Stockholders of Firsthand Technology Value Fund (NASDAQ: SVVC) Urged to Vote to Terminate Investment Advisory and Management ...
May 07 2021 - 9:04AM
Rawleigh Ralls, a long-term investor and beneficial owner of 3.7%
of Firsthand Technology Value Fund, Inc. (NASDAQ: SVVC), today
announced his strong and urgent support of a binding proposal to
terminate the investment advisory and management agreements between
SVVC and Firsthand Capital Management, Inc., which is being
submitted for consideration by stockholders at the Fund’s 2021
Annual Meeting on May 25, 2021.
- Mr. Ralls has been a
stockholder of SVVC since 2013 and currently owns 3.7% of SVVC’s
outstanding common stock. He is an experienced board member and a
successful investor/portfolio manager, who has founded several
investment funds.
- Mr. Ralls has known
Kevin Landis, Chairman of the Board, CEO and President of SVVC, for
over 7 years and serves on the board of IntraOp Medical, one of
SVVC’s portfolio companies. Over the past ten years Mr. Landis has
had ample opportunity to prove his competence in managing the
Fund’s investment portfolio, but the results clearly demonstrate
that he has failed in this role.
- Mr. Ralls is
voting AGAINST the election of both board members up for
re-election, Mr. Burglin and Mr. Yee, because he holds the
board responsible for SVVC’s performance and not acting to change
the Fund’s management structure and advisory relationship.
- Mr. Ralls is
urging all SVVC stockholders to SUPPORT a BINDING proposal to
TERMINATE the investment advisory and management agreements between
Firsthand Technology Value Fund, Inc. and Firsthand Capital
Management, Inc.
- If the investment
advisory and management agreements with Firsthand Capital
Management are terminated, Mr. Ralls will work with other
stockholders and the current or a newly appointed board of SVVC to
maximize the value of the current portfolio.
- Mr. Ralls is
available to speak with any stockholder who would like a more
detailed description of his experience with Mr. Landis and
Firsthand Capital Management and why he believes Mr. Landis and
Firsthand Capital Management are unqualified to continue in their
current roles. He is also interested in sharing his ideas on how to
help SVVC realize its potential while reducing fees and expenses.
Mr. Ralls can be reached via email at rallsrawleigh@gmail.com
The following are Mr. Ralls observations based on his investment
experience and facts from SVVC’s public filings:
1. |
SVVC’s performance has been abysmal and is even more alarming given
that it occurred during one of the biggest bull markets in recent
history. |
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2. |
As illustrated in SVVC’s recent Form 10-K, a $10,000 investment in
SVVC stock at its inception on April 18, 2011 would be down
78% in value and worth just $2,190 on December 31, 2020,
while investments in the broader markets like the SP500 and Nasdaq
are up 350-500% over the same period. According to
cfainstitute.org data, venture capital fund returns are even
higher. |
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3. |
Yet according to SVVC’s annual 10-K filings, Mr. Landis’ company,
Firsthand Capital Management, has been paid over $33.8M in
advisory fees over the last 10 years, while the Fund has
suffered losses of well over $100M in total assets from its peak in
2014. |
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4. |
Mr. Landis’ investment selection and stewardship has been dreadful
with an intolerable number of his substantial investments resulting
in “ZEROS.” Below are a few examples: |
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Investment |
Total Investment |
Investment Duration |
Year Written Down to Zero |
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QMAT |
$20.7M |
~7 years |
2019 |
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Telepathy |
$7.95M |
~ 5 years |
2019 |
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Aliphcom |
$10.1M |
~ 4 years |
2017 |
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VuFine |
$5M |
~ 4 years |
2019 |
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Total |
$43.75M |
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5. |
The current portfolio holdings performance has also been dismal.
Below are the top portfolio positions using year-end valuations vs.
total invested capital as of December 31, 2020 (Form 10-K). |
|
- Pivotal Systems –
Initial investment in 2012, total invested by SVVC ~$3.6mm, current
value $22.5mm, UP 625%.
- IntraOp Medical –
Initial investment of $26mm in 2013, total invested by SVVC ~$50mm,
current value $25mm, DOWN $25mm, or 50% from initial investment,
approximately 8 years ago.
- WrightSpeed –
Initial investment $6mm in 2013, total invested ~$36mm, current
value $23mm, DOWN $13mm, or 36% from initial investment almost 8
years ago.
- Revasum – Initial
investment 2016, total invested by SVVC ~$13.5mm, current value
$12.6mm, DOWN 6.6% over the investment period.
- Hera Systems –
Initial investment of $2mm in 2015, total invested by SVVC
~$11.2mm, current value $3.6mm, DOWN $7.6mm, or 68% from initial
investment.
- SVXR – Initial (and
total) investment $4.1mm in 2016 by SVVC, current value $5.38mm, UP
32%.
- Silicon Genesis –
Initial investment $2.4mm in 2011, total investment by SVVC of
$8.4mm, current value $1.33mm, DOWN 84% from initial
investment.
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The only real winner in the current portfolio,
Pivotal Systems, looks to have been Firsthand’s ‘source of funds’
over the last year or longer. Mr. Landis has been selling this
winner so he can re-invest in the portfolio’s losers. One year ago,
the Fund owned 45M shares of Pivotal Systems vs. the 31M shares
owned as of December 31, 2020. Mr. Landis has a long history of
selling his winners to prop up his losers (the portfolio once
included FB, NFLX, NUTX, ROKU, TWTR and WKDY).
In summary, the portfolio’s long-term results strongly confirm
that Mr. Landis and his firm’s management contract should be
terminated. The the current board should easily be able to manage
the portfolio in the interim while seeking an alternative
management solution, and Mr. Ralls is willing to volunteer his
time, resources and experience to assist with this process at no
cost to SVVC stockholders.
Mr. Ralls has over 30 years experience in the investment
community, including an eight-year career at Goldman Sachs and as
co-founder of two investment funds, Precept Capital Management and
Lacuna Capital LLC. He is currently a director on six company
boards, including one public (Tucows, Inc. Nasdaq: TCX) and five
private companies in the software and technology space. Mr. Ralls
has been on numerous other company boards, raised considerable
investment capital and advised many public and private company
management teams.
Mr. Ralls graduated from the University of Arkansas in 1984 and
received an MBA from Southern Methodist University.
IMPORTANT INFORMATION CONCERNING THIS COMMUNICATIONThis press
release is being issued pursuant to Rule 14a-2(b)(1) promulgated
under the Securities Exchange Act of 1934. This is not a
solicitation of authority to vote your proxy. I am not asking for
your proxy card and will not accept proxy cards if sent. The cost
of this communication is being borne entirely by Rawleigh
Ralls.
Contact:Rawleigh
Rallsrallsrawleigh@gmail.com
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