CrossingBridge Advisors, LLC

What they do

ENDI Corp. operates through four reportable segments: CrossingBridge Operations, which provides investment advisory and sub-advisory services to mutual funds and an ETF; Willow Oak Operations, which encompasses joint ventures and service offerings in asset management; Internet Operations, which sells internet access, email, hosting, and storage services through Sitestar.net; and Other Operations, which includes corporate office functions and nonrecurring strategic activities. The company's primary focus is on generating cash flow to pursue opportunities, as stated in its 10-K.

Revenue drivers

• CrossingBridge Operations — Generates revenue from investment advisory and sub-advisory fees on mutual funds and an ETF, with assets under management (AUM) exceeding $1.7 billion as of September 30, 2023, including five proprietary advised funds and two sub-advised funds.
• Willow Oak Operations — Includes revenue and expenses from joint ventures, service offerings, and initiatives in the asset management industry, though specific revenue contribution is not provided in the excerpts.
• Internet Operations — Provides internet access, email, hosting, storage, and ancillary services through Sitestar.net, contributing to overall revenue, but its relative size is not detailed in the excerpts.
• Other Operations — Includes nonrecurring or one-time strategic funding activities and corporate office expenses, which may not be a primary revenue source but affect overall company results.

Recent performance

For the year ended December 31, 2023, ENDI Corp. reported revenue of $9.6 million, up from $7.6 million in 2022, and net income of $2.5 million, compared to $2.4 million in 2022. Diluted EPS was $0.46 in 2023, down from $0.66 in 2022. Operating cash flow was $2.7 million in 2023, an increase from $1.7 million in 2022. Quarterly revenue for 2023 showed sequential growth, reaching $2.8 million in the fourth quarter. The balance sheet at December 31, 2023, showed total assets of $25.5 million, total liabilities of $2.4 million, and shareholder equity of $23.1 million, with cash and equivalents of $9.0 million.

Strategy

Management states that the company's primary focus is on generating cash flow to maintain flexibility to pursue opportunities as they arise. ENDI intends to invest cash in a segment only if the expected return on invested capital is appropriate for the risk, measured against all available investment opportunities. The company continually reviews various business opportunities, including those outside its current segments. As part of this strategy, the company deregistered its Class A common stock in January 2024, suspending its duty to file reports under the Exchange Act. The company completed mergers that made Enterprise Diversified and CrossingBridge wholly-owned subsidiaries.

Risks

• Loss of key assets under management — A significant portion of revenue depends on CrossingBridge's AUM, and the loss of a significant amount of AUM could materially adversely affect results.
• Deregistration reduces public reporting — The company filed a Form 15 to deregister its Class A common stock and suspend its duty to file reports under the Exchange Act, which may reduce transparency for investors.
• Dependence on key personnel — The loss of key employees and the ability to retain and attract key personnel is cited as a risk factor that could harm the business.
• Integration and cost savings from mergers — Difficulties in achieving cost savings, operating efficiencies, and revenue opportunities as a result of the mergers could negatively impact financial performance.

Outlook

Management does not provide specific forward guidance in the excerpts. The company continues to evaluate business opportunities and intends to invest where returns are appropriate relative to risk. The deregistration and suspension of reporting obligations may limit future public disclosures, and the company's focus remains on generating cash flow to fund strategic initiatives.