Apollo Investment Corporation
Q3 2015 Earnings Call Transcript

Published: 5 Feb 2015

[Operator:]

Good morning, and welcome to Apollo Investment Corporation’s Earnings Conference Call for the period ending December 31, 2014. At this time all participants have been placed in a listen-only mode. The call will be open for your questions following the speakers’ prepared marks. [Operator Instructions]. I will now turn the call over to Elizabeth Besen, Investor Relations Manager for Apollo Investment Corporation.

[Elizabeth Besen:]

Thank you, operator and thank you everyone for joining us today. With me today are Jim Zelter, Chief Executive Officer; Ted Goldthorpe, President and Chief Investment Officer; and Greg Hunt, Chief Financial Officer. I’d like to advise everyone that today’s call and webcast are being recorded. Please note that they are the property of Apollo Investment Corporation and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I’d also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking information. Today’s conference call and webcast may include forward-looking statements. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future results, our business prospects and the prospects of our portfolio companies. You should refer to our registration statement and shareholder reports for risks that apply to our business and may adversely affect any forward-looking statements we make. We do not intent to update our forward-looking statements or projections, unless required by law. To obtain copies of our SEC filings please visit our website at www.apolloic.com. I’d also like to remind everyone that we’ve posted a supplement financial information package on our website, which contains information about the portfolio as well as the company’s financial performance. At this time I’d like to turn the call over to Jim Zelter.

[James C. Zelter:]

Thank you, Elizabeth. This morning we released earnings for the December quarter and filed our 10-Q. I’ll begin my remarks with some highlights for the period before turning over the call over to Ted, who will discuss the market environment, provide a few comments about our oil and gas portfolio and discuss our investment activity for the quarter. Greg will then discuss our financial results in greater detail. We will then open the call to a variety of questions. For the quarter we reported net investment income of $0.24 per share, which reflects a stable level of recurring investment income and a slightly elevated level of prepayment income, although down on a sequential basis. At the end of December net asset value per share was $8.43, down 3.3% from the end of September. The decline in NAV primarily reflects mark-to-market volatility in some of our oil and gas and natural resource investments which Ted will address. The volatility in the liquid credit markets during the quarter improved our ability to create better investment opportunities, as evidenced by the slight expansion in yield on new assets. That said we remain selective in our approach with a focus on secured opportunities. As we’ve said before we do not currently intend to raise equity below net asset value and we will continue to execute on our strategy of selectively deploying capital and proactively monetizing select investments to improve the existing portfolio’s overall returns. Taking all of this into account we were able to increase the overall debt yield by approximately ten basis points to 11.1% from 11% at the end of September. It is during volatile periods like these when we expect to particularly benefit from the broader Apollo platform, which provides us with scale, investment opportunities and market insights across a diverse set of asset classes and industries. We remain relatively confident in our ability to continue to generate sufficient income to cover the dividend and maintain stable net asset value over a long-term cycle. We are cautiously optimistic that recent spread widening, the growing impact of regulations on lending environments and the potential for rise in interest rates will create favorable market conditions for us to deploy capital in the coming year. We will remain selective investors generally focused on complexity and illiquidity and remain optimistic about the opportunities for providers of the capital solutions. Finally turning our discussion to our dividend the Board approved a $0.20 dividend for shareholders of record as of March 20, 2015. With that I will turn the call over to my partner Ted Goldthorpe.

[Edward J. Goldthorpe:]

Thank you Jim. I’ll begin my comments with current market conditions followed by some comments about our oil and gas portfolio and then a discussion about our investment activities for the quarter. Amidst challenging market conditions including concerns about global growth as sell-off in the liquid leveraged credit markets, falling oil prices and persistent retail outflows, new issue leverage loan volumes for the quarter declined to a three year low. The lack of dealer inventories in fixed income products contributed to volatility during the period. Investors continued to exit loan funds and there have been 40 recent outflows over the past 42 weeks. The continued strength of new issued CLO markets only partially filled the void. As a result of the demand deficit clearing yields rose to a two year high and spreads widened. During periods of volatility in the liquid credit markets borrowers focus on certainty of execution and rely less on the public markets and create a more favorable climate for asset deployment for investors like us. That said, the middle-market lending environment remained generally insulated from the trends in the broadly syndicated lending markets as activity remained generally healthy although spreads widened during the quarter. With this backdrop we had a busy quarter for originations. During the period we invested $609 million in 13 new portfolio companies and 13 existing companies. We continue to focus on secured debt opportunities which account for 65% of the investments made during the period. During the quarter we exited $699 million investments and approximately 75% of exits were proactive sales as we continued to rotate out of certain lower yielding assets. We continue to increase our exposure to floating rate assets, which represented 52% of the debt portfolio at the end of quarter, up from 48% last quarter. This shift towards floating rate assets should be beneficial when interest rates ultimately rise. Moving on to investment activity, during the quarter we invested a $144 million into the secured debt and $5 million to the equity on Dodge Data and Analytics, the market leading provider of public and private non-residential construction project data and publications. We syndicated down a portion of debt investment to a hold level of $59 million at the end of December. Syndication capabilities have significant value because they can provide improved economics, including incremental fee income enhanced yields as well as the cyclical deal flow from lenders to whom we show deals. We realize all of these benefits would our syndication of Dodge Data. We invested $37.8 million in App Solar, a new joint venture created by three established solar companies to acquire, build and manage a diverse portfolio of ground and building mounted commercial and residential solar assets with a special focus on social housing rooftop developments. The proceeds are being used to find the construction and ownership of residential and ground mount solar projects in the UK. We also invested $25 million in secured debt at Afors Holdings [ph] to support its acquisition by its sponsor. Afors [ph] provides the priority SaaS based data analytic solutions to government and commercial customers to satisfy safety regulatory and compliance needs. Exits, which include sales, repayments and revolver pay downs totaled $699 million for the quarter. We continued to sell lower-yielding assets and the weighted average yield for investments sold was 9.9%. Sales totaled $444 million for the quarter, including the full exit of our positions in Panda Sherman, NVA Holdings and First Data amongst others. We also reduced our exposure to other investments, including a partial sell out of investments in Walter Energy and Chronus [ph] Corporation. We continue to see some of our investments get refinanced with new deals. Repayments for the quarter totaled $240 million including our investments inventive [ph], Evergreen Tank Solutions, VWR, Ranpak and Racold [ph] amongst others. Revolver pay downs totaled $14.6 million. Overall, we believe our portfolio credit quality remained strong. The portfolios weighted average rating increased to 2.2 from 2.1 on a cost basis and remained at 2.1 on the fair value added basis. The increase on a cost basis was primarily attributable to oil and gas and mining investments. No investments were placed on non-accrual status during the quarter. In addition, the weighted average net leverage of investments remained at 5.4 times and the weight average interest coverage remained at 2.5 times. Given that decline in the price of oil, we want to make a few comments about our oil and gas portfolio. Our portfolio primarily consists of directly originated senior secured investments that are generally higher in the capital structure, secured by the assets of the borrower, structured with strong covenants and include hedging requirements. We remain in constant dialogue with our borrowers. These companies are diversified geographically and are generally located in basins and operate at the lower end of the cost curve. At the end of the quarter oil and gas represented 13.6% of the portfolio on a fair value basis compared to 13.2% at the end of September. And we do not have any exposure to oil services companies. With that, I will now turn the call over to Greg, who will discuss financial performance for the quarter.

[Gregory W. Hunt:]

Thanks Ted. Total investment income for the quarter was $110 million, down 7% from last quarter and up 16% year-over-year. The decrease quarter-over-quarter was mainly due to lower prepayment income. Interest income for the December quarter totaled $9.3 million of prepayment income compared to $21.9 million in the September quarter and $2.5 million in the year ago quarter. Fee income decline slightly but remained above average. The expenses for the December quarter totaled $53.4 million, compared to $53.2 million last quarter and $44.9 million for the year ago quarter, a sequential decrease in incentive fees associated with the decreased level of investment income generated during the period as well as lower management fees associated with decrease in the average portfolio were offset by an increase in interest expense associated with the $150 million of debt issued in October. Net investment income was $56.7 million or $0.24 per share for the quarter. This compares to $65.7 million or $0.28 per share in September quarter and $49.7 million or $0.22 per share for the year ago quarter. For the quarter, the net loss in the portfolio totaled $76.1 million or $0.33 per share compared to a net loss of $23.7 million or $0.10 per share for the September quarter and a net gain of $56.1 million or $0.25 per share for the year ago quarter. The net loss for the quarter is primarily attributable to [indiscernible] linked investments partially offset by gains in other investments. In total, our quarterly operating results decreased net assets by $19.5 million and $0.09 per share compared to an increase of $42 million or $0.18 per share for the September quarter and an increase of $105.7 million or $0.47 per share for the year ago quarter. On the liability side of the balance sheet, we had $1.6 billion of total debt outstanding at the end of the quarter, up from $1.58 billion at the end of September. The company's net leverage ratio which includes the impact of cash and unsettled transactions stood at 0.74 times at the end of December compared to 0.76 times at the end of September. Heading into quarter end we knew certain investments would be repaid in the March quarter and planned appropriately. With that operator please open the call to questions.

[Operator:]

[Operator Instructions]. Your first question comes from the line of Matthew Howlett of UBS.

[Unidentified Analyst:]

Hey, good morning everybody. It’s Ben on for Matt. Thanks for taking my question. With kind of equity, your equity allocation increasing a little bit in the quarter and leverage masked, could you just talk about kind of how you're thinking about those investments and a potential maybe harvest some of those and redeploy into income producing assets. Thanks.

[James C. Zelter:]

It’s a great question. So I’d say a big focus for us over the next six to 12 months is to harvest some of our older private equity investments. There is no assurance that, that will happen obviously but if we're able to monetize them at good levels and redeploy them into income producing assets that's obviously a big focus for us over the next six to 12 months.

[Unidentified Analyst:]

Great. Thanks a lot.

[Operator:]

Your next question comes from the line of Rick Shane of JPMorgan.

[Richard Shane:]

Actually guys, that was my question. I was just sort of curious given where you are and the leverage within your leverage regime and sort of where you stand in terms of being able to monetize existing investments and take advantage of that market opportunities right now. You guys answered it. Thank you.

[Edward J. Goldthorpe:]

But I would add one thing Rick, just to build on your question. A third of our book still yields less than 10% and unlike most PDCs we still have a healthy amount of liquidity in our portfolio and so if you look at where we sold assets last quarter, it was sub 10% yields on average and our originations were obviously above 10% yield. So despite where our leverage is, which is obviously at the high end of the range we think we continue to have organic opportunities to originate wider spread assets and monetize lower yielding assets. So obviously that includes our liquid portfolio and also if the previous question obviously some of our private equity investments.

[Richard Shane:]

Hey Ted, and if I could ask a follow-up question having not really asked the question on the first part but your balance sheet is a little bit less asset sensitive than your peer group. Your 50% floating rate. Do you see an opportunity or does it make sense strategically at this point as you're moving towards 2015 to pursue becoming more asset-sensitive.

[James C. Zelter:]

Well I think that certainly the low rate environment has persisted a bit longer than many would have thought. The question we got over the last couple of years is how the portfolio is going to perform in a higher rate environment. The reality has been a lower environment. I sort of -- I’ll answer a couple ways. One is Greg sort of suggested that we came in the quarter realizing the variety of prepayments would occur naturally in the first quarter. Those have occurred thus far. So we're operating in a comfortable zone in terms of fixed, in terms of leverage and in the quarter we did issue some debt and we would certainly expect to do so, if we can do so if we can get attractive rates. But having a strong view we feel we have enough floating rate exposure and floating rate liabilities and having a natural allocation to both fixed floating is I think how we want to operate the business.

[Richard Shane:]

Got it. Okay, thanks Jim.

[Operator:]

Your next question comes from the line Troy Ward of KBW.

[Troy Ward:]

Great, thank you and good morning, Hey guys can you just speak a little bit on the energy portfolio, whether you've seen any significant changes in fair value since 12/31, especially on the liquid side obviously where you have good information. But then secondarily on names where you're getting opportunities to speak with energy management teams as they prepare for 2015 and beyond, can you talk about whether or not there is big change in their capital plans whether they have already or planned to do cost cutting, things like that to help protect your asset quality?

[James C. Zelter:]

Yeah, so to answer the first question we really haven’t seen material moves in our liquid book since quarter end nor in our illiquid book. I would say a couple of things. I think the market is very focused on these companies raising up unsecured-debt and having met many, many management teams as a firm our firm’s met many, many management teams, I think so far we have not seen that happen. I mean management teams are cutting CapEx, we have been very surprised this week, somebody accessed the high yield market regular way. A lot of people have done stock deals over the last six weeks, including some of our portfolio companies which is clearly very credit positive. And so management teams seem much more realistic about things than they have in previous downturns. I think people are comparing for lower for longer to the extend it happens and people are getting much closer to home in terms of capital spending as opposed to raising new capital. So we think our business is very well positioned to provide first lien senior secured-debt and we think it’s a big opportunity for us. It really hasn’t manifested itself yet and when we look at our pipeline, our pipeline for new originated senior secured assets in oil and gas specifically is actually pretty anemic. So we are hoping this becomes a big opportunity for us in the second half of this year but really what we have done is seen management teams do a lot of credit friendly things, cutting CapEx, doing farm-ins, raising equity and that’s kind of what we have seen for the first -- for last three months.

[Troy Ward:]

Great, thanks.

[Operator:]

Your next question comes from the line of Doug Mewhirter of Suntrust.

[Douglas Mewhirter:]

Hi, good morning. A few questions I guess first just a follow-up on the energy question. I guess it’s obvious that you have a very well structured energy portfolio, a lot of security there, lot of, I guess fall backs and hedges. I guess if oil stays between $40 and $50 range over say two to three years, does that start pushing up against your comfort level? I mean I realize everything is very well hedged but hedges do have to get rolled over and I am just kind of wondering how your companies are set up for having to their breadth for a longer period of time.

[James C. Zelter:]

Yeah, I mean it’s a great question. The answer is if oil stays at these levels for sustained period of time, there is a lot of companies generically whose model does not work. And so we feel like we are pretty well covered for next couple of years and we are working very closely with each of our borrowers. Again most of our borrowers are in lower cost basins, but clearly if you are in a $40 or $50 oil environment for three, four years it’s going to put stress on lot of these companies. And so again we feel very well positioned and we feel very well structured in our books and a number of our portfolio companies have raised equity already but clearly we are in constant dialogue with each of these companies.

[Douglas Mewhirter:]

Okay, that’s fair enough. I mean it’s hard to, definitely hard to tell the future. Second question may be a little more specific, looks like you took the opportunity to invest in some structured products this quarter. I know you always been active member of that market, is that just you are taking advantage of dislocation or some miss priced CLO equity tranches out there in the market that you picked up or is it part of something broader that you are looking at some broader trend?

[James C. Zelter:]

So we are, when we define structured products is obviously a broad definition. It covers lots of different things. We do not use this vehicle to buy generic CLO equity in general. We do it more strategic transactions. So for example we talk a lot about our corporate [ph] funds in our Madison transactions which we think are very strategic. We did a transaction called Golden Hill which again is a very strategic transaction. It’s not a generic buy and sell equity. It’s a joint venture with a very, very large counterparty. So when you go through our structured products business we really don’t have material exposure to what I call a generic CLO equity or secondary liquid markets. It’s really proprietary originated things that come out of the Apollo platform, right tax rates, strategic partnerships with large counterparties who match up with us very well and so we want to be very, very strategic with how we use that basket.

[Douglas Mewhirter:]

Okay thanks, that’s all my questions.

[Operator:]

Your next question comes from the line of Chris York of JMP Securities.

[Christopher York:]

Good morning guys. Thanks for taking my questions. Just one this morning. I would suspect that oil and gas E&P companies maybe pursuing second lien loans as borrowing basis have declined. What is your current appetite for new energy credits given an already sizeable portfolio?

[Edward J. Goldthorpe:]

I think as I said before if risk for reward is very favorable for us and we can pursue our existing strategy, which again is top of the capital structure, full covenants, companies hedged, that’s a business that we are very much interested in and our oil and gas portfolio yields a substantial premium to the overall portfolio. So we continue to think it provides good risk. Chris as I said before we’re really not seeing low hanging fruit right now and we’re preparing our business for lower and longer as well. So we’re being very, very disciplined and prudent about the new deployment of capital.

[Christopher York:]

Got it, thanks Ted.

[Operator:]

Your next question comes from the line of Arren Cyganovich of Evercore ISI.

[Arren Cyganovich:]

Thanks just thinking about the sector in general now trading, you are not a loan trading at pretty big discount to book value, what kind of challenges does that pose for maybe committing to new investment opportunities? I know you have a fairly liquid portfolio that can allow for rotation. But in terms of providing capital to new opportunities do you find yourself constrained at all in this environment?

[James C. Zelter:]

I’ll talk big picture and Ted can talk. I mean certainly with the sector trading where it is in aggregate it doesn’t appear there will be a lot of equity issuance. So I think we’ve taken the approach that our capital should cost more to borrowers and there are some parts of market that are still healthy and competitive but certainly overtime I would suspect that the whole industry it starts continue to trade at levels where issuance of equity is not possible. We’re going to replace our collective capital. So we are making higher margin on returns but to Ted’s point a lot of discussion about energy right now, a lot of the focus of activity is on the existing names in the high yield and loan universe. There really companies are resetting budgets, cutting back CapEx, pushing hard on their suppliers to cut cost, for the most part in aggregate a lot of that rescue financing and energy has not occurred yet. But certainly I think that we are in a lower rate environment where our yields are relatively high trading below NAV. I think we like everybody else is making sure we get paid for the money that we lend out as a broad strategy.

[Edward J. Goldthorpe:]

Yeah and the good news about this is it’s also listen, the other 87% of our business from oil and gas is still competitive, activity levels are lower today than what they were a couple of months ago. Yes, spreads are still pretty tight and so we don’t feel like this is the great environment for us to be massively growing our business. We think we have organic opportunities to high grade yields within our portfolio and it’s still a reasonably robust credit market out there. And so we’re being very, very cautious just given all of the tail risks and macro risks out there today, about being disciplined about deploying capital.

[Arren Cyganovich:]

Okay, thanks, it’s helpful, and in terms of, I guess with the lower amount of activity you’re expecting a slower amount of repayments directed from the portfolio?

[James C. Zelter:]

Yeah, so we really say that we [indiscernible] the portfolio since we went public. Really are gross -- our net activity is really consistent. Our gross deployment in exits is typically pretty correlated. So in period of time we’re really, really busy on the origination front, we typically have lots of repayments and vice versa. So repayments for our business are down pretty materially, generically both at the end of last year and early this year. And so obviously we’re going to repay that in certain situations and help us churn our portfolio but repayment activity is definitely down. But new origination activity is down as well. And so net activity I think is going to be pretty constant. So I think gross will be subdued for the foreseeable future, if we look at our pipeline.

[Arren Cyganovich:]

Got it, thanks. And then just lastly the oil and gas in your commentary about the protection you have in there are helpful. Why not just maybe sell some of it, marks on the portfolio are pretty close to your cost basis for a lot of them. Why not just exit some of these positions to kind of reduce the exposure there and kind of take some of the target off of your back being a little bit higher close to that sector in general?

[James C. Zelter:]

Yeah let me go through our portfolio in detail, number one we’re earning excess spread, and we still feel pretty good about the credits. And number two is if this is not a, these assets were not readily salable. This is a portfolio we feel really good about. We feel good about how we are positioned and everything else, but these are not liquids carriers and so these are originated pieces of paper with constant talk with management teams to create the spoke documents and so I don’t think that’s something we’re going to pursue I don’t think we’re going to pursue a wholesale exit of certain marks.

[Arren Cyganovich:]

Got it, okay thank you.

[Operator:]

Your Next question comes from the line of Jonathan Bock of Wells Fargo Securities.

[Jonathan Bock:]

Good morning and thank you for taking my questions. Ted, just want to understand a little bit about the covenant protection that you have within your oil and gas loans. You mentioned that there was a risk that some of these companies take on increased levels of senior secured debt in effect kind of priming your position to the strength that you are in the second. Do you have covenant protection that can prevent that from happening and can you perhaps outline that risk a bit more because yes while we understand people cut CapEx budgets we understand they don’t go away completely and liquidity is going to need to come from somewhere.

[Edward J. Goldthorpe:]

Yes, so just a clarification point. The comment I made was a generic comment and so when you look at the -- if you look at the high yield index and you look at high yield energy securities, typically almost of the [indiscernible] declines. Our portfolio the originated portfolio which is the vast, vast majority of our portfolio does not have the ability to decline. And so if you think about how a typical oil and gas company finances itself it has a reserve base, what you call ABL and then behind is higher bonds, the vast majority of the high yield universe is structured that way. We’re typically dealing with borrowers before they get performing RBL [ph] and so the vast majority of our portfolio you cannot layer us with that.

[Jonathan Bock:]

Great and then one question, Jim for you, so as you look across the entirety of the space where perhaps we’re starting to see spread widening to a greater degree and more liquid and tradable securities, I can refer to as BSL but you know there’s a kitch [ph] layer there that the middle markets firms can focus on a bit larger versus direct originated volumes. Do you have a preference in terms of ease, in terms of how one actually goes and originates in this environment, is it a target rich environment and the more liquid and tradable categories today or not?

[James C. Zelter:]

These are my energy or the broad universe?

[Jonathan Bock:]

Broadly speaking Jim.

[James C. Zelter:]

I think taking a step back and Ted has alluded to it, energy oil and gas anywhere between 16% and 20% of the broad high yield markets. And really because of -- as Ted mentioned AVLs, RVLs is not allowed in the second lien market today. There’s only a broad handful. Certainly there’s been broad dispersion in the high yield market. We have a couple of additions in those but I think that broadly speaking there is -- while there is massive dislocation in that space and we are long-term constructive about this energy complex I think there are some opportunities there. The broadly syndicate loan market is sort of a world -- it’s the haves and have-nots, companies that are large scale and successful, are having an ease to come to market, many others maybe in the technology space at higher leverage are having a more challenging time. So we did a run, looking at the broad credit space of price dispersion last year and how many securities were up or down 10, 20, and 30 points versus being up 10 or 20 points and the dispersion is wildly on the negative side in an environment where the indexes are relatively flat. So there is a vast amount of dispersion going on, but the broadly syndicated or the middle markets syndicated markets are deals that work, work well and there is a tremendous amount of demand. I think what we are trying to do is take the proverbial step back and with this dislocation whether it’s in energy or other areas price our capital accordingly. And I do want to emphasize, we were very clear three, four years ago, how we were going to diversify origination, away from primarily sponsored business. We’ve done some aircraft, we’ve done some energy, management and the Board is fully behind the strategies we’ve taken. And this is not a time for us to sort of cut and run. We’ve got well-structured securities, we are long-term positive on the complex and in terms of making and requiring investments to make our dividend, we stand behind our portfolio.

[Edward J. Goldthorpe:]

I’ll just make one other comment which is buying liquids [ph] is not [indiscernible]. We have, like they still a massive spread for illiquid risk and we’re super focused on proprietary origination. And so despite there has been some spread widening in the DSR market that translated in to spread widening in the middle market and that is really where we’re trying to focus our business.

[Jonathan Bock:]

That’s great. And then I guess question as it relates to belief in your portfolio. So if I’m looking at Dodge Data and Analytics where you’re earning a nine inch coupon, slightly higher I would imagine with some fees et cetera that you’re getting a little bit above that. Can you explain the return dynamics that would come from making an investment in Dodge versus making an investment in your own stock today below book? Which one provides the better risk adjusted return?

[James C. Zelter:]

Well, Jeff certainly you yesterday and I’m sure the whole market read your report as has our Board. And certainly that’s a topic of discussion. And as I’m sure you can imagine there is a whole host of attributes one would go in to decide what makes sense to the portfolio long-term. And we and management and the board are -- had a discussion yesterday and I’m sure will be ongoing the very question you raised about whether it makes sense at certain points to buyback our stock. These are the other activities and other investments. So we’re certainly focused on it and certainly I think it’s very easy one there than next to make a decisions, but the prudent thing to do is to take a step back look at your overall portfolio, look at the capital structure you have and make long-term decisions which our shareholders have entrusted us with and that’s we’re doing right now. So I think making decision based on one investment certainly when you look at what you think is a stated yield on Dodge and you look at where you think is the -- what we know the NAV is of our stock and ability to purchase it that looks quite obvious. But I would argue that there is another a variety of other ancillary benefits of doing Dodge and we have found that while the stated yield looks quite lower in many of these things between prepayments and fees and when you really put the numbers through names like Dodge, we have found B2B very nice low to mid-teens type of returns. So it actually compares quite favorably on will you may be able to buy our stock today on a given opportunity.

[Jonathan Bock:]

And make no mistake. Just the fact that they’re having discussion that’s actually good, I mean at the end of the day people have already seen you and a number of the folks part of your team do the right thing as a relates to fees et cetera in terms of waivers which is much appreciated. So we’re glad you’re having the discussion and there are intangibles no doubt, but of course as people start to look at the great value that’s offer at below book we’re glad I know that you’re looking at it is well. So guys thank you so much for taking my questions.

[James C. Zelter:]

Excellent.

[Operator:]

We have no further questions at this time. I’ll now return the call to Jim Zelter for additional or closing remarks.

[James C. Zelter:]

Great. As usual, we appreciate your support and interest in our company and we’ll work feverishly to grow shareholder value overtime. So thank you much, thank you for attending. And your questions today and we look forward to you talking to you in the near future. Bye-bye.

[Operator:]

Thank you for participating in today’s conference call. You may now disconnect.