Buying This IPO Play at a Deep Discount

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shares Owned After Trade	% Portfolio
NSLR	Buy	1,730	9.41	22,695	3.3

After you receive this alert, the Pro Portfolio will buy 1,730 shares of Neostellar Capital (NSLR) at or near $9.40. Following the trade, the Portfolio will own 22,695 NSLR shares, roughly 3.25% of its assets.

In our comments reviewing Neostellar’s full Q2 2026 results, we shared that we expected to remain on the sidelines with NSLR shares at least until early September. At that time, the thinking is we will have a better indication about the expected rebound in IPO market activity. However, we are making a small move with NSLR shares on Monday given the continued decline in the stock over the last few days, which puts it at a very favorable discount to the net asset value per share of $13.44 exiting June.

We also wanted to revisit our comments about the $20 million redeemable promissory note. For starters, the structure of the note was laid out in the company’s April 29 Schedule 14A filing that currently resides on the SEC website. On page 25 of that filing, it is stated that “an affiliate of the Magnetar JV Entity will agree to invest $20,000,000 in the Company.”

Note the wording used in the filing: “invest.” Very similar to the same wording used by Neostellar CEO Mark Klein last week and during our recent video conversation with him.

The filing goes on to explain the form of that investment:

Subject to certain exceptions, if, prior to the Externalization, the Company issues shares of its Common Stock to third parties for aggregate cash proceeds of at least $230,000,000 (the “Qualified Fundraising”), then the Magnetar Investment would occur following the Qualified Fundraising and would be in the form of a purchase of the Company’s Common Stock.

If the Qualified Fundraising does not occur prior to the Externalization, then the Magnetar Investment would occur following the Externalization in the form of a convertible promissory note issued by the Company to such Magnetar affiliate (the “Note”).

The Note would be automatically convertible into shares of the Company’s Common Stock in connection with the Qualified Fundraising. If the Qualified Fundraising does not occur within three years of the Externalization, the Company would be obligated to repay to such Magnetar affiliate all outstanding principal and interest under the Note.

Given the timing of the move to the externally managed structure and no Qualified Fundraising event, we can rule out the first part. That led to the convertible promissory note that was issued.

As for why the investment was structured in the form of a promissory note instead of a strait equity investment, that gets back to why we are making our move on Monday with NSLR shares — the deep discount relative to the NAV per share. While we can buy NSLR shares at an attractive level below the NAV per share, it’s another thing for Neosteller, or any other company, to sell stock below the NAV per share.

Reviewing the timeline and the statements made in Neostellar’s filings, earnings press release and during its earnings conference call last week, it’s more than apparent the management team made known in advance what was likely to transpire. Some may quibble about the language used to refer to Magnetar’s capital being placed into the company, but per the filing it was billed as an investment. That means the folks at Neostellar, and Klein in particular, did not misrepresent the Magnetar investment. It also means comments calling into question his integrity and credibility need to be revisited and rethought.

Following Monday’s move to pick up some additional NSLR shares, we still have additional room to flesh out the Portfolio’s position size. However, should we see a rebound in NSLR shares, that could limit the size of that additional room. Our plan with NSLR shares is to play the long game and capture the benefit on the company’s NAV per share as it monetizes more of its investment portfolio. With that in mind, we will reset our checkpoint to $8.50 from $9.00, but plan on lifting it back up as NSLR shares move on Monday.

As we take another nibble out of the Portfolio’s cash position, we will be scrutinizing existing positions, factoring in current technical positioning, to make a prudent move or two to lift our cash levels should the opportunity present itself.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)

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At the time of publication, TheStreet Pro Portfolio was long NSLR.