We're Lifting This Price Target as We Get Ready to Count Our Dividend Payments

We have another earnings pre-announcement to discuss: SuRo Capital’s SSSS preliminary update on its investment portfolio for the second quarter, which includes the anticipated return of dividends to shareholders. 

Based on SuRo Capital’s expectation for net asset value to be between $9-$9.25 per share at the end of June, we are lifting our SSSS target to $9.25 from $8.75. That jump from $6.66 exiting the March-ending quarter reflects the upswing in stock prices for CoreWeave CRWV and ServiceTitan (TTAN), as well as appreciation in other SuRo positions, including Open AI.

A key part of our investment rationale for adding SSSS shares to the Portfolio was the expected return of dividends as SuRo monetized its Portfolio holdings. We are seeing that play out today with the company announcing an initial dividend of $0.25 per share. We expect more details on this in the coming weeks, but to us it was the following that stood out even more to us: “Based on ongoing portfolio activity, we anticipate declaring additional dividends throughout the year.”

When SuRo reports its June-ending quarterly results, we’ll have a much better sense as to how much, if any, of its TTAN position remains following the June 10 IPO lockup expiration. Any remaining shares to be monetized, along with the pending CRWV IPO lockup expiration on Sept. 24, will be fuel for those additional dividends.

Let’s remember also that given SuRo’s business development corporation (BDC) status, it must pay out at least 90% of its income in dividends. This means we could see a special dividend late this year. Second, for us at the Portfolio, SSSS is a total return play, which means factoring in capital appreciation in the shares plus dividend payments.

Following this announcement, we’re inclined to pick up more SSSS shares, but first, we’ll let the good news wash over the shares. That includes a potential round of other price target increases across Wall Street. Should we see SSSS shares retrench amid a larger market pullback, we’d be inclined to strike, especially if the shares pierce the $8 level. 

The Pro Portfolio is long SuRo.