampling, both paid off at par in May and July respectively, providing a total annual return of 15.3% and 9.7% respectively on our investments and resulted in net aggregate cash proceeds of $2.8 million.

In addition, we increased our dividend to stockholders for the current quarter ending September 30, 2011 by 11.1% to $0.05 per month per share. Over the last two quarters, we have raised our dividend by a total of 25% and we expect our distributions will be fully covered by ordinary income for the current fiscal year ended March 31, 2012.

We are encouraged by the flow of deal opportunities and are currently working on a number of new transactions which should lead to additional new investments, and we hope to continue that good news shortly. As a result of these activities, at the end of the June quarter, we had $214.3 million invested in 17 portfolio companies at cost and total assets of $242 million.

For an update on the portfolio company, in general, our portfolio companies are performing well and we are seeing improvement. On these calls, I continue to emphasize the portfolio management activity, which is one of our strengths and an important part of our investment management approach of working to limit losses and preserve cash flow from our portfolio companies. The portfolio management teams provide value-added services such as strategic and business planning. This is where we work with outside resources to assist the portfolio companies in continuing to review their competitive positioning and their talent resources, among other key business metrics.

Secondly, operating management support. In this activity, we tap experienced operating management talent through our onerous staff or from a pool of talent we've cultivated over the years.

Third, we facilitate interaction between our portfolio companies' management teams, which allows for exchange of ideas such as best practices and purchasing pricing and manufacturing disciplines, among others.

An important point here, which is why I keep stressing this, is that this is an experienced operating resource that works with our portfolio company management and the Company's equity sponsors to improve the Company's operations and their growth potential. We believe these activities to be extremely important as a competitive strength and add value to our portfolio.

Turning to the marketplace for our smaller companies and our market that we operate in, the flow of opportunities for buy-outs is very good in both quality and quantity. The drivers for this continue to be, first, economy [of] the middle market; second, availability of financing for leverage; and three, private equity capital availability.

First, while the general economic conditions continue to create some uncertainty around earnings and cash flow of the lower middle market companies, we are experiencing some stability in these middle market businesses, and they are returning to profitability and in some cases reaching or exceeding levels experienced prior to the 2009 timeframe. This change in profitability is causing an increase in supply of good business for sale as owners are taking advantage of these positive results.

Secondly, senior debt availability is increasing with the banks beginning to reestablish leverage loan activity and setting higher lending goals for 2011 and beyond. We are experiencing senior leverage ratios, depending on the collateral positions, of up to 3 times their operating cash flow or EBITDA.

Third, the private equity funds that sponsor these buy-outs have significant amounts of capital to deploy and are anxious to put that money to work. The result is, one, we are seeing valuations relative to the trailing cash flow or EBITDA approaching 6.5 to 7 times for good companies and we're even seeing some that are higher than that. Secondly, private equity firms are able to achieve a higher amount of leverage or the use of debt as part of the purchase price. This has resulted in the private equity firms in taking advantage of this leverage being able to reduce their equity contribution 50% to 40% and in some cases lower of the total capital required. Third, the mezzanine and equity co-investment, which is our product, is in demand to fill the gap between the senior lenders and the equity investors.

Now, how does this affect our pipeline? Well, these factors are favorable to our investment objectives as overall leverage is increasing and there is greater demand for subordinated debt and equity in the transactions in our market area. We continue to emphasize our marketing and deal generating activity. In fact, our advisor recently opened an office in Los Angeles with a very experienced individual, which expands our geographic footprint for deal generation. As a result, we are experiencing an increase in the flow of both the quality and the number of new opportunities for subordinated debt and the equity investments which we make.

We, however, continue to be cautious about the economy and we will be diligent in our pursuit of these new investments and be careful about the values which we look at as we look to these investments. We are in very good position with capacity for new investments resulting from the funding availability of our line of credit and our current cash position. Our increased marketing efforts and presence in the marketplace should allow us to continue on a growth trend with additional new investments over this next year.

So, our outlook. Our goal for this fund is to maximize our distributions, which we increased a total 25% over the past two quarters to shareholders, while achieving solid growth in the portfolio of proprietary investments in this lower middle market company buy-out market.

David, this concludes my part of the presentation.

That was a good report and certainly a lot of good news and we're excited about the future for this fund.

Now let's hear from our Chief Financial Officer, David Watson, on the Fund's financial performance for this quarter. David?

Good morning everyone.

Before I go through the financial statements, I would like to highlight several key points. First, just like the A. Stucki and J Store sales in the prior fiscal year, the Cavert Wire re-capitalization was a great equity investment success, which highlights our investment strategy of achieving returns through current income from debt investments and capital gains from equity coinvestments. Second, we closed on one new proprietary buyout, Mitchell Rubber, during the quarter totaling $16.4 million. Third, we believe our portfolio is performing well. This is reflected in the $1.1 million of net increase in the value placed on our portfolio of investments once you exclude the reversals due to the realized gains. Fourth, at the time of this call, we have nothing borrowed on our line of credit and we have about $31.8 million in cash on the balance sheet, so we have the ability to deploy more capital for the right opportunities. Lastly, our recent investment activity allowed us to increase our dividends to stockholders by 25% over the last two quarters, and like the past two fiscal years, we forecast that 100% of distributions paid in fiscal year ending March 31, 2012 to be covered by taxable income, which highlights our commitment to prudent growth and preservation of stockholder capital.

Now, for the details, and I'll start with the balance sheet. At the end of the June quarter, we had $242 million in assets consisting of $165 million in investments at fair value, $69 million in cash and cash equivalents, and $8 million IN other assets. Included in the cash and cash equivalents is $40 million of U.S. Treasury securities through the use of borrowed funds at quarter end to satisfy our asset diversification requirements.

At the June quarter end, we had no borrowings outstanding on our line of credit, $40 million borrowed via the short-term loan and had $200 million in net assets, so we were less than 1-to-1 leverage on our borrowings. We had a net asset value of $9.06 per share. Currently, we have $163 million in investments at fair value, cash of $31.8 million and no borrowings. We believe this to be a conservative balance sheet for a company like ours and we believe our overall risk profile is low.

Moving over to the income statement, for the June quarter end, total investment income was $5.3 million versus $7.2 million in the prior-year quarter, while total expenses, including credits, were $1.8 million versus $3 million in the prior-year quarter, leaving net investment income, which is before a appreciation, depreciation gains or losses, of $3.5 million versus $4.2 million for the quarter last year, a decrease of 17%. This decrease primarily resulted from significant other income recorded in the prior-year period related to the sale of our investment in A. Stucki, partially offset by a decrease in the incentive expense in the current quarter.

I think it is also important to point out that our weighted average yield on interest-bearing debt investments increased to 12% in the current quarter. This is up from 10.3% in the prior-year quarter due to this increase. However, this increase was offset by a year-over-year decrease in the weighted average cost basis of our interest-bearing investment portfolio which went from $165 million for the three months ended June 30, 2010 to $147 million for the three months ended June 30, 2011. This is due primarily to the sale of our investments of A. Stucki and Chase.

Let's turn the realized/unrealized changes in our assets. Realized gains and losses come from actual sales or disposals of investments. Unrealized appreciation and depreciation come from our requirement to mark our investments to fair value on our balance sheet with the change in fair value from one period to the next getting recognized in our income statement. Unrealized appreciation and depreciation is a non-cash event.

Regarding our realized activity for the June 2011 quarter end, we had a realized gain of $5.7 million, and this is primarily related to Cavert Wire's recapitalization. For the June 2010 quarter end, there was $17 million in realized gains related to the sale of A. Stucki. As for our unrealized activity for the June 2011 quarter end, we had net unrealized depreciation of $5.1 million over our entire portfolio, which includes the reversal of $6.2 million in unrealized appreciation primarily related to the Cavert Wire recapitalization. Excluding reversals, we had $1.1 million in unrealized appreciation for the current quarter. The remaining net appreciation was primarily due to increased multiples and, to a lesser extent, performance at certain of our portfolio companies.

Our entire portfolio was fair valued at 77.1% of cost as of June 30, 2011. The unrealized depreciation of our investments does not have an impact on our current ability to pay distributions to stockholders, but does indicates that the value is lower and there may be future realized losses that could ultimately reduce our distributions.

Now let's turn to net increase in net assets from operations. This term is a combination of net investment income, unrealized net appreciation or depreciation, and realized gains and losses. For the June 2011 quarter end, this number was an increase of $4.2 million or $0.19 per share versus an increase of $5.4 million or $0.24 per share in the prior year's June quarter. The year-over-year change is primarily due to the additional income recorded in connection to the A. Stucki sale in the prior-year quarter. While we believe our overall investment portfolio is stable, as demonstrated by cumulative net gains over the past six quarters, and continues to meet expectations, today's markets move fast and are generally volatile. Investors should expect volatility in the aggregate value of our portfolio.

From an asset quality standpoint, the risk rating system we use (technical difficulty) our proprietary loans which represent over 96% of our portfolio at a weighted average of 5.6% for this quarter, which is down slightly from 5.9% in the quarter ended March 31, 2011. Our risk rating system gives investors a probability of default rating for the portfolio with a scale of 0 to 10, with 0 representing a high probability of default. We see the risk in this portion of the portfolio staying relatively the same as prior quarters.

From an interest rate risk standpoint, 66.4% of our loans have variable rates, but they all have a minimum or floor in the rate charge, so with the low interest rates that we've experienced over the last two years, these floors have minimized the negative impact on our ability to make distributions. The remaining 33.6% of our loans are fixed and we believe they are at relatively high rates.

On the other side of the balance sheet, in the event we have borrowings outstanding, we have an existing interest rate cap on $45 million of the debt on our credit facility in order to have some protection on our cost of funding if interest rates rise significantly Currently, with the payoff of survey sampling, we do not have any loans in our portfolio with paid-in-kind or PIK income. PIK income results in recording non-cash income from which we have to distribute our stockholders under tax rules. Strategically, we will always aim to limit our exposure to PIK.

Currently, all of our portfolio companies are paying current except for one, which remains on nonaccrual this quarter, and one new one which experienced a downturn in their performance and were unable to make their June interest payment.

With that, we look forward to maintaining momentum and hope to continue to increase our income-generating assets to increase our reoccurring income and to increase our distributions to our stockholders.

Now, I will turn the call back over to David.

Thank you David Watson. That was a good summary of our financials. I hope each of our listeners will read our press release and also obtain a copy of our annual report called a 10-K which has been filed with the SEC and also our 10-Q that was just filed that can be accessed on our website at www.GladstoneInvestment.com and also on the SEC website. If you want to know more about the Gladstone funds, you can go to www.gladstone.com and we have a lot of information there about our funds.

The big news this year of course in this quarter is that we recovered from the recession, that we are back up and we are out making new deals. The first quarter ending June 30 is a good indication of our performance and a good indication I think for the future as well.

We have a nice line of credit with BB&T and KeyBanc and room to borrow under the line. We have cash on our balance sheet. So we are looking for new transactions. I think this is a fabulous fund with a great opportunity and a good upside.

We also have all the worry that we continue to worry about of course. I mention them each time because they are so critical to the outlook. The cost of oil continues to be very high. I think the United States is way too dependent on foreign oil, and we always look at our portfolio companies and try to determine how they will fare if oil prices continue to go up. I hope the United States will increase our use of domestic energy sources such as coal, natural gas and nuclear. That would help us out a lot.

Trade deficit with China and other countries are a drain on our economy. China subsidizes their businesses and then sells the products to us under the Free Trade Agreement. As you all know, china has destroyed thousands of businesses in the United States and the caused the loss of many jobs. We always analyze our companies in terms of the China situation to make sure that they can't be destroyed by the Chinese.

My own personal view of China, and this is just me personally, I think they're going to have some very large problems, and I think it will happen over the next 18 months to two years. They continue to build office apartments and other buildings that have no one to occupy them. The banks there keep lending money to build them, and the banking system is being propped up by the government. At some point in time, that game will be over.

Now, we're very, very worried about inflation. This comes from the United States Government printing so much money and borrowing so much under their ability to continue to sell debt. We worry that the dollar will have a big depreciation over the next 18 months. We analyze all of our companies in terms of how they can handle inflation, and inflation is coming, folks. It's coming and the dollar will decline in value, and this will certainly hurt all of the folks on fixed incomes a great deal, and it will certainly hurt fixed income bondholders. The recent compromise bill did little to slow down this evaluation of the dollar, so I don't have much hope that, over the next year, they'll do much of the publicity that comes out.

The amount of money being spent on the war in Iraq and Afghanistan certainly continues to hurt. We think the world of our soldiers. They are wonderful. They put their life at risk for us every single day, and they are the true heroes of this period of time. I hope we can reward them and continue to support them. However, as we all know, the war continues to drain our economy.

Even worse, even though they talk about cutting spending, the pork barrel spending by the federal government just has to find a stop someplace. These earmarks they have and special deals are just -- again, I'm glad to see some of the congressmen are putting a stop to this wasteful spending; I wish there were more of them. We should not be spending more than we have tax revenue. I think this is the first time in history that the American people now know that we have a problem. All of the publicity that has been given to it, and I think we will fix some of the spending spree in the federal government. I just hope we fix at all.

Of all the money being spent by the federal government, very little money is aimed at small businesses. This is a tremendous mistake because small businesses create 80% of all the new jobs. This new spending is missing the opportunity to stimulate the small business area. The Congress and the Administration say they are going to do a lot to help small businesses, but they almost never do. I am hopeful that we'll have term limits some day and remove some of the people that are so stubbornly opposed to helping small businesses.

As a result of not creating jobs, unemployment is far too high. While the government counts unemployment at about 9%, I think a lot of the figures certainly using the old way of doing that count would show that the unemployment rate is probably closer to 15%.

In other ways, the US economy continues to chug along. We are always amazed at how strong some of these small businesses are. However, the economy for the first two quarters of this year, as you all know, well, it was just terrible. The government adjusted the growth figures down for the first quarter near 0, and the one for this quarter is starting out at 1.3% and my guess it will probably be reduced again.

I have a deep worry about the economy. In general inflation adjusted terms, GDP is flat, probably negative. We may see contradiction -- contraction in the next few quarters, annualized inflation. Everything seems to be going faster than it was even in 2007, which is not a good indication for a turnaround.

We are simply in the deepest economic downturn since the collapse in 1932. The current government's approach is fixing the situation the same way Franklin Roosevelt did, which was heavy regulation of businesses and astronomical spending by the government. You know, folks, it didn't work then; it has not worked for any other country; I don't really see it working for us. We really just need to take our medicine, go on an austerity program like they are doing in Greece and Ireland and England and many other countries. Unless we are willing to do that, we can't really fix the problem.

Entrepreneurs, many small business owners, and other savvy managers have kept their costs low. We are lucky to have so many portfolio companies that are still doing so well. It's a testament to their tenacity and their strength. I still believe we are at the bottom of the recession, while it may take us six months to figure that out and know whether we are coming out or not, we seem to be in a good investment climate right now. We are still under the belief that there is not another deep downturn as there was in 2008 and 2009. Every new investment that we look at gets the stress test to see how much they could stand a severe downturn, how much it will hurt sales and how much it will hurt earnings, to make sure that they can continue on a downturn and still pay interest on our debt.

We have a great team of employees here at the Company, and they work with all the management teams of companies that are in our portfolio or coming to get into our portfolio to get ready for both a downturn as well as hyper-inflation. So I think we are in good position in this company today.

Our distributions declared by the Board of Directors in July increased by 11.1% to $0.05 per month in July, August and September. Now, a run rate of $0.60 a year makes [that] 25% increase that we've had and the Board meets again in October to consider and vote upon the dividend for the October, November, and December time frame. We'll just have to see what they do at that period.

At the distribution rate, the stock was trading at about $7.15 yesterday, so the yield is 8.4%. We're trading at about 80% of book. This is a screening by the day for those people who like yield and a good chance of an upside.

Please go to our website, sign up for our e-mail notification service. We don't send out junk mail, just news about your company. So go to www.GladstoneInvestment.com; that's the site. You can also follow us on Twitter under Gladstonecomps -- that's all one word. You can find us on Facebook under the keyword "The Gladstone Companies".

Another general reminder, please vote your shares. You have a few more days to vote. We have a good meeting at our annual meeting this week. It's coming up on Thursday. You can go to our website, www.GladstoneInvestment.com, and vote your shares, very easy to go there. You do need your proxy card in order to do it, so hopefully we'll see some of you come to our annual shareholders meeting.

You know, folks, as part far as I can see, the rest of calendar 2011 looks much better than 2010 did, even all of 2010. But as you know, we can only see a few quarters out. We never know what's coming and what's going. We are stewards of your money, so we're going to go slow. We're not going to ramp up real quick just to show you some tremendous upside. We're looking for new investments now, and we've got a good backlog, a good pipeline of deals. I think you'll see some good closings over the next quarter or two.

Now, let's have some questions from the analysts that always join our call and many of the loyal shareholders. So operator, if you'll come on please and we'll get their questions.

(Operator Instructions). Charles Redding, BB&T Capital Markets.

Hi gentlemen. Good morning and thanks for taking my call. I just had a quick question on expected mix on new originations. I think previously we discussed 80% subordinated roughly and 20% on preferreds. Have you thought about that in terms of how that may have changed?

David Dullum is going to take that question.

That's pretty consistent with our models and the way we look at deals, so I would say not really. As time goes on it might get tweaked 75/25, on a deal-by-deal basis. But that's pretty close to where we need it to be.

What we're trying to maintain there is at least a 10% current pay on the money, all the money that we put out. So if you add the debt and the equity together and divide by that into the interest rate, it should be 10% or more.

Great, thanks. Then just thinking about leverage quickly, I know your facility matures in April. Do you think this contributes any hesitancy in terms of adding additional leverage, given the previous Deutsche Bank issues, or are you pretty much expecting to draw down on that? I know obviously you've got a lot of cash too, so I just wanted to get your thoughts on leverage.

Yes, we are currently working with the banks not only to extend the loan but also to increase it. Our best guess is that we're going to use our cash and a substantial amount of the current loan probably by Christmas, certainly by next March. So the goal is to put out a good chunk of money over the next six to nine months. That should be just in time. We'll know way before that and have an announcement on any increase or certainly any renewal of our line of credit.

Excellent, thank you much.

David West, Davenport & Co.

Good morning. I was wondering if you could talk a little bit about (inaudible) mentioned one loan missed a June payment. Is that connected to the Country Club Enterprises credit? I noticed the value on that declined fairly precipitously in the quarter.

David Dullum will take that one.

Yes. CCE, which is in the golf cart distribution business in a very good part of the country and it's one of the largest distributors for Club Car primarily, what we experienced over the last I'd say six months or so is very aggressive competitive pricing. We own a very large share of the market in that market that they're in. So we've had to be careful from the standpoint of the classic case of share relative to price. So we've been prepared to give us some share because pricing was as aggressive as it was. The result is the Company continues to perform. It's got positive cash flow, but it has definitely experienced a decline in some of its EBITDA. So we're working on the plan, as we mentioned before, how to go forward and think what to do relative the competition. So we are still very positive with the business. One of the folks that's on our Board and very active in working with us which is appropriate our plan is actually ex-Chairman of Club Car and of Club Car Inc. So he knows the business. He's been around long time and he is working with us and our management team to do the right things for the business. So we're still very optimistic about the business but indeed we did recognize a decline in value this past quarter.

As I understand from the Q, it still is on an accruing status at this point in time?

Yes.

Very good. Just a general comment, it certainly seems like the market -- you have two pretty substantial dividend increases this year. I guess current forecasts really don't show that big a jump in net investment income. It sounds like, from your comments, you're fairly optimistic that the pipeline is going to result in some accelerated investment activity in the second half of this fiscal year.

Certainly, as you know this business, you work hard and develop. It takes time to get deals done. So, we are clearly in the process of doing that, building the pipeline not only on deals that might be getting close to fruition in a real investment and others that are building. So yes, I would use the word "cautiously optimistic" in regards to our effort and we're putting a lot more effort. As I mentioned clearly, we all know the market reasonably well. You see it as much as we do, and I think it's got some good stuff out there. And so we just have to be careful. Valuations, as I mentioned, we are seeing some, frankly, some fairly crazy valuations for good companies that we are not -- as David said, we want to be cautious. So we continue to think through carefully which ones we want to go after, but I'd say the opportunities are good and we are working hard to keep building that pipeline and hopefully increase the income.

Very good. Thank you.

(Operator Instructions).

Last chance for a question, then we're going to move on.

Adrian Day, Adrian Day Asset Management.

Good morning. I'm just wondering if there's any progress at all on obtaining long-term debt.

No, we don't have any long-term debt. We've talked to some insurance people, but they're still not financing companies like ours or any finance company to any large degree. I think, if we had a rating that was a single-A or a triple-B, it would be easier, but we're probably not ever going to get that -- ever is a long time. So without a rating that's very high, it's very hard to get long-term debt money. Our size is holding us back. Being a smaller BDC rather than a larger BDC, it's hard to get those ratings and hard to get long-term debt. So we haven't found one yet, but we're still looking.

Thank you.

[Lee Potter], Private Investor.

This one's to David Dullum. I think, since you guys have been working pretty hard, you deserve a new photograph of the Four Horsemen for your annual report. You've been using the same one for the last four or five years.

Okay, Lee, we appreciate the comment. We'll work on that.

Okay. How much -- at the presence status of your book value of $9.06, what would be the total investment we'd be looking at if you were fully invested? About approximately?

Obviously, we would invest the $30-some million in cash that we have, so that would go into our portfolio. But remember, when we move it out of cash and move it into the portfolio, it's not going to move the dial on the net asset value. What happens in the net asset value is when something goes up in value, it will go up. So just moving money from one place to another is not going to change the net asset value.

Next question please.

(Operator Instructions).

No other questions?

No sir, not at present.

We thank you all for tuning in and we'll see you next quarter. That's the end of this conference call.

This conference now has concluded. Thank you for attending today's presentation. You may now disconnect.