We're Swapping Out 2 Bullpen Names for a CoreWeave-OpenAI Play
Catalysts to watch include an expanding IPO market and dividend announcements.
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We are adding the shares of SuRo Capital SSSS to the Pro Portfolio’s Bullpen given this business development company’s investment positions in OpenAI, CoreWeave CRWV and ServiceTitan (TTAN), which accounted for just over 28% of its total portfolio exiting March.
The balance of that portfolio spans 34 other companies, primarily private companies but some other public ones as well. Since then, we’ve seen significant movement in CRWV and TTAN shares, which suggests we should see SuRo’s net asset value per share climb rather nicely compared to the $6.66 level it was at the end of the March quarter.
SuRo’s focus is investing in high-growth, venture-backed private companies, and CEO Mark Klein has shared openly that, assuming normal market conditions, the company tends to exit holdings that have gone public when they are permitted to do so. Looking at existing lock-up expirations, SuRo’s position in TTAN shares should be freely tradeable this June, and for CRWV shares, that looks like September.
As we mark those potential monetization dates, we also have to consider SuRo’s structure as a business development company. Similar to real estate investment trusts (REITs), the majority of a business development company’s (BDC) earnings must be paid out to shareholders in the form of dividends. While SuRo has not paid a dividend since early 2022, we see the odds of that payment stream to shareholders returning if only in the form of special dividends. Granted, we would prefer a steady stream of smaller dividends with the occasional special dividend payment to meet BDC requirements to pay out at least 90% of their taxable income in the form of dividends.
Because of its investments in Canva, Whoop, Liquid Death, Lime and Vast Data, we also see SuRo as a play on the re-opening of the IPO market. While we are seeing another wave of Trump tariff-induced volatility in the market today, strength in CoreWeave’s recent IPOs and initial post-pricing strength this week in the shares of Hinge Health (HNGE) and MNTN Inc. (MNTN) suggest the IPO market window is re-opening once again. As SuRo’s investments in private companies become publicly-traded ones, we are likely to see additional monetization events in 2H 2025 and 2026.
As these and other SuRo positions become public, the movement in those stock prices will drive SuRo’s net asset value per share and influence SSSS shares as well. For that reason, we will have to monitor stock prices for SuRo’s public investments, but we will also want to keep a close eye on its private ones as well. That will mean keeping tabs on business developments, capital raises and other milestones, including S-1 filings with the SEC.
In mid-March, Wall Street firm price targets on SSSS shares were clustered around $8, but as we noted above we have seen significant price appreciation in the shares of CoreWeave and ServiceTitan quarter to date. Given the state of the market, we could see these shares move lower in the near term, but even a modest pullback would still leave more than ample appreciation to be captured when SuRo updates its net asset value per share once we close out the current quarter. Our analysis suggests that even with a modest pullback in CRWV and TTAN shares, barring anything dramatic in SuRo’s other holdings, we could see its net asset value per share coming in at around $8 per share.
With a multiple of 1x net asset value per share, we see $8 as a realistic near-term price target for SSSS shares. Like many other stocks, however, SSSS shares have moved quite a distance in the last few weeks, leaving their relative strength index (RSI) level near overbought levels. Given our market comments on Friday morning, we can’t rule out SSSS shares being dragged lower near-term should a resolution emerge ahead of the Trump-EU June 1 tariff date.
While we see support for the shares at $5.54 (100-day moving average) and $5.22 (50-day moving average), we also see the jump between them and that will see us take a deeper technical look at the shares on Tuesday.
Given all of the above, we will start SSSS shares off in the Portfolio’s Bullpen. Should we see a more favorable risk-to-reward profile emerge, we’re inclined to call the shares up to the Portfolio.
As we make this addition, we’ll remove shares of Netflix NFLX and Cisco CSCO from the Bullpen. And for those who may ask, we are still evaluating such a move for Welltower WELL and Broadcom AVGO as we look for other new Bullpen and Portfolio candidates.
