RENN Fund, Inc.
Semi-Annual Report
June 30, 2022
RENN FUND, INC.
TABLE OF CONTENTS
JUNE 30, 2022
Shareholder Letter � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 1 |
Consolidated Financial Statements: | |
Consolidated Schedule of Investments � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 2 |
Consolidated Statement of Assets and Liabilities � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 5 |
Consolidated Statement of Operations � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 6 |
Consolidated Statements of Changes in Net Assets � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 7 |
Consolidated Statement of Cash Flows � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 8 |
Consolidated Financial Highlights � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 9 |
Consolidated Notes to Financial Statements � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 10 |
Other Information � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 20 |
Service Providers � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � | 21 |
RENN FUND, INC.
SHAREHOLDER LETTER
JUNE 30, 2022 (UNAUDITED)
Dear Shareholders,
We are pleased to present the Renn Fund Inc. ("Fund") Semi-Annual Report for the six-month period ending June 30, 2022. The portfolio is concentrated in companies which we believe represent attractive investment opportunities that are not overly dependent upon the performance of the broader equity market. It has served investors well to have a high exposure to the broader market for much of the past decade, as low interest rates and government bond yields below the inflation rate supported equity valuations. However, the first half of 2022 has witnessed high reported inflation (as measured by the CPI1) and rising interest rates, and the broader equity markets have fallen significantly. As a result, we believe that strong equity returns will need to come from idiosyncratic sources.
The top three holdings in the Fund, Apyx Medical Corp., Texas Pacific Land Corp., and Fitlife Brands Inc., had mixed returns in the first half of the year, with Texas Pacific rising, while Apyx and Fitlife shares fell. Apyx had an eventful first half of the year, amidst a very challenging capital markets environment for the biotechnology sector. The company started the year by reporting preliminary 4th quarter revenue growth of approximately 50% year-over-year. Complications arose when the FDA issued a "Safety Communication" related to use of their advanced energy products for non-indicated procedures. This was related to physicians using the products for various dermal resurfacing procedures, despite not having FDA clearance. This resulted in a steep decline in the shares' prices, which was partially remedied by successive 510(k) approvals from the FDA for certain end uses for dermal surfacing. Shortly after quarter- end, the company received approval for lax skin in the submental region (below the chin). This opens a very large addressable market with full FDA approval. The company has yet to update its financial guidance following this approval, but we expect the company to operate very close to break-even by the end of the year.
Texas Pacific's shares rose mostly in response to a 40% and 51% year-to-date rise in oil and gas prices, which drove nearly 100% earnings growth in the first quarter compared to a year ago. Higher energy prices are likely to translate into higher production levels and land use through the back half of the year. We believe that global energy markets are structurally undersupplied, while the market is vastly overestimating the demand "destruction" from a potential recession. The company has a one- of- a- kind asset base, in the most prolific energy field in the western world. We believe that recent geopolitical tensions only enhance the value of these assets.
FitLife continues to execute on its turnaround strategy, while navigating a challenging environment for retail supplement sales. The health/nutrition market is consolidating following the bankruptcy of GNC Holdings, the nation's largest supplement retailer. GNC emerged from bankruptcy in later 2020, and many of its franchisees continue to operate. However, the company has sought to diversify its sales channels, specifically targeting online and other direct to consumer channels. The company grew its revenues by approximately 16% in the first quarter and holds over $10 million in cash.
The balance of the portfolio is allocated to similarly unique companies that we believe can drive shareholder returns regardless of the macroeconomic environment. This is based on high- quality, long- lived assets and undemanding valuations. We are holding a sizeable cash balance given the macroeconomic uncertainty, but remain eager to allocate capital as capital market conditions permit.
1 CPI: The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
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RENN FUND, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2022 (UNAUDITED)
Shares or | ||||||
Principal | ||||||
Amount | Company | Cost | Value | |||
MONEY MARKET FUNDS - 34.27% | ||||||
83,987 | Fidelity Government Cash | |||||
Reserves Portfolio - | $ 83,987 | $ 83,987 | ||||
Institutional Class, 0.01% � | ||||||
5,005,810 | Fidelity Investment | |||||
Money Market Funds | ||||||
Government Portfolio - | 5,005,810 | 5,005,810 | ||||
Institutional Class, 0.01% � | ||||||
Total Money Market Funds ��� | 5,089,797 | |||||
CONVERTIBLE BONDS - 0.00% | ||||||
Oil and Gas - 0.00% | ||||||
1,000,000 | PetroHunter Energy | |||||
Corporation 8.50% | ||||||
Maturity 12/31/2014(1)(2)(5) ��� | 541,331 | - | ||||
Total Convertible Bonds ��������� | - | |||||
COMMON EQUITIES - 64.42% | ||||||
Accomodations - 0.63% | ||||||
3,608 | Civeo Corp.(2) ������������������������ | 127,364 | 93,339 | |||
Aerospace & Defense - 0.02% | ||||||
20 | Boeing Co.(2) �������������������������� | 4,267 | 2,735 | |||
Asset Management - 1.23% | ||||||
973 | Associated Capital Group, | 40,594 | 34,863 | |||
Inc. - Class A ��������������������� | ||||||
7,098 | Gamco Investors, Inc. ����������� | 189,620 | 148,348 | |||
230,214 | 183,211 | |||||
Diversified Financial Services - 0.05% | ||||||
1,800 | Galaxy Digital Holdings | 31,086 | 6,754 | |||
Ltd.(2)(4) ������������������������������ | ||||||
Marine Shipping - 0.07% | ||||||
300 | Clarkson PLC(4) ��������������������� | 16,197 | 10,992 | |||
Metal Mining - 3.94% | ||||||
580 | Franco-Nevada Corp. ������������ | 83,192 | 76,316 | |||
18,478 | Mesabi Trust �������������������������� | 496,054 | 453,081 | |||
1,560 | Wheaton Precious Metals | 65,121 | 56,207 | |||
Corp. ���������������������������������� | ||||||
644,367 | 585,604 |
Shares or | ||||||||
Principal | ||||||||
Amount | Company | Cost | Value | |||||
COMMON EQUITIES - 64.42% (Continued) | ||||||||
Medicinal Chemicals and Botanical Products - 5.46% | ||||||||
77,228 | FitLife Brands, Inc.(2) ������������ | $ 9,131,688 $ | 810,894 | |||||
Oil and Gas - 22.26% | ||||||||
15,759 | Permian Basin Royalty Trust | 218,303 | 260,811 | |||||
808,445 | PetroHunter Energy | 101,056 | - | |||||
Corporation(1)(2)(5) �������������� | ||||||||
16,300 | PrairieSky Royalty Ltd.(4) ����� | 193,455 | 205,270 | |||||
1,908 | Texas Pacific Land Corp. ������ | 1,079,739 | 2,839,142 | |||||
1,592,553 | 3,305,223 | |||||||
Other Financial Investment Activities - 0.15% | ||||||||
100 | CF Acquisition Corp.VI - | 1,206 | 997 | |||||
Class A. (2) ������������������������� | ||||||||
1 | Morgan Group Holding | 16 | 1 | |||||
Co.(2) ���������������������������������� | ||||||||
7,000 | Urbana Corp.(4) ���������������������� | 22,499 | 21,698 | |||||
23,721 | 22,696 | |||||||
Real Estate - 0.38% | ||||||||
3,600 | Tejano Ranch Co.(2) ��������������� | 68,859 | 55,872 | |||||
Securities and Commodity Exchanges - 1.63% | ||||||||
685 | Cboe Global Markets, Inc. ���� | 80,892 | 77,535 | |||||
204 | CME Group, Inc. ������������������� | 46,086 | 41,759 | |||||
240 | Intercontinental Exchange, | 30,806 | 22,570 | |||||
Inc. ������������������������������������� | ||||||||
14,000 | Miami International | 105,000 | 100,800 | |||||
Holdings, Inc.(1)(2)(3) ����������� | ||||||||
262,784 | 242,664 | |||||||
Securities, Commodity Contracts, and Other Financial | ||||||||
Investments and Related Activities - 0.44% | ||||||||
5,460 | Grayscale Bitcoin Trust(2) ������ | 258,912 | 65,848 | |||||
Live Sports (Spectator Sports) - 1.89% | ||||||||
5,091 | Big League | 280,000 | 280,005 | |||||
Advance, LLC.(1)(2)(3) ��������� | ||||||||
Surgical & Medical Instruments & Apparatus - 24.27% | ||||||||
615,000 | Apyx Medical Corp.(2) ����������� | 1,470,958 | 3,603,900 |
See accompanying Notes to Consolidated Financial Statements.
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RENN FUND, INC.
CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED) AS OF JUNE 30, 2022 (UNAUDITED)
Shares or | |||||
Principal | |||||
Amount | Company | Cost | Value | ||
COMMON EQUITIES - 64.42% (Continued) | |||||
Technology Services - 2.00% | |||||
550 | Core Scientific, Inc.(2) ������������ | $ 7,513 | $ | 819 | |
1,048 | CACI International,�������������������������Inc. - | 296,485 | 295,305 | ||
Class A. (2) | |||||
303,998 | 296,124 | ||||
Total Common Equities ���������� | 9,565,861 | ||||
EXCHANGE TRADED FUNDS - 0.05% | |||||
124 | ProShares Short VIX Short����������- | 7,201 | 5,978 | ||
Term Futures ETF(2) | |||||
Total Exchange Traded Funds ��� | 5,978 | ||||
OPEN ENDED MUTUAL FUNDS - 0.10%
824 Kinetics Spin-Off and Corporate Restructuring
Fund(6) �������������������������������� | 13,167 | 15,541 | |||||
Total Open Ended | |||||||
Mutual Funds ���������������������� | 13,167 | 15,541 | |||||
PREFERRED STOCKS - 1.25% | |||||||
30,966 | Diamond Standard, | 185,798 | 185,798 | ||||
Inc.(1)(2)(3) ���������������������������� | |||||||
Total Preferred Stocks ������������ | 185,798 | 185,798 | |||||
WARRANTS - 0.02% | |||||||
Diamond Standard, Inc., | |||||||
Exercise Price: $9.00, | |||||||
837 | Expiration Date: | ||||||
January 15, 2026(1)(2)(3) �� | - | 25 | |||||
Miami International | |||||||
Holdings, Inc., | |||||||
Exercise Price: $7.50, | |||||||
2,132 | Expiration Date: | ||||||
March 31, 2026(1)(2)(3) ���� | - | 3,390 | |||||
Total Warrants ������������������������� | - | 3,415 | |||||
TOTAL INVESTMENTS - 100.11% �������� | $20,284,261 | $14,866,390 | |||||
LIABILITIES LESS | |||||||
OTHER ASSETS - -0.11% ���������������������� | (15,859) | ||||||
NET ASSETS - 100.00% ���������������������������� | $14,850,531 |
Shares or | ||
Principal | ||
AmountCompany | Proceeds | Value |
SECURITIES SOLD SHORT - 0.00%
EXCHANGE TRADED FUNDS - 0.00%
- Direxion Daily Gold Miners Index Bear 2X Shares
ETF ������������������������������������ | $ | (202) | $ | (252) |
- Direxion Daily Junior Gold
Miners Index Bear 2X
Shares ETF(2) ��������������������� | (123) | (167) | ||||
(7) | ProShares Ultra VIX Short- | (1,102) | (102) | |||
Term Futures ETF(2) ���������� | ||||||
Total Exchange Traded Funds ��� | ||||||
(1,427) | (521) | |||||
TOTAL SECURITIES | ||||||
$ (1,427) $ | (521) | |||||
SOLD SHORT - 0.00% ������ | ||||||
- See Semi-Annual Report Note 5 - Fair Value Measurements.
- Non-IncomeProducing.
- Big League Advance, LLC., Diamond Standard, Inc. and Miami International Holdings, Inc. are each currently a private company. These securities are illiquid and valued at fair value.
- Foreign security denominated in U.S. Dollars.
- The PetroHunter Energy Corporation ("PetroHunter") securities are in bankruptcy. The securities are valued at fair value.
- Affiliated security, given that the security is managed by the same Investment Advisor as the Fund.
See accompanying Notes to Consolidated Financial Statements.
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RENN Fund Inc. published this content on 29 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 August 2022 15:30:44 UTC.