H1 2021 gross returns on investments: 13.1%, or $406.3k (+10.2% YoY, annualized). Our gross returns continued to grow in Q2, increasing to 13.1% from 6.1% in Q1. This puts us on a slightly higher annualized rate than in 2020. Our net exposure has gradually increased over time, as we reinvest gains, or at least park them in eTrade. In total, we've gained 68.2% on the average amount of exposure we have in any period. This should be compared to the 57.7% (14.2% annualized) we've gained against the total capital of Nakano, ex-expenses.

In a flip from Q1, we've now returned a bit more in our public deals than in our private ones, approx. 58.8% ($729.1k/$1,239.9k) on average capital on private deals vs. 79.7% ($803.4k/$1,007.5k) on public sector investments. This is mostly a denominator issue, since we moved a significant amount of capital into private investments this period, though there was some effect as well from 1) the low number we received from the ValFund Miami property, and 2) the continued strength of the stock market.

H1 2021 expenses: $8.3k (-29.1% YoY annualized). This is mostly meaningless at this stage, since there are seasonal items which will boost this run-rate later in the year (accountant's fees, various subscriptions, city taxes, etc.). Our rent is slightly up, incidentally, to $1,278 per month from $1,250. This is just the normal inflation that is baked into our contract.

Private deals done: 3, or $487.9k (+12.0% YoY). We've committed to a $50k preferred stock investment in The Assembly Authority (TAA), which is ultimately funding a purchase of a white-glove equipment installation company sponsored by Blue Jay Capital. In addition, we increased our stake in NextAlim by €50.0k ($62.9k), via a convertible bond, and our investment in ScreenMeet by $375k, via preferred B round.

The new investment in TAA was based on the strength of the core business idea and our desire to deepen our relationship with Josh Putterman's Blue Jay Capital, supported by more modest confidence that the business plan looked achievable by the current management team. A recent update from Blue Jay showed positive EBITDA through May, with the expectation of the same through year-end, so that is unexpectedly early, good news.

The upsizes of NextAlim and ScreenMeet represent growing confidence in their business plans. NextAlim is preparing to list in August, which will give us a subsequent exit 14 months later (there is a lock-up). NextAlim has also shown surprising resilience during COVID, supported more-than-expected by French state funds and loans earmarked for green investments. They now have two major clients with large long-term contracts. We had previously written down our initial investment in them by 29%, based on an intermediate down-round in which we did not participate. I am going to continue to hold them at the discounted valuation until the IPO gets closer.

In the case of ScreenMeet, the series B round was heavily oversubscribed, and brought in two major new participants: Salesforce, a distributor of the technology and a possible future purchaser; and Hummer Winblad, a big-deal (apparently) Silicon Valley VC firm, who most recently orchestrated the $6.5b sale of a company called MuleSoft to … Salesforce. The business continues to expand, though perhaps more slowly than we'd expect: they are currently on a run-rate of $2.5m of sales p.a., against the valuation of the B round of nearly $50m. This gradualist approach to sales is expected to be sped up by the hiring of a much larger sales staff made possible by the funding of this round.

Net new public investments made: 6, or -$340k (-109% YoY). We are executing a tapering off/decrease in our public stock portfolio. Some of this is coincidental: we needed to fund private investments in Q2 so liquidated in order to find cash. Also, I'm being more sensitive to our short-term vs. long-term tax exposure when deciding to take profits. I think it is also true that we are both nervous about all the froth in the market and so have been less eager to push stock ideas. In any case, we've been less active in 2021 compared to 2020, and slightly bearish at that.

Temporally, we sold a large number of positions in early 2021. We exited FOR and APHA entirely, which had run up considerably at the end of 2020 (we took 3x on APHA, but missed a 7.5x when Reddit got a hold of them). We put some risk back in March/April doing two rather contradictory things: 1) shifting the portfolio towards dividend payers, and 2) increasing our BABA stake. Our BABA position remains one of the main concerns with the portfolio. Also, we have exited all of the bond ETFs we had been using as vehicles to park cash. It is maddening that I can't find anything to deposit cash in for a modest return without worrying about principal erosion, but that is what the market is right now. In any event, our public investments continue to perform, with realized gains of $181k in H1 2021, and unrealized gains increasing by about $150k.