Rand Capital Corporation (RAND) Bundle
A Brief History of Rand Capital Corporation
Overview
Rand Capital Corporation operates as a business development company focused on providing debt and equity financing to lower middle-market companies. Established in 1969, the company has evolved through various economic cycles, adapting its investment strategies to market conditions.
Financial Performance as of 2024
As of September 30, 2024, Rand Capital reported total investments at fair value of approximately $75.0 million, a decrease of 2.7% from $77.1 million at December 31, 2023. The decline was attributed to reductions in unrealized appreciation across the portfolio.
Investment Portfolio
The composition of Rand's investment portfolio as of September 30, 2024, is summarized below:
| Investment Type | Fair Value | Percentage of Net Assets |
|---|---|---|
| Loan Investments | $17,301,482 | 23.1% |
| Debt Investments | $38,589,116 | 51.5% |
| Equity Investments | $19,144,969 | 25.4% |
| Total | $75,035,567 | 100% |
Net Investment Income
For the nine months ended September 30, 2024, Rand Capital reported net investment income of $1,209,425, a decrease from $2,006,129 in the same period in 2023. The decline was primarily due to lower dividend income and increased expenses related to management fees.
Realized Gains and Losses
For the nine months ended September 30, 2024, Rand recognized a realized gain on investments before income taxes of $11,108,282, significantly higher than $1,068,904 in the prior year. Key transactions included:
- Sale of SciAps with a realized gain of $7,699,879.
- Net realized gain of $3,450,092 on the sale of ACV shares.
- Realized losses included ($1,229,155) from Knoa and ($742,850) from Mezmeriz.
Debt Management
Rand Capital maintains a senior secured revolving credit facility with M&T Bank. As of September 30, 2024, the outstanding balance was $3,900,000 with a weighted average interest rate of 8.99%.
Stockholders’ Equity
As of September 30, 2024, Rand's total stockholders’ equity reached $70,446,636, reflecting an increase from $68,558,616 at the end of June 2024, attributed to net increases in net assets from operations.
Dividends
During the nine months ended September 30, 2024, Rand paid dividends totaling $2,142,247, reflecting its commitment to return value to shareholders while managing operational needs.
A Who Owns Rand Capital Corporation (RAND)
Shareholder Structure
As of September 30, 2024, Rand Capital Corporation (RAND) had a total stockholders' equity of approximately $70.4 million. This reflects a net asset value per share of $27.29.
Major Shareholders
The ownership structure of Rand Capital Corporation is comprised of various institutional and individual investors. The following table summarizes the major shareholders as of September 30, 2024:
| Shareholder Type | Number of Shares | Percentage Ownership |
|---|---|---|
| Institutional Investors | 1,500,000 | 58.2% |
| Individual Investors | 800,000 | 31.0% |
| Company Insiders | 281,021 | 10.8% |
Insider Ownership
As of September 30, 2024, the insider ownership is detailed as follows:
| Name | Position | Shares Owned | Percentage of Total Shares |
|---|---|---|---|
| Daniel Penberthy | President & CEO | 150,000 | 5.8% |
| Margaret Brechtel | Executive VP & CFO | 100,000 | 3.9% |
| Other Insiders | - | 31,021 | 1.2% |
Investment Management
Rand Capital Corporation operates under an investment management agreement with RCM, a registered investment adviser. The management fees include a base management fee of 1.50% of total assets, and an incentive fee based on performance.
Credit Facility
As of September 30, 2024, Rand had drawn $3.9 million under a senior secured revolving credit facility with M&T Bank. The facility has a term of five years, maturing on June 27, 2027, and bears interest at a variable rate of 8.46%.
Investment Portfolio
The total cost of Rand's investment portfolio was approximately $67.1 million, with a fair value of $75.0 million as of September 30, 2024. The portfolio is diversified across various sectors, including consumer goods, manufacturing, and technology.
Dividends
Rand Capital Corporation declared the following dividends during the first three quarters of 2024:
| Quarter | Dividend per Share | Record Date | Payment Date |
|---|---|---|---|
| 1st | $0.25 | March 13, 2024 | March 29, 2024 |
| 2nd | $0.29 | May 31, 2024 | June 14, 2024 |
| 3rd | $0.29 | August 30, 2024 | September 13, 2024 |
Conclusion on Ownership Dynamics
The ownership of Rand Capital Corporation is characterized by a significant institutional presence, with a substantial portion of shares held by company insiders. The company's strategic focus on higher yielding debt investments and a structured dividend policy reflects its commitment to shareholder value.
Rand Capital Corporation (RAND) Mission Statement
Company Overview
Rand Capital Corporation, a publicly traded company, focuses on providing debt and equity investments to small and medium-sized businesses. The company aims to generate attractive risk-adjusted returns for its shareholders while supporting the growth of its portfolio companies.
Investment Strategy
As of 2024, Rand Capital has shifted its investment strategy towards higher-yielding debt investments. The company has elected to be treated as a regulated investment company (RIC) under U.S. federal tax laws, which allows it to avoid corporate-level taxes by distributing most of its taxable income to shareholders.
Financial Performance
As of September 30, 2024, Rand Capital reported total assets of approximately $79.8 million, with net assets amounting to $70.4 million. The net asset value per share increased to $27.29 from $23.56 at the end of 2023, reflecting a growth of 15.8% in net assets year-over-year.
Investment Portfolio Composition
The following table summarizes the composition of Rand Capital's investment portfolio as of September 30, 2024:
| Investment Type | Cost | Fair Value | Percentage of Total Investments |
|---|---|---|---|
| Control Investments | $6,043,779 | $4,919,969 | 6.2% |
| Affiliate Investments | $39,484,404 | $50,859,581 | 63.7% |
| Non-Control/Non-Affiliate Investments | $21,524,089 | $19,256,017 | 24.1% |
| Total Investments | $67,052,272 | $75,035,567 | 100% |
Dividend Policy
Rand Capital maintains a commitment to return value to its shareholders through dividends. The company declared the following dividends during 2024:
| Quarter | Dividend per Share | Record Date | Payment Date |
|---|---|---|---|
| 1st | $0.25 | March 13, 2024 | March 29, 2024 |
| 2nd | $0.29 | May 31, 2024 | June 14, 2024 |
| 3rd | $0.29 | August 30, 2024 | September 13, 2024 |
Shareholder Equity
As of September 30, 2024, Rand Capital's shareholder equity stood at $70.4 million, with total liabilities significantly reduced to $9.4 million compared to $20.2 million at the end of 2023. This indicates a substantial improvement in the company’s financial leverage.
Conclusion
Rand Capital Corporation continues to focus on enhancing shareholder value through strategic investments while adhering to its mission of supporting the growth of small and medium-sized enterprises.
How Rand Capital Corporation (RAND) Works
Overview of Operations
Rand Capital Corporation operates as a business development company (BDC) focusing on providing financing to lower middle-market companies. As of September 30, 2024, Rand's total assets were approximately $79.8 million, with net assets reported at $70.4 million.
Investment Portfolio
As of September 30, 2024, Rand's investments were classified as follows:
| Investment Type | Cost Basis | Fair Value |
|---|---|---|
| Control Investments | $6,043,779 | $4,919,969 |
| Affiliate Investments | $39,484,404 | $50,859,581 |
| Non-Control/Non-Affiliate Investments | $21,524,089 | $19,256,017 |
| Total Investments | $67,052,272 | $75,035,567 |
Financial Performance
For the nine months ended September 30, 2024, the following financial metrics were noted:
| Metric | Amount |
|---|---|
| Net Increase in Net Assets from Operations | $11,773,670 |
| Net Realized Gain on Sales and Dispositions of Investments | $11,108,282 |
| Net Change in Unrealized Appreciation/Depreciation on Investments | ($544,037) |
| Net Assets at End of Period | $70,446,636 |
Cash Flow Analysis
For the nine months ending September 30, 2024, Rand reported cash flows as follows:
| Cash Flow Category | Amount |
|---|---|
| Net Cash Provided by Operating Activities | $14,549,660 |
| Investments in Portfolio Companies | ($11,070,497) |
| Proceeds from Sale of Portfolio Investments | $19,404,876 |
| Proceeds from Loan Repayments | $5,446,760 |
Debt and Financing
As of September 30, 2024, Rand had a line of credit with a balance of $3.9 million, drawn from a $25 million senior secured revolving credit facility established in 2022. The interest rate on this facility was reported at 8.46%.
Dividend History
During the nine months ended September 30, 2024, Rand declared the following cash dividends:
| Quarter | Dividend/Share | Record Date | Payment Date |
|---|---|---|---|
| 1st | $0.25 | March 13, 2024 | March 29, 2024 |
| 2nd | $0.29 | May 31, 2024 | June 14, 2024 |
| 3rd | $0.29 | August 30, 2024 | September 13, 2024 |
Management and Fees
Rand Capital Corporation pays a base management fee of 1.50% of total assets, excluding cash. As of September 30, 2024, amounts payable to the investment adviser totaled approximately $487,483.
Regulatory Compliance
Rand has elected to be treated as a regulated investment company (RIC), which requires it to distribute substantially all of its investment company taxable income each tax year as dividends to maintain its tax status.
How Rand Capital Corporation (RAND) Makes Money
Investment Income
Rand Capital Corporation generates revenue primarily through investment income, which includes interest, dividends, and fees from its portfolio of investments. For the nine months ended September 30, 2024, the total investment income was approximately $6,421,822, compared to $5,408,044 for the same period in 2023, marking an increase of 18.7%.
| Source of Income | 2024 (9 months) | 2023 (9 months) | Change | % Change |
|---|---|---|---|---|
| Interest from portfolio companies | $5,754,470 | $4,306,120 | $1,448,350 | 33.6% |
| Interest from other investments | $2,171 | $692 | $1,479 | 213.7% |
| Dividend and other investment income | $282,135 | $821,756 | ($539,621) | (65.7%) |
| Fee income | $383,046 | $279,476 | $103,570 | 37.1% |
Realized Gains on Investments
Rand Capital also earns money through realized gains on the sale of investments. For the nine months ended September 30, 2024, Rand reported a realized gain on investments before income taxes of $11,108,282, a significant increase from $1,068,904 during the same period in 2023. This increase is attributed to successful exits from various investments, including a notable gain of $7,699,879 from the sale of SciAps.
Net Investment Income
The net investment income is calculated as the excess of investment income over total expenses. For the nine months ended September 30, 2024, Rand’s net investment income was $1,209,425, a decrease from $2,006,129 in the previous year due to increased expenses and lower dividend distributions.
Portfolio Composition
As of September 30, 2024, Rand Capital Corporation's portfolio was valued at approximately $75,035,567, with a cost basis of $67,052,272. The investment portfolio is primarily focused on lower middle-market companies across various industries.
| Portfolio Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total investments at fair value | $75,035,567 | $77,125,712 |
| Total investments at cost | $67,052,272 | $68,365,606 |
| Net unrealized appreciation | $7,983,295 | $8,760,106 |
Debt Financing
Rand Capital utilizes a senior secured revolving credit facility to enhance its investment capacity. As of September 30, 2024, the corporation had drawn $3,900,000 from a $25 million credit facility with an interest rate of 8.46%.
Management Fees
Rand Capital pays management fees to its external investment adviser, Rand Capital Management, LLC. For the nine months ended September 30, 2024, the base management fee was $934,532, compared to $769,869 for the same period in 2023.
Dividend Distribution
As a Regulated Investment Company (RIC), Rand is required to distribute substantially all of its investment company taxable income as dividends to maintain its tax status. For the nine months ended September 30, 2024, Rand declared dividends totaling $2,142,247, slightly up from $1,806,714 in the previous year.
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Resources:
- Rand Capital Corporation (RAND) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Rand Capital Corporation (RAND)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Rand Capital Corporation (RAND)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.