Braemar Hotels & Resort: Gross Asset Management Contract, Initiated Sales Process

It's probably a sign of the times, have to dip in quality to find some ideas and this pitch makes me throw up a little in my mouth. 

Braemar Hotels & Resorts (BHR) (~$200MM market cap, ~$2.1B enterprise value) is a luxury hotel REIT that was formerly known as Ashford Prime, a spin of Ashford Hospitality Trust (AHT) in 2013.  BHR is externally managed by Ashford Inc (formerly AINC, went private via a reverse/forward split last year), the creation of the infamous Monty Bennett.  Hotel REITs are a challenging business because they need to outsource the hotel management function to a third party to maintain REIT status, then also pay for the franchise flag, throw on top of that an egregious external asset management contract and BHR never had a chance.  The only reason these external Ashford hotel REITs exist is because they were all originally under one roof before AINC was spun from AHT.  I don't think this structure would have gotten public otherwise.

Again, skipping a lot of history here, there has been numerous activists at BHR trying various ways to remove Ashford from an otherwise healthy portfolio of luxury hotels.  Finally, on August 26th, the REIT officially waived the white flag and announced the initiation of a sale process.

In a typical external REIT management agreement, there might be a 3x termination fee, not so with BHR, Ashford has negotiated a "discount" to their termination fee with the board to facilitate a sale:

Their termination fee is 12x PLUS another 20% on top of that, again truly gross and no way AINC would have come public without being a spinout of its blood sucking host AHT.  Bennett would later steal AINC by issuing himself preferred stock and draining all value from minority AINC shareholders.  While I just wrote up not being sure about the incentives in the TURN/MCLI deal, here they're squarely in our face that Ashford only cares about themselves and views this as an opportune time to get 14-15 years worth of management fees upfront.

However, I still think there might be a trade here, albeit a very risky one.  This sale process rhymes a bit with Bluerock Residential Growth REIT (fka BRG, now BHM) where you had an externally managed REIT with a messy balance sheet that effectively made the equity a stub.  Any positive surprise in the sales process produced exceptional returns for the stub.  Below is my quick back of the envelope math on the potential outcomes of a BHR sale based on various cap rates:

Most of the value in the portfolio is in a handful of luxury hotels, 4 under the Ritz-Carlton flag (Lake Tahoe, Puerto Rico, Sarasota and St. Thomas), 1 under the Four Seasons (Scottsdale).  Luxury hotels have continued to perform well through the covid bullwhip with some luxury hotels trading hands well within the range above.  I've also included the $25MM termination fee to rid the buyer of Remington, Ashford's hotel management arm, plus the potential for the preferred stock to convert to common above $4.39/share.  Again, it feels a little gross to own this one, Ashford is really incentivized to only get a price above their termination fee so we're counting on the independent board members (one new board member already came out publicly they were unaware of the termination fee negotiation) to keep the process honest.  But I think it's an interesting bet in small size.

Disclosure: I own shares of BHR plus a few call options

180 Degree Capital: Merger w/ Mount Logan Capital, Tender Offer, Questions Remain

180 Degree Capital (TURN) is a microcap (~$46MM market cap) closed end fund (CEF) pursuing an activist strategy in microcap stocks.  Before 2017, some of you might remember the name, it was a venture capital fund known as Harris & Harris Inc (TINY).  There are a few similar ones today, these almost never work.  CEO Kevin Rendino took over, changed the strategy, but was hampered by their legacy venture portfolio weighting down overall returns.  The last few years have been a difficult time for microcap investing, large caps seem to outperform year in and year out, but it's especially difficult to outperform if you're running a subscale internally managed CEF.  Expenses create too high of a hurdle to justify a small fund's existence.

I'm going to skip some background but TURN trades at a discount to NAV (not uncommon for CEFs) and has for some time.  Naturally activists showed up (Marlton Partners and others) and pushed the company to close the discount by repurchasing shares, liquidating and/or distributing the underlying public equities in TURN's portfolio in-kind to shareholders.  To management's credit, TURN did implement a "Discount Management Program", but to limited success.

In January of this year, TURN entered into a reverse merger with private credit manager, Mount Logan Capital Inc (trades as MLC on Cboe Canada) valuing TURN at NAV (later revised to 110%) and Mount Logan at $67.4MM.  This transaction potentially fits the "balance sheet to income statement transformation" theme where the market is currently valuing TURN at a multiple of book value and in the future will judge Mount Logan Capital on an earnings basis.  Marlton Partners pushed back on the transaction, there was even a counter proposal from another CEF, Source Capital (SOR), at NAV, but TURN rebuffed that deal.  Shareholders on both sides of the transaction have now approved the reverse merger with Mount Logan Capital, which should close sometime this month.

Who is Mount Logan Capital?  It is an affiliate of BC Partners, where BC Partners credit team's executive management team also doubles as Mount Logan Capital's management team subject to an expense sharing agreement (so not quite an externally managed company).  Mount Logan has a random assortment of low-quality asset management contracts plus an owned insurance company where they're managing the float for a total of $2.8B (the graphic is from last November), but that number is puffed up a bit by the insurance AUM and a couple run off management mandates.

Source: November 2024 Investor Presentation

It is unclear to me why Mount Logan exists separate from BC Partners which has its own credit platform and the delineation between the two on future asset management contracts.  Management owns some shares here but not really enough to prioritize Mount Logan or become exceptionally rich if it is successful.  The incentives are hard to tease out, which likely means they're not well aligned with outside minority shareholders.  The relationship with BC Partners is strange, the two BDCs (PTMN and LRFC) recently merged, LRFC was being managed by Mount Logan Capital and PTMN by Sierra Crest Investment Management (a JV where BC Partners is the majority owner, Mount Logan Capital held a minority stake), the combined BDC was rebranded as BCP Investment Corp (BCIC) and will be managed by Sierra Crest.  What's the point of Mount Logan?

In the merger proxy, Mount Logan management did put forth some pretty ambitious fee-related earnings projections that seems difficult to achieve:

If the 2026 numbers are to be believed, the $67.4MM valuation put on Mount Logan in the merger (actually less now that its been revised) is only 3.5x FRE (heavily adjusted) and doesn't count the spread earnings they receive from the owned insurance subsidiary.  So either BC Partners is so desperate to get Mount Logan off of a backwater Canadian exchange and onto the NASDAQ, or something isn't right here.  In July, they put out a SPAC-like deck comparing their FRE multiple to much larger more established peers and includes some wild upside targets.

Luckily, as part of the revised merger agreement, new Mount Logan Capital (will trade under the ticker MCLI) has agreed to a $15MM tender offer (presumably funded by liquidating TURN's portfolio) after closing at NAV (~$5/share) for any shareholders that don't want to go along for the ride.  It's a bit of a free look to see if MCLI trades better on a U.S. exchange.  Additionally, they've committed to a $10MM share repurchase program post-tender offer to support the stock and provide liquidity.

Small-cap BDC/credit managers haven't done particularly well in public markets despite the permanent capital angle, two that come immediately to mind are Fifth Street Asset Management (FSAM) and Medley Management (MDLY).  Interested in hearing others thoughts, especially if you have a strong view on the future of Mount Logan.  I own a bit, mostly hoping it trades well out of the gate, if not, there's some support from the tender offer (management has committed to not participating).

Disclosure: I own shares in TURN

Mural Oncology: Update

Mural Oncology (MURA) ($~30MM market cap) has turned into a bit of a battleground busted biotech in the comments section of my original post.  I always appreciate feedback on ideas, in this case it helped me avoid the fall in MURA's stock price after their recently published business update.  The cash burn has been significantly higher than expected as they wind down their R&D and clinical efforts, but included in the press release were a few nuggets worth pointing out making the stock interesting at current price levels.

First, MURA gives a cash estimate for year-end, this is a positive change as they didn't in the original April strategic alternatives announcement:

As of June 30, 2025, the company had approximately $77.1 million in cash and cash equivalents. The company estimates that, if it has not consummated a transaction or other strategic alternative by December 31, 2025, its cash and cash equivalents as of such date will total approximately $43 to $48 million.

At the mid-point, that equates to approximately $2.50/share.  In addition, most companies will warn that any forward estimates could come in lower than anticipated or sale processes take longer than expected, etc., but MURA sort of did the opposite:

This cash guidance is subject to a number of assumptions and actual cash balances may differ materially, particularly if the Company consummates a transaction or other strategic alternative prior to December 31, 2025.

"Actual cash balances may differ materially" then cite a positive type surprise, just found that interesting to note.  Maybe something is already in the works?  Lastly, MURA snuck in language around a liquidation or wind down being a possibility which they hadn't mentioned previously:

any strategic alternative it may pursue, including, but not limited to, an offer for or other acquisition of the company, merger, business combination or other transaction, including a possible wind- down and liquidation of the company

The simple back of envelope math is below, my guess is someone like XOMA or Tang (although one negative here is neither Tang nor BML are known shareholders) come in and make an offer that amounts to a liquidation dressed up as an acquisition (helps with the Irish takeover rules, gives management change of control bonuses, etc.) for 90% of the projected year-end cash:

There is some acknowledged hair on this situation, it is a former spin that hasn't reached the two year safe harbor (would do that in November) and it has also let go of over 90% of their employees bringing into question whether the IRS would still consider this an active trade or business.  My uneducated take is MURA is still in the drug development business, they haven't sold their assets/business (other biotechs, SYBX comes to mind, seem very aware to avoid being classified as a cash shell and continue to mention their IP in filings despite similarly stopping all development efforts), usually there is some grace period but I admit it's a risk.  

It has been several months now since the strategic alternatives announcement, if such a tax issue were a concern, MURA's advisers or legal would have popped it up by now?  Management hasn't hinted at any issues, would be an epic mistake to blatantly shoot yourself in the foot regarding taxes, but I'm sure its happened before and I could have egg on my face with this one.

Disclosure: I own shares of MURA, bought back in recently.

Franklin Street Properties: Office Basket, Strategic Alternatives

The second in the office REIT basket is Franklin Street Properties (FSP) (~$180MM market cap), this one might be a more direct comparable to City Office REIT (CIO) in that it owns 14 central business district (some less CBD than others) multi-tenant office buildings in the sunbelt (like CIO) but also in places like Denver and Minneapolis which have been slower to recover.  FSP has been on my radar for a long time as they've included the below language for years in their quarterly results, it's been an unofficial liquidation of sorts since the pandemic.  They've sold over $1B in property and used the proceeds to deleverage their balance sheet.

We continue to believe that the current price of our common stock does not accurately reflect the intrinsic value of our underlying real estate assets.  We will continue to seek to increase shareholder value by pursuing the sale of select properties when we believe that short-to-intermediate term valuation potential has been reached.

In May, FSP officially announced a strategic alternatives process:

“The Board of Directors is committed to maximizing value for all our shareholders,” stated George J. Carter, Chairman and CEO. "We believe that FSP's share price does not adequately reflect the underlying value of our real estate, and, accordingly, we have undertaken this strategic review process to explore opportunities to eliminate this disconnect."

We haven't seen the CIO proxy yet, but I anticipate in the background to the merger we'll see many counterparties participated in the auction (CIO mentioned conducting a comprehensive process).  FSP could be a consolation prize if you're a private equity manager with cash to burn.

FSP typically hosts a quarterly conference call to review their financial results, earnings were released today and FSP decided to skip having a call.  The market has been frustrated with the speed of this slow motion liquidation, but it appears they're finally serious about selling the remaining assets/entire company.  FSP's portfolio is only 69% leased, the office landlord business has a lot of operating leverage to it, if you (or an interested private buyer) have a strong view that leasing activity will recover then this one might be cheaper than it screens on an current NOI run-rate basis.

Franklin Street Properties is a bit of a family business, management pays themselves well, but do own 10% of the shares and to their credit have shrunk the business over the last 5 years.  The risk here is that they run a process and don't feel like they're getting fair value, continue to pay themselves handsomely and let the slow-motion liquidation continue for a few more years.

Disclosure: I own shares of FSP

Net Lease Office Properties: Office Basket, REIT Spin/Liquidation

I'm starting up an office REIT basket, last week City Office REIT (CIO) announced it was being acquired by MCME Carrell (an affiliate of Elliott Management and Morning Calm Management) for $7/share in cash, which is approximately a 10% cap rate on CIO's net operating income (85% occupancy).

It's been 5 years since the worst of the pandemic, return to office trends keep moving in the right direction.  Anecdotally, my commuter train is generally as crowded as it was pre-pandemic (excluding Fridays) and the Chicago loop seems mostly normal again.  New supply is virtually non-existent, likely will be for the foreseeable future, these things take time, but private equity seems willing to take a risk on office at these valuations.

First up, and likely the least risky of the three, is Net Lease Office Properties (NLOP) (~$500MM market cap), a well-known favorite that many other value bloggers have written up since it was spun off from W.P. Carey (WPC) (NLOP's external manager) in November 2023.  It is a vehicle designed to be a liquidation with a limited life, similar to other REIT spins of the past like Retail Value or Spirit MTA -- popular among value investors, REIT liquidation, gives me nightmares of the New York REIT (NYRT) pitch.  

But this situation has mostly de-risked, at the time of the spin, NLOP was saddled with a 14% interest rate mezzanine loan, after several initial rounds of asset sales, the mezzanine loan has now been completed paid off as of April.  That news is important because the remaining debt is all non-recourse mortgages attached to specific properties, any further asset sales on the unencumbered properties can be used to make special liquidating distributions to shareholders.  Much of the mortgage debt might end up getting extinguished via foreclosure, can almost think of those properties as call options on the office recovery.

As the name suggests, NLOP owns primarily single tenant office properties where the tenant is responsible for most of the operating expenses of the property (net lease or triple net lease).  Keeping things simple, below is a quick back of the envelope illustration of what NLOP would be approximately worth at a 10% cap rate, similar to the CIO transaction.

There's a lot more fun you can have modeling out the liquidation value here, including the cash flow from here until the final distribution, what handing back the keys means on the encumbered properties, etc.  The portfolio is 85% leased, there's one chunky property, KBS's headquarters in Houston that makes up 23% of the rent roll, but I'm generally more optimistic on Houston than others, it wasn't as impacted by covid and has a more in-person office culture than some other cities.  I think it's a manageable.

Disclosure: I finally joined the party and now own shares of NLOP

GCI Liberty: Cheap, Tax Asset, Malone Fatigue?

GCI Liberty (GLIBA/K) is back in public markets, the leading telecommunications provider in Alaska was spun off on Tuesday (7/15) from Liberty Broadband (LBRDA/K) ahead of LBRD's merger with Charter Communications (CHTR).  

Alaska is a challenging market, it has a small population with a huge unforgiving geography, partially protecting GCI from competition (although satellite providers like Starlink are a threat and starting to take some share).  GCI is primarily a broadband business (70% of revenue) which also includes 3000 miles of undersea cable connecting Alaska to the rest of the country with the remainder mostly in wireless (GCI recently discontinued their video offering).  The business was founded 45 years ago by Ron Duncan who is still the CEO today at 72 years old.  Unlike other broadband businesses, GCI is skewed towards business revenue with the big exposure to healthcare and education in rural/remote villages, many of these places only have a couple medical professionals or teachers, everyday services are provided in single rooms using video conferencing.  However, their business has challenges, much of GCI's revenue is tied to government programs (Universal Service Fund or "USF" is mid-40% of revenue) under constant scrutiny and the Alaskan economy is tied to cyclical natural resource markets like oil and mining.  Population has declined slightly over the last few years, revenue growth at GCI is likely roughly flat to inline with inflation over time.

Below is a back of the envelope valuation of GCI:

GCI Liberty is cheap compared to peers (I pulled peer multiples from CapitalIQ, didn't verify or normalize), but that's not really what caught my attention in the spin.  Unlike other Liberty entities where John Malone has stepped back from the board or agreed to eliminate his super-voting rights in negotiated mergers, here at GCI, Malone is the Chairman and will be leading capital allocation decisions.  

To steal the line of another investor I chat with, this is like the old quote that Warren Buffett has stated he believes he could achieve a 50% annual return if he were managing a smaller sum of money.  The spin was taxable to Liberty Broadband shareholders which allowed Malone to achieve setup basis on the GCI assets, resetting the depreciation tax shield (which likely also benefits from the Trump administrations recent "BBB") the value of which will be based on the first 20 days of trading, but capped at $420MM per the merger agreement with CHTR.  That value is not included in the valuation above and significant given the ~$2B enterprise value.

In the investor day presentation, John Malone comments both on the valuation and capital allocation thoughts (attribution to BamSEC):

Shane Kleinstein Liberty Media Corporation – Head of Investor Relations

I think building on that, John, we got a question from a valuation perspective, building on what Ron had said, how do you suggest investors think about appropriate multiples or valuation for this asset partially in light of the recent Cox-Charter transaction, partially in light, while GCI has strategic advantages. It is -- the dynamics have changed since it last traded publicly. So curious reviews from a valuation standpoint.

John C. Malone Liberty Broadband Corporation – CEO & Chairman of the Board

Well, I would say, if you're speaking of valuation in terms of EBITDA multiple, it should trade at a premium EBITDA multiple because it's EBITDA will be fully sheltered, it has a modest debt leverage situation, so it doesn't have a lot of downside risk. It has a declining capital intensity, and therefore, its free cash flow characteristics should be superior. Now Charter is currently is trading at or around a 7 multiple EBITDA. I would think that this business should be trading at a premium to that. And if it doesn't, we've got -- we're going to have plenty of free cash flow with which to reduce equity if that opportunity presents itself, I think, the Board will be looking at returns on the free cash flow and how to deploy it.

And given the fact that we have more than enough tax shelter to shelter our own cash flow, we'll be looking opportunistically for acquisitions or investments that provides unusually high pretax returns, but that can benefit substantially from the shelter that consolidating what GCI could provide. So it's kind of an ideal core asset, around which to build some interesting incremental assets. So we certainly look forward to that. I'm hoping that it can become the beginning of a new Liberty Media and now that Liberty Media has largely gone to a single line of business focus with its spin-offs and we will have the availability, of course, of the Liberty Media management team who work for -- who will work for this enterprise under contract, providing services ranging from financial to tax accounting and public relations chain, including you.

Later on, after commenting on leverage, he goes into possible areas he'd be interested in:

John C. Malone Liberty Broadband Corporation – CEO & Chairman of the Board

Well, from my point of view, Shane, I would say 3 is a pretty nice number going up for accretive acquisitions. Sometimes you'll take it up in order to -- until you get the synergies realized from combination. We would try to stay in the 3 to 3.5 range, I would think. And if we drop below that, we might take it up in some kind of a small recap and shrink the equity. But my guess is that if we look widely enough, we're going to find lots of accretive, small but accretive acquisitions in the communications sector, looking primarily at special situations, in some cases, distress, but I think that we will find opportunities to grow the business outside of Alaska with accretive small incremental acquisitions in the -- in and around the communications industry.

Capex will be a bit muted in the next 12-18 months has GCI finishes its investment cycle as part of the Alaska Plan, but following that, as a minimal cash tax payer, Malone should have a lot of flexibility to make acquisitions and use GLIBA like his "50% return PA".  Read through the spinoff docs as well, there's a lot of talk about issuing Ventures Group tracking stock in the future which could be a turnoff to many.  I haven't seen much chatter about this spinoff, there seems to be a lot of John Malone fatigue in the last 5-10 years as some of their investments have underperformed (that might be generous phrasing).  He's 84 years old, but he's an admitted deal junkie:

Shane Kleinstein Liberty Media Corporation – Head of Investor Relations

Well, John, I'll turn a related but different one to you. A question came through, what's your expected involvement in GCI and Liberty. What are the areas that you particularly expect to be taking part?

John C. Malone Liberty Broadband Corporation – CEO & Chairman of the Board

Well, I enjoy strategy, I enjoy strategizing with Ron. I love M&A. I love deals, and I love structure and so the opportunity to rebuild what some people regard as complexity and I regard it as high return investing is what I look forward to. And I think the combination of Ron and his knowledge of the business and his team with some of the young guys within Liberty Media's management structure, who are pretty good at turning over rocks so we'll have talent available to the organization that is several steps above what an organization that size would normally have available to it in terms of finance, tax structure and clearly IR and public relations. So I think we have a little bit of a supercharger when it comes to capabilities that you wouldn't normally find in a business of the size of GCI because of the involvement with Liberty, Liberty Media, me and the rolodexes that both Ron and I have been able to develop over this long period, I think, we're going to find some very interesting opportunities, which will have exceptional financial reward associated with them.

I think it's an interesting setup, cheap asset on its own, with the call-option on Malone's deal making capabilities in a smaller, less followed entity.

Disclosure: I own shares of GLIBA/K once again

Mid Year 2025 Portfolio Review

I joke that any large recurring conference call is incomplete without the host commenting on how quickly the year is progressing, but here were are, already halfway through 2025.  My performance struggles continue as my portfolio lost -3.64% in the first half of the year, versus the S&P 500 gaining 6.20%.  My long term performance (hopefully only temporarily) dipped below my goal of a 20% CAGR, the threshold where I think the effort is worth my time.

My biggest contributors thus far have been Par Pacific Holdings (PARR), Third Harmonic Bio (THRD) and ACRES Commercial Realty (ACR); with the biggest distractors being Creative Media & Community Trust (CMCT), Mereo BioPharma Group (MREO) and 23andMe Holdings (ME).

Below are some quick elevator pitch summaries on my current positions.  As usual, some of these were written up to a week ago and could be slightly stale. 

Current Positions:

• Broken Biotechs
• Athira Pharma (ATHA) has a market capitalization of ~$12.1MM despite having $33.7MM in NCAV as of 3/31.  This busted biotech announced a strategic review back in September, hiring Cantor Fitzgerald, but didn't completely halt their research pipeline.  ATHA has one potential ALS therapy (ATH-1105) currently in a Phase 1 trial with healthy adults, the company is hoping to dose with actual ALS patients later this year.  If we assume they'll burn another $15MM (currently spending ~$9MM/quarter) chasing the drug development ghost and on any strategic transaction expenses, liquidation value comes in around $0.48/share versus a current quote of $0.31/share.  That's before ascribing anything for the public listing or IP value with ATH-1105.  Perspective Advisors is the largest shareholder with ~14% of the shares outstanding, they previously indicated in a 13D filing they have been in discussions with management on a reverse merger or other transaction.  BML owns 8% and has been more active in pushing for liquidations recently.  This situation isn't as clean as I typically like and has a significant ongoing burn, but I continue to hold a small position.
• CARGO Therapeutics (CRGX) fully waived the white flag on 3/18, did a 90% reduction in force, suspended all drug development and appointed a new CEO to run the strategic alternatives process.  The stock responded and closed much of the gap to my estimate of liquidation value, which is still a bit under $5/share ($235MM, large enough sum that it should be attractive to potential merger partners), it trades for $4.14/share today, representing a fair amount of upside still remaining.  Madison Avenue Partners and Kevin Tang each own about 6.5%.
• ESSA Pharma (EPIX) is trading for $1.75/share and my estimate of its liquidation value is approximately $2.10/share.  9.5% shareholder BML and 5.1% shareholder Soleus Capital Management have both written public letters to the board pushing for a liquidation.  Kevin Tang is also here with a 9.7% stake, but BVF Partners is the largest shareholder at 20%.  In the Q1 results (filed after the Soleus & BML letters), EPIX included the line "we have taken productive steps towards a decision and hope to share an update in the near future."  That was 53 days ago, hopefully a resolution will take place shortly.
• HilleVax (HLVX) is the oldest in the basket, having stopped development efforts last July and later announced their strategic alternatives process in August.  My estimation of liquidation value is approximately $2.50/share (HLVX still has their operating lease to clean up, I'm valuing it at a 50% haircut to the full face amount) compared to a current quote of $1.90/share.  The shareholder registry here is a little more traditional biotech centric with Frazier Life Sciences owning 21%, Takeda owning 13.5%, but Kevin Tang is lurking with just under 10%.  There is more status quo risk here compared to others, HLVX has kept the line in their press releases and filings that one potential outcome of the review is to pursue continued development of their vaccines in adults (they originally targeted infants in the failed trial).
• In late December, Ikena Oncology (IKNA) entered into a reverse-merger agreement with InmageneBio (IMA) whose lead asset IMG-007 has an ongoing Phase 2b clinical trial for the treatment of atopic dermatitis (chronic itchy / inflamed skin).  The market doesn't like this deal despite the $75MM concurrent PIPE, IKNA is targeting $100MM net cash at close or ~$2.05/share versus a current quote of $1.35.  I recently voted against the merger, but still expect the deal to go through as 25.8% of IKNA shareholders have signed on to a support agreement (although BML, 8.4% shareholder, has popped up saying they're voting against the deal).  Even in these disappointing deals, occasionally there's a little pop after close as the shareholder base turns over.
• No major news at Mural Oncology (MURA), development has been fully halted and the company is pursuing strategic alternatives.  My estimation of liquidation value is $3.25/share against a current quote of $2.50/share.  There is some good discussion in the comments about the two-year safe harbor for spins (would falloff this November) and Irish takeover rules pushing this towards being acquired or a reverse merger versus a liquidation.
• Repare Therapeutics (RPTX) is a busted biotech with a liquidation value of at least $2/share (possibly more, could be some IP value), but nothing really notable has changed since my write-up last month.  One slight positive, they did include a new line in their 10-Q making the strategic review more clear, from the MD&A section: "We plan to explore a full range of strategic alternatives and partnerships across our portfolio to maximize shareholder value."
• In April, only two short months after announcing strategic alternatives, Third Harmonic Bio (THRD) announced it would be liquidating and returning cash to shareholders.  The liquidation was approved almost unanimously (other similarly situated biotechs should take note), the initial distribution is scheduled to take place in the third quarter with an estimated total of $5.30-$5.44/share (the initial distribution will likely be 90-95% of this value).  This doesn't include any proceeds from the sale of THB335 (here's what appears to be the asset sale deck).  Along with AVTE or ABIO, a model for other broken biotechs to follow.
• M&A / Strategic Alternatives Processes
• CKX Lands (CKX) is a microcap Louisiana land bank that started a strategic alternatives process almost two years ago (August 2023), admittedly the success rate for long drawn out processes is not good.  The latest update appeared in the 2024 10-K: "As part of management’s desire to maximize value for shareholders through this process, the Company expects to seek to partition, in kind or by sale, ownership of its undivided interests in lands co-owned with others. There can be no assurance that the Company will be successful in reaching a negotiated partition of its co-owned acreage that would avoid the need to seek partition in court."  About half of their net acreage is held through a 16.67% ownership in joint venture, it sounds like the leading bidder doesn't want to be part of the JV (understandable!) and wants the acreage partitioned/subdivided which could take significantly more time or not happen at all.  There's not much else to go on here, fair value is still likely meaningfully above the current $10-$11 share price, but any failure to sell the company means CKX is likely in forgotten microcap purgatory for another decade.
• HomeStreet (HMST) is a west-coast regional lender that was caught up in the 2023 banking crisis, originally they sold themselves to FirstSun Capital Bancorp (FSUN) in January 2024, but that deal faced regulatory scrutiny over the combined entities CRE exposure and the deal was terminated in November 2024.  HMST then went about another sale process, leading to an all-stock deal with California based Mechanics Bank (MCHB) which effectively is a reverse merger, MCHB is private with limited liquidity on the OTC market, their shareholders will own 91.7% of the combined company.  The controlling shareholder of MCHB is the Ford Financial Fund, their principals are strong operators having run this playbook a few times where they chip away at the efficiency ratio and ultimately sell their bank holding company investments to larger institutions.  In the meantime, they plan to pay 90+% of net income as a dividend which should make MCHB eligible for inclusion in some dividend ETFs and attract other income focused investors.  The transaction is scheduled to close September 1st, Mechanics Bank is guiding to $1.31/share in 2026 EPS, which would equate to a 10x earnings multiple on a forward basis at today's $13 HMST share price.
• Income Opportunity Realty Investors (IOR) days in public markets should be numbered.  The company is incredibly simple, the majority of the assets are in a cash-like receivable from the external manager, with remainder in a note to an affordable housing development.  In January, the controlling family via Transcontinental Realty Investors (TCI) completed a tender offer where they were only shake out 21,128 shares of IOR at $18/share (versus a book value of $30.22/share) (if you read through the multiple tender offer amendments, it appears some shareholders backed out of the tender) to bring their ownership above the 90% level (allowing them to perform a squeeze out in Nevada).  Since the close of the tender, TCI has continued to buy shares in the open market adding another 33,524 shares, all below the $18/share tender offer.  Recently, shares have drifted closer to $19, soon the controlling family is likely going to determine they've run out of disinterested sellers (very little public float is remaining) to purchase shares from and do a squeeze out.  Hopefully at a more equitable price.
• NSTS Bancorp (NSTS) is a small converted thrift located on the outskirts of Chicago's northern suburbs.  NSTS passed its three year cooling off period in January and can now be acquired, shareholders are pushing the bank to sell itself and management doesn't appear to be standing in the way.  Tangible book value of ~$15/share seems like a nice floor on any takeout, NSTS currently trades for $12.25/share.
• Soho House & Co (SHCO) is an operator of private social clubs, late last year, the company announced it had received a $9/share cash offer from a consortium that includes Executive Chairman Ron Burkle.  In late January, Dan Loeb's Third Point (9.9% owner) sent a letter to the Soho House board pushing for a better deal.  Since then, the company has been mysteriously quiet, the debt markets seem pretty open, I'm not sure what the hold up is exactly?  I've lightened up a bit on position after adding to it during the tariff driven broad market selloff.
• Spinoffs / Asset Sales
• Enhabit (EHAB) is a home health and hospice operator that was spun-off of Encompass Health (EHC), following the spinoff the company stubbed its toe badly (as is typical for many spins) as it was behind the industry shift from Medicare to Medicare Advantage plans.  Much of that mix-shift is largely behind them, now it is more of a deleveraging story with a nice demographic and economic tailwind.  Seniors want to stay and its cheaper to care for them in their homes.  There's not an obvious near-term catalyst here, but a multiple at 9.4x EBITDA (during the last round of consolidation, industry peers were taken out at double this multiple) and levered 5.4x EBITDA, a return to steady growth should do wonders for the share price over time.  [Late edit, CMS proposed some pretty punitive rate action for 2026, including -5% temporary adjustment to recoup perceived overpayments from 2020-2025.  Not great if you're overweight Medicare and leveraged.]
• International Game Technology (IGT) is about to change their name to Brightstar Lottery (BRSL) on the closing of their deal with Apollo and Everi Holdings (EVRI), rumored to happen this week.  Brightstar "won" the Italian Lotto rebid that includes a 2.23 million Euro upfront fee, significantly higher than many expected.  We should find out more detailed capital return plans in the near future, which might spark a longer update from me including revisions to my valuation thinking after the Italian lotto bid and better accounting for the non-controlling interests.
• Seaport Entertainment Group (SEG) is a collection of real estate and entertainment assets located primarily in Manhattan (I tend to think concerns over the potential new mayor are overblown) that was spun-off from Howard Hughes (HHH) last year, Bill Ackman's Pershing Square owns just under 40% of SEG.  The company is marketing their 250 Water St land parcel which should provide a catalyst, I expect the company to participate in a JV by contributing the land and letting their partner take the development and construction risk.  CEO Anton Nikodemus and team are hard at work repositioning (again) the Seaport, signing some important leases and trying to reign in costs to bring down the cash burn but there's still significant wood to chop.  Bill Ackman's ownership percentage looms large here, there are some majority ownership restrictions on the AAA baseball team which partially drove the spinoff, but the market is likely heavily discounting SEG on the anticipation of Ackman shifting value to himself somehow. 
• Other / Legacy Holdings
• Creative Media & Community Trust (CMCT) continues to confound me a bit, this disaster of a REIT has somewhat stabilized its death spiral of preferred stockholders requesting redemption, the company then paying for in common stock (which they have elected since CMCT doesn't have the cash), then lastly the new common stockholders selling at whatever price they can.  As a preferred stock holder, the game theory would seem to suggest at this point you would not want to redeem?  CMCT has the cashflow to pay the remaining preferred dividend and has paid off the defaulted term loan at the corporate level, replacing it with new property level mortgages (done at presumed 50% LTVs?  Validating some equity value in the real estate), essentially taking a corporate bankruptcy off the table.  The company put out a cryptic 8-K this past week where they both seemed to disclose that they continue to get preferred redemption requests and that they're in the process of selling assets (my guess, the SBA loan portfolio gets sold first), which might suggest that redemptions could be paid in cash?  Office properties around the country continue to recover in value, their properties were unharmed by this year's wildfires in Los Angeles.  L.A. has the Olympics, World Cup and Super Bowl all coming in the next few years which should continue to provide some economic stimulus via additional infrastructure in the area.  The demise of the Bay Area (their other area of concentration) seems to have subsided with the AI boom.  I might be a bagholder at this point, but continue to think there might be something here if you squint, whether common stockholders see any of that value is another story (this is externally managed by a team that has previously showed they're not fully aligned with minority shareholders).
• Green Brick Partners (GRBK) is a Dallas metroplex based homebuilder, at this point I only continue to own it since it's held in a taxable account.  The company is well run, seems to have some secret sauce in sourcing infill real estate (is it possible to have a competitive advantage here?) and trades for a bit under consensus 10x NTM earnings.  I continue to hold, but if my poor performance continues and I have excess tax losses to soak up, selling some or all of GRBK might be an option.
• Mereo BioPharma Group (MREO) is charging towards a key data read out of Setrusumab's Phase 3 trial with partner Ultragenyx (RARE), either a second interim analysis in mid-2025 or a final analysis in Q4.  As usual, no real opinion on the science here, merely crossing my fingers.  Don't think I'd own this if I managed outside money.
• Par Pacific Holdings (PARR) is a downstream energy company focused on niche markets like the upper Rockies and Hawaii.  The company has benefited from increasing refining crack spreads due to a mixture of tariff concerns, military conflicts and other market factors.  This is another well run company, I like management, but don't really consider it a particularly actionable investment idea.  I've sold a little into this recent rally and have been considering sell the rest to reallocate to other new ideas.

Current Portfolio:

Quick Hits on Closed Positions:

• 23andMe Holdings (ME) has been quite the saga this year, I bought hoping for a pretty straightforward take out but didn't have conviction in the idea for all that happened since January.  ME declared bankruptcy and recently sold most of the assets to co-Founder Anne Wojcicki for $305MM (which was the original thesis but didn't take the original path).
• ACRES Commercial Realty (ACR) is a non-dividend paying commercial mortgage REIT that got in trouble during covid, new management took over and has performed their new strategy admirably.  ACR hasn't turned the dividend back on, but the stock rallied anyway at the start of the year, even though the thesis is about 80% of the way there.  I sold after holding for several years to recycle into other new ideas.
• Aerovate Therapeutics (AVTE) and AlloVir (ALVR) both closed on their reverse mergers, I sold shortly after on each.
• Elevation Oncology (ELEV) entered into a cash plus CVR buyout deal with Kevin Tang's Concentra Biosciences that acts a liquidation.  When the shares traded quickly above the $0.36 cash consideration, I sold, don't think there's much value in the CVR, not enough to justify the opportunity cost for me to continue to hold.
• Dun & Bradstreet Holdings (DNB) was a short-term trade based on buyout rumors, the buyout happened, but at a rather low price of $9/share.  The private equity buyers timed the deal well in the midst of the tariff driven selloff, I'm sure they'll do well on their investment.
• The Enzo Biochem (ENZ) saga finally ended, with a $0.70/share cash merger.  I sold.
• Keros Therapeutics (KROS) announced a return of capital to satiate activist investors but seems set on continuing with research and development.  I decided to sell as the near term event has passed and don't have conviction to own KROS for the medium term. 
• Kronos Bio (KRON) is a strange situation to keep in the memory bank, the company entered into agreement with Kevin Tang's Concentra Biosciences to be bought for $0.57/cash plus a CVR.  The CVR was overly complicated and the near term cash portion of the CVR was valued at $0.02 to $0.05 in the proxy, that's when I sold assuming I was wrong on the situation.  But a couple weeks later, the company announced they had terminated their operating lease, generating significant cost savings to be paid to CVR holders that wasn't accounted for in the original proxy.  Presumably the lease negotiations were ongoing at the time the proxy was published, great outcome for those that continued to hold, but I'm still a bit puzzled by the timeline and disclosure transparency.
• I've spilled enough virtual ink on Howard Hughes Holdings (HHH), I disagree with the direction the company is taking to become a permanent capital vehicle for Pershing Square and sold my position.
• Selling Inhibrx Biosciences (INBX) was a reaction to the tariff selloff, it was my lowest conviction idea at the time as its science based biotech where I have little-to-no edge (could argue that for most of my positions), so I sold it to raise cash / pay down margin.
• Limoneira Company (LMNR) ended their strategic process without a transaction, I thankfully sold immediately and recognized a reasonable gain, shares have slid considerably since.

Current Watchlist:

As always, thank you for reading and commenting, please feel free to share any ideas in the comment section.

Disclosure: Table above is my taxable account, I don't manage outside money and this only a portion of my overall assets.  As a result, the use of margin debt, options or concentration does not fully represent my risk tolerance.