• Fully Diluted NAV per Share: $35.43 at December 31, 2024.
• NAV per Share Total Return: 15.4% for 2024.
• Annualized NAV Share Total Return Since IPO: 10.8%.
• Return on Equity (ROE): 14.6% for 2024.
• Dividend Declared: $0.11 for Q4 2024, totaling $0.44 for the full year.
• Dividend Yield: Approximately 3.1% based on year-end share price of $14.
• Shareholder Returns via Tender Offer: Approximately $25 million returned in April 2024.
• Investment Income Contribution to NAV: Increased NAV per share by $6.45.
• Operating Expenses and Fees Impact on NAV: Reduced NAV per share by $1.54.
• Interest Expense Impact on NAV: Reduced NAV per share by $0.28.
• Gross Dividends Impact on NAV: Reduced NAV per share by $0.44.
• Net Dilution Impact on NAV: Reduced NAV per share by $0.46.
• Share Repurchases Impact on NAV: Increased NAV per share by $0.57.
• Private Equity and Venture Capital Allocation: Increased to 22% from 16% in 2023.
• Bank Loans Allocation: Decreased to 5% from 8% in 2023.
• Private Equity and Asset Management Companies Allocation: Increased to 45% from 44% in 2023.
• Aggregate Investment Performance: Gross profit of $575 million for 2024.
• Top Investment Gains: $280 million from Equitic, $153 million from Ripple Labs, $126 million from an Australian gold mining company.
• TFG Asset Management Gain: $300 million for 2024.
• Hedge Fund Strategies Gain: $33 million for 2024.
• Bank Loans Loss: $16 million for 2024.
• Real Estate Loss: $18 million for 2024.
• Private Equity and Venture Capital Gain: $285 million for 2024.
• Legal Assets Gain: $4 million for 2024.
• Other Equities and Credit Loss: $12 million for 2024.
• Cash Bank Balance: $30.5 million at year-end 2024.
• Net Cash Balance: Negative $339 million at year-end 2024.
• Credit Facility: $400 million with $300 million drawn as of year-end 2024.

• Warning! GuruFocus has detected 7 Warning Signs with LSE:TFG.

Release Date: March 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tetragon Financial Group Ltd (LSE:TFG) achieved a NAV per share total return of 15.4% for 2024, with a fully diluted NAV per share of $35.43.
• The company declared a dividend of $0.44 for the full year, representing a yield of approximately 3.1% based on the year-end share price.
• Tetragon's investment in Equitic generated a significant gain of $280 million, driven by higher valuations and increased ownership.
• The private equity and venture capital segment saw a substantial gain of $285 million, with notable contributions from Ripple Labs and an Australian gold mining company.
• TFG Asset Management recorded an investment gain of $300 million, with strong performance from its asset management businesses.

Negative Points

• Tetragon's cash position was negative $339 million at the end of 2024, with $300 million drawn from a credit facility.
• The bank loans segment recorded a loss of $16 million for the year, driven by defaults and lower-than-expected recoveries.
• Real estate investments experienced a net loss of $14.7 million, primarily due to exposure to commercial, residential, and hotel sectors in the US.
• The other equities and credit segment generated a loss of $12.2 million, with negative contributions from a biotech company and an AI-assisted workflow automation leader.
• Tetragon's shares continue to trade at a significant discount to NAV, with no immediate solution to narrow the gap.

Q & A Highlights

Q: What are Tetragon's plans with the XRP investment, and is there an exit mechanism for Ripple? A: Tetragon owns A and B shares in Ripple, not XRP directly. Ripple is a private US company, and its shares trade on private exchanges. There are no immediate expectations of liquidity, but the company has been doing regular buybacks. In 2024, Tetragon sold $15 million worth of Ripple shares through company-initiated buybacks.

Q: Given the cash position and the discount to NAV, would Tetragon consider purchasing more stock in 2025? A: Tetragon's net cash position is negative $339 million, financed by a $400 million revolver. While buybacks are seen as a good use of cash, especially with a wide discount, they are contingent on improving the cash position. Historically, Tetragon has spent about $860 million on buybacks.

Q: Can you update shareholders on the current status of any Equitic transaction? A: Tetragon has engaged with strategic partners and financial advisors to explore options for Equitic. The valuation of Equitic uses a discounted cash flow approach and a market multiple approach, with more details available in the audited financial statements.

Q: Who are Tetragon's peers in the publicly traded asset management space? A: Tetragon is a closed-end fund, not an asset manager, and does not consider firms like KKR, Blackstone, or Apollo as peers. Tetragon's peer group consists of entities aiming to provide positive risk-adjusted returns over long periods with low correlation to markets.

Q: What is the endgame for insider employee ownership, which is approaching 50% of the company? A: The principals, including Paddy Dear and Reed, enjoy what they do and have no plans to change their approach. They aim to continue investing with the goal of compounding positive returns and may buy back shares if the discount persists.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.