Neostellar Capital, formerly SURO Capital (NASDAQ:SSSS), reported second-quarter 2026 results alongside its first earnings call under the Neostellar name, highlighting a transition to an externally managed structure and new investments tied to artificial-intelligence infrastructure.
Chairman and Chief Executive Officer Mark Klein said the company’s transition to an externally managed model became effective July 15 following stockholder approval. Neostellar Advisors, jointly owned by members of the former management team and Magnetar Holdings, became the company’s investment advisor. The company continues to trade on the Nasdaq Global Select Market under the ticker NSLR.
Net Asset Value Declines as Externalization Costs Weigh
Neostellar ended the second quarter with net assets of approximately $355.9 million, or $13.44 per share, compared with $14.24 per share at the end of the first quarter and $9.18 per share a year earlier.
Chief Financial Officer Allison Green said the sequential decline was driven primarily by an $0.88-per-share reduction from net investment loss, including about $20 million in accelerated and nonrecurring expenses related to the externalization. The company also cited a $0.29-per-share decrease associated with common-share issuances from partial conversions of its 6.5% convertible notes due 2029, as well as a $0.02-per-share decline from net unrealized investment depreciation.
Those factors were partly offset by a $0.20-per-share increase from stock-based compensation, net of share-withholding settlements, and a $0.19-per-share increase from realized gains on portfolio investments. Neostellar had 26.47 million common shares outstanding as of June 30.
At quarter-end, the company had approximately $14.6 million in liquid assets, including $12.9 million in cash and $1.7 million in unrestricted public securities. It also held about $15.4 million in public securities subject to lockups or other sale restrictions, representing its remaining CoreWeave exposure through CW Opportunity 2 LP.
AI Infrastructure Investments Lead Quarterly Activity
Neostellar’s principal investment activity during the quarter involved TensorWave and ClickHouse. The company funded the remaining $15 million of a $20 million commitment to Magnetar Opportunity 2025-4 LP, a special-purpose vehicle invested in TensorWave. The initial $5 million tranche was funded in January.
The investment was made in connection with TensorWave’s $350 million Series B financing, which was co-led by Magnetar and AMD Ventures. Klein said the staged commitment allowed Neostellar to increase its position as TensorWave executed rather than committing the entire amount at once.
TensorWave is building an AI cloud around AMD’s ecosystem to provide specialized computing capacity for AI training and inference workloads. Klein said the participation of AMD Ventures supported Neostellar’s view that the company is positioned to benefit from growing demand for high-performance capacity and a more diversified hardware ecosystem.
The company also invested approximately $9.5 million in ClickHouse Series A preferred shares through a secondary transaction in April. Klein said ClickHouse provides real-time analytics and data infrastructure that can support AI and other data-intensive enterprise applications. According to management, ClickHouse’s cloud offering has surpassed $250 million in annual run-rate revenue, more than tripling from a year earlier, while its customer base reached roughly 4,000 following the addition of more than 1,000 net new customers since January.
Neostellar additionally invested about $225,000 in Huntress Labs common shares through a secondary transaction during the quarter.
Portfolio Realizations and Concentration
During the quarter, Neostellar received four distributions from CW Opportunity 2 LP totaling approximately $6.5 million in net proceeds. The distributions included approximately $1.9 million of return of capital and $4.6 million in realized gains. Green said the aggregate distribution represented about 12.2% of Neostellar’s $15 million initial investment in the vehicle, while distributions received to date represented approximately 44.1% of that original investment.
The company also sold 147,135 shares of GrabAGun Digital Holdings during the quarter, generating approximately $467,000 in net proceeds and a realized gain of roughly $311,000. After quarter-end, Neostellar sold another 143,655 GrabAGun shares at an average net price of $3.12 per share, generating approximately $448,000 in proceeds and a realized gain of approximately $295,000. It held 308,964 shares as of the call date, representing 30% of its original position.
Neostellar received a $5.2 million distribution from a full exit of HL Digital Assets, producing a realized gain of about $45,000. After the quarter ended, it also exercised 86,076 common warrants of Shogun Enterprises, doing business as Hearth, for an aggregate exercise price of approximately $861.
- Top five holdings at June 30: WHOOP, OpenAI, VAST Data, TensorWave and Blink Health.
- Those five positions represented approximately 69% of the portfolio at fair value.
- The top 10 positions accounted for approximately 86% of portfolio fair value.
- Consumer goods and services represented 41% of the portfolio, followed by AI infrastructure and applications at 34% and software as a service at 10%.
Financing and WHOOP Outlook
During the quarter, holders converted $8 million of the company’s $35 million principal amount of 6.5% convertible notes due 2029 into 1.09 million common shares and cash for fractional shares. The remaining principal balance was approximately $27 million at quarter-end.
Subsequent to quarter-end, Neostellar received $20 million in gross proceeds from a redeemable promissory note issued to a Magnetar affiliate. The note carries a 6.5% annual interest rate, matures in three years and is mandatorily redeemable in common stock upon completion of a qualifying equity financing involving at least $230 million of common equity.
Asked about Neostellar’s investment in WHOOP, Klein said the company invested $11 million and that the position has increased considerably in value. He said WHOOP has publicly stated its intention to go public and suggested that, if conditions remain favorable, the company could seek an IPO sometime next year. Klein also said Oura’s confidential IPO filing could be instructive for companies in the health and wellness technology market.
About SURO Capital (NASDAQ:SSSS)
SURO Capital Corp (NASDAQ: SSSS) is a closed-end management investment company that operates as a business development company (BDC). Founded in 2013 and headquartered in Lewisville, Texas, SURO Capital provides capital solutions to lower middle-market companies across a range of industries. As a BDC, the company is governed by the Investment Company Act of 1940 and focuses on offering debt and equity financing to privately held businesses that may have limited access to traditional bank lending.
The firm’s primary business activities include originating and managing a diversified portfolio of senior secured floating rate loans, unsecured loans, unitranche debt, and equity co-investments.
