CION Investment Q1 Earnings Call Highlights

Co-Chief Executive Officer Mark Gatto said the 4th was “not our strongest” from a header perspective, but argued that the drivers were nuanced. He said the shortfall versus the company’s monthly basal distributions of $0.30 per stock for the 4th was driven chiefly by little transaction fees from reduced repayment and concern activity, little dividend income and higher involvement disbursal tied to caller refinancing activity.

“We judge that the underlying net capableness of our portfolio remains intact, and we stay optimistic astir the trajectory from here,” Gatto said.

Net Asset Value Declines connected Unrealized Marks

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CION’s nett plus worth fell 4.7% during the 4th to $13.11 per stock from $13.76 astatine year-end. Management attributed the diminution chiefly to unrealized mark-to-market decreases successful the portfolio and the institution under-earning its distributions during the quarter. Chief Financial Officer Keith Franz said the diminution was partially offset by the accretive effect of stock repurchases.

Gatto said much than 80% of the downward question successful portfolio marks was unrealized and driven by market-level factors, including movements successful comparable nationalist institution valuations and broader recognition dispersed widening, alternatively than “fundamental recognition deterioration” astatine portfolio companies.

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Management besides addressed broader scrutiny of backstage recognition valuations. Gatto said CION uses 4 autarkic third-party valuation providers and that the “vast majority” of the portfolio is taxable to afloat autarkic reappraisal each quarter. He added that third-party macro assumptions and marketplace inputs tin sometimes nutrient marks that bash not afloat bespeak the recognition fundamentals of idiosyncratic positions.

CION said bundle represented 1.8% of portfolio just worth astatine quarter-end. President and Chief Investment Officer Gregg Bresner said the institution had 3 bundle portfolio companies and “no ARR loans” successful the portfolio, adding that CION has historically avoided bundle lending based connected recurring-revenue maturation methodologies erstwhile companies had antagonistic EBITDA astatine closing.