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1. Company Snapshot

1.a. Company Description

Rand Capital Corporation is a business development company and regulated investment company specializing in private equity investments.The firm prefers to make investments through equity or debt instruments in lower middle market and in small to medium-sized privately held companies.It generally lends to more mature companies.


The firm does not prefer to invest in real estate sector.It invests in companies that are engaged in the exploitation of new or unique products, technologies, or services.The firm invests in healthcare, consumer products, manufacturing, software, and professional services.


It seeks to invest in companies based in the Western and Upstate New York region and its surrounding states with focus on Buffalo and Niagara region.The firm may invest in region within three to five hour drives from Western New York including Canada.It typically invests between $0.5 million and $1.5 million and the total investment in rounds is between $1 million and $5 million.


The firm seeks to invest up to maximum of $3 million total per company as part of follow-on investments.It invest in startups and companies having annual revenue up to $10 million.It invest companies having EBITDA up to $5 million.


The firm Follow-on investment(s) up to a targeted maximum of $2 million to $3 million total per company.The firm frequently participate three investment round.The firm seeks to be a lead investor in companies within its geographical area and participates in syndicate/co-invest with other investors outside it.


It prefers to invest in businesses that are unique or possess proprietary right.The firm prefers to be a minority investor and seeks to take a Board seat in its portfolio companies.It typically holds its investments for a period of five to seven years.


Rand Capital Corporation was founded in 1969 and is based in Buffalo, New York.

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1.b. Last Insights on RAND

Rand Capital Corporation's recent performance was driven by a 27% increase in total investment income for Q3 2024, primarily supported by strategic debt portfolio growth. The company's debt portfolio expansion contributed to this growth, indicating a successful strategy to diversify its investments. Additionally, the company's recent announcement of shareholder election results for the fourth quarter 2024 stock and cash dividend suggests a commitment to returning value to shareholders.

1.c. Company Highlights

2. Rand Capital's Q3 FY2025 Earnings: Navigating a Sluggish Market

Rand Capital Corporation reported total investment income of $1.6 million for the third quarter of FY2025, a decline from the previous periods due to debt repayments and a slowdown in new originations. The net investment income was $993,000. The actual EPS was not disclosed, but the company's net asset value stood at $53.6 million or $18.06 per share at September 30, 2025. With a P/B Ratio of 0.73, the stock appears to be undervalued relative to its book value.

Publication Date: Nov -20

📋 Highlights
  • Liquidity and Debt Position: Maintained $28 million in liquidity with no debt under senior credit facilities.
  • Dividend Stability: Paid $0.29/share dividend for third consecutive quarter, reflecting consistent returns to shareholders.
  • Portfolio Composition: $44.3 million fair value portfolio across 19 companies, with 83% debt and 17% equity allocation.
  • Investment Activity: Deployed $2.9 million in new and follow-on investments amid sluggish market conditions.
  • Net Investment Income: Generated $993,000 net investment income despite $1.6 million decline in total investment income from slowed originations.

Investment Strategy and Portfolio Composition

The company remained patient and selective in deal origination, deploying $2.9 million in new and follow-on investments during the quarter. The portfolio has a fair value of $44.3 million across 19 companies, with a mix of 83% debt and 17% equity. Dan Penberthy, President and Chief Executive Officer, emphasized the company's ability to remain disciplined and flexible in a challenging market, focusing on yield-focused debt investments.

Dividend Sustainability and Balance Sheet Strength

The dividend was maintained at $0.29 per share for the third consecutive quarter, highlighting the company's ability to sustain it even in a slower investment cycle. The company finished the quarter with nearly $28 million in liquidity and no debt outstanding under their senior credit facilities, demonstrating a healthy balance sheet. With a Dividend Yield of 36.54%, the stock presents an attractive income opportunity.

Valuation and Outlook

Given the current market environment, Rand Capital's ability to navigate the sluggish market and maintain its dividend is a positive sign. The company's P/S Ratio stands at 7.08, indicating that investors are pricing in moderate growth expectations. As the company is well-positioned to deploy capital into yield-focused debt investments, it is likely to create long-term value for shareholders. Analysts do not expect revenue growth next year. The ROE stands at -10.59%, which is a concern, but the company's focus on yield-focused debt investments may help improve returns in the future.

3. NewsRoom

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Rand Capital Declares Total Fourth Quarter Cash Dividend of $0.85 per Share for Fourth Quarter 2025

Dec -03

Source: businesswire.com

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Rand Capital (RAND) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

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Rand Capital Reports Third Quarter 2025 Results

Nov -07

Source: businesswire.com

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Rand Capital Corporation (NASDAQ:RAND) Short Interest Up 180.0% in October

Nov -01

Source: defenseworld.net

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Rand Capital Announces Third Quarter 2025 Financial Results Conference Call and Webcast

Oct -23

Source: businesswire.com

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Rand Capital (RAND) Q2 2025 Earnings Call Transcript

Aug -04

Source: seekingalpha.com

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Rand Capital (RAND) Q2 Net Income Jumps

Aug -04

Source: fool.com

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Rand Capital Reports Second Quarter 2025 Results

Aug -04

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Investment & Related Activities

Expected Growth: 10.2%

Rand Capital's Investment & Related Activities segment is poised for growth driven by increasing demand for alternative financing options among small and medium-sized businesses. The segment's focus on debt and equity investments will benefit from the ongoing economic expansion, low interest rates, and rising entrepreneurial activity.

7. Detailed Products

Venture Capital Investments

Rand Capital Corporation provides venture capital investments to early-stage and growth-stage companies, focusing on technology, healthcare, and sustainable energy sectors.

Debt Capital Investments

Rand Capital Corporation offers debt capital investments to established companies, providing flexible financing solutions to support business expansion and growth initiatives.

Equity Co-Investments

Rand Capital Corporation participates in equity co-investments alongside other investors, providing additional capital to support portfolio companies' growth and expansion plans.

SBIC Debentures

Rand Capital Corporation issues SBIC debentures, which provide a source of capital for small businesses and startups, supporting entrepreneurship and job creation.

8. Rand Capital Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Rand Capital Corporation's investment portfolio is diversified, which reduces the threat of substitutes. However, the company's focus on venture capital investments makes it vulnerable to substitutes in the form of other investment opportunities.

Bargaining Power Of Customers

Rand Capital Corporation's customers are primarily institutional investors and high net worth individuals, who have limited bargaining power due to the company's specialized investment services.

Bargaining Power Of Suppliers

Rand Capital Corporation's suppliers are primarily investment opportunities and portfolio companies, which have moderate bargaining power due to the company's diversified investment portfolio.

Threat Of New Entrants

The venture capital industry is highly competitive, and new entrants can easily enter the market, posing a significant threat to Rand Capital Corporation's market share and competitiveness.

Intensity Of Rivalry

The venture capital industry is highly competitive, and Rand Capital Corporation faces intense rivalry from established players, which can lead to reduced market share and profitability.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.09%
Debt Cost 5.64%
Equity Weight 78.91%
Equity Cost 5.64%
WACC 5.64%
Leverage 26.72%

11. Quality Control: Rand Capital Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.6/10

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Growth: 5.6

Quality: 3.8

Yield: 10.0

Momentum: 2.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

15.43$

Current Price

15.43$

Potential

-0.00%

Expected Cash-Flows