In its second-quarter 2024 investor letter, River Oaks Capital highlighted Logan Ridge Finance Corporation (NASDAQ
), reflecting on its performance and strategic developments. Here’s a detailed look at how the acquisition has impacted LRFC and what it means for investors:

Company Overview: Logan Ridge Finance Corporation (LRFC) operates as a Business Development Company (BDC), providing financing to small and midsize private companies through debt or equity investments. This type of financing is crucial for companies that have outgrown local bank financing but are not yet large enough to access Wall Street or major banks.

Performance and Market Data:

• Current Stock Price: As of September 3, 2024, LRFC’s stock closed at $21.51 per share.
• Market Capitalization: $57.562 million.
• Recent Returns: The stock experienced a -2.10% return over the past month but gained 0.51% over the last 52 weeks.

River Oaks Capital’s Insights: River Oaks Capital, which has LRFC as its seventh-largest position, praised CEO Ted Goldthorpe and his team at BC Partners for their ongoing turnaround efforts since taking over in 2021. The firm views Goldthorpe as a highly capable steward of capital, providing transparency about the company’s turnaround stages.

Investment Perspective: Despite LRFC’s potential, the company is not among the top 31 stocks favored by hedge funds. The number of hedge funds holding LRFC shares remained unchanged at 2 from the previous quarter. River Oaks Capital acknowledges LRFC’s potential but emphasizes that AI stocks offer greater promise for higher returns within a shorter timeframe.

Strategic Importance: The turnaround at LRFC is seen as a positive development, with Goldthorpe’s leadership playing a crucial role in the company’s strategic direction. This aligns with River Oaks Capital’s investment philosophy of focusing on business owners with a long-term perspective and underfollowed micro-caps and small caps.

Broader Market Context: River Oaks Capital’s strong year-to-date performance—returning 5.1% compared to the Russell 2000 TR’s 1.7% and the Russell Microcap TR’s -0.8%—reflects its successful strategy of investing in undervalued stocks like LRFC. While LRFC is not a top pick among hedge funds, its ongoing transformation under Goldthorpe’s leadership represents a significant potential upside for investors willing to be patient.

For more detailed updates on Logan Ridge Finance Corporation and other investment opportunities, you can refer to River Oaks Capital’s latest investor letter and explore their top holdings for 2024.