Good day and welcome to the Sutter Rock Capital's Fourth Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jackson Stone. Please go ahead.

Thank you for joining us on today's call. I'm joined today by the Chief Executive Officer of Sutter Rock Capital, Mark Klein; and Chief Financial Officer, Allison Green. Please note that a slide presentation that corresponds to today's prepared remarks by management is available on our website at www.sutterrock.com under Investor Relations, Events & Presentations. Today's call is being recorded and broadcast live on our website, www.sutterrock.com. Replay information is included in our press release issued yesterday. This call is the property of Sutter Rock Capital and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in yesterday's earnings press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance or future financial condition or results and involve a number of risks, estimates and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including, but not limited to, those described from time to time in the company's filings with the SEC. Management does not undertake to update such forward-looking statements unless required to do so by law. To obtain copies of Sutter Rock Capital's latest SEC filings, please visit our website at www.sutterrock.com or the SEC's website at sec.gov. Now I'd like to turn the call over to Mark Klein.

Thank you, Jackson. We are pleased to share the results of Sutter Rock Capital's fourth quarter 2019. First, I will review the recent quarter and provide an update on key initiatives we are executing to enhance shareholder value. Then I will present an overview of key developments in the portfolio. To conclude, I will hand the call over to Allison Green for a brief financial overview. At the conclusion of our remarks, we will open the call up for questions. Let's start with Slide 3. At December 31, 2019, net asset value was $11.38 per share, an increase from $11.24 per share at September 30, 2019, and an increase from $9.89 per share at December 31, 2018. Net asset value totaled approximately $200 million at year-end, inclusive of dividends totaling $0.32 per share declared during the fourth quarter compared to $214 million at September 30. As we have stated before, we believe the strong growth of our portfolio of companies have been exhibiting will continue to drive NAV as we continue to be optimistic about the future of our portfolio. Please turn to Slides 4 and 5. In our ongoing efforts to drive shareholder value, our Board of Directors concluded that, given the recent market-wide sell-off and the significant discount at which our stock is trading to authorize a $5 million increase to our share repurchase program. This brings the total dollar amount allocated to share repurchases to $40 million inclusive of the $10 million modified Dutch tender offer that Sutter Rock Capital commenced in the fourth quarter. We've continued to buy back stock in the recent market sell-off, and as of today, we have repurchased approximately $31.5 million of our common stock between the share repurchase program and the tender offer. Later in the call, Allison will provide additional…

Thank you, Mark. I would like to follow Mark's update with a more detailed review of our financial results as of December 31, 2019, and updates regarding recent dividends declared and paid, our share repurchase program, and the modified Dutch Auction tender offer, our transition to an internally managed BDC and other ongoing expense reduction initiatives and our current liquidity position. We are pleased to report that we ended the fourth quarter in 2019 with an NAV per share of $11.38. A breakdown of NAV per share as of year-end is shown on Slide 9 and is consistent with our financial reporting. In sum, the increase in NAV per share during the fourth quarter was largely driven by approximately $0.43 per share in net realized gain on investments and the net appreciation of $0.36 per share due to the accretive effects of common stock repurchased during the quarter through the share repurchase program and the modified Dutch Auction tender offer. These increases to NAV per share were offset by $0.32 per share in dividends, resulting from net realized capital gains declared in the fourth quarter, $0.17 per share of net unrealized depreciation of our portfolio investments and a net decrease of [ $0.15 ] per share of net investment loss and decrease to the effect of stock-based compensation on paid-in capital. During the fourth quarter, Sutter Rock Capital declared a total of $0.32 per share in dividend. On November 5, 2019, our Board of Directors declared a $0.20 per share dividend paid on December 12, 2019 to shareholders of record on December 2, 2019. Additionally, on December 20, 2019, our Board of Directors declared an additional dividend of $0.12 per share paid on January 15, 2020 to shareholders of record on December 31, 2019. The dividends declared and paid have…

[Operator Instructions] We'll take our first question from Mark Palmer with BTIG.

Yes. Just wanted to delve a little bit into the initiative regarding private credit, if you can talk a little bit about what that portfolio, that part of the overall portfolio could look like? Is there going to be any particular industry focus? What are you thinking with regard to diversification, position sizes, things of that nature?

Sure, Mark, and thank you for the question, and thank you for being on the call. Our general view broadly is to allocate approximately 20% of our gross assets to the strategy, which is about $50 million right now. It is an asset-based strategy, typical off-balance sheet lending secured by hard assets or contracts, done this for quite some time. One of the things we did allude to in our -- in both our press release as well as in my comments is the intent is to lead investments, but be able to do it with other large credit funds that have reached out, that I carry strong relationships with, so that we have the opportunity to have a diversified portfolio of investments as opposed to having only a handful of them. So our bite-size would probably be no more than $10 million any given investment, but more likely closer to $5 million. So that we could have as many as 10 investments in our portfolio under this strategy.

And with regard to the rest of the portfolio, are you -- where you want to be right now in terms of the number of positions that you have? And how are you thinking about that part of the portfolio? As you say, you've got plenty of cash to go out and opportunistically make investments, where do we see things going from there?

Sure. Great question. So if you sort of do the math of what we put forth in the earnings call, you would see there's about $45 million of cash going into year-end, and obviously, the cash that we got from Parchment. So we do have a fair amount of cash. We continue to actively look at different portfolio opportunities. We feel quite fortunate to have a fair amount of a cash position at this time. We've said for a while that plus or minus 20 names is about the right size for us. We also said any new positions on the equity side would be typically a $10 million investment, it would have to be extraordinary for it to be a $15 million investment. There will be some competition of capital now that we are executing against the strategy would carry and that's sort of where we lie. We are really pretty comfortable with our portfolio. As you can see, the top 5 positions are about 60-some-odd percent of the portfolio, the top 10 are 80-some-odd percent. And our top positions in our portfolio are performing quite admirably.

And at this time, I'm showing no further questions in the queue. [Operator Instructions] Ladies and gentlemen, this concludes today's call. Thank you for your participation, and you may now connect -- disconnect your phone lines.

Thank you all very much. We greatly appreciate your support. Thank you for taking the time today.