UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22298
Starboard Investment Trust
(Exact name of registrant as specified in charter)
(Exact name of registrant as specified in charter)
116 South Franklin Street, Rocky Mount, North Carolina 27804
(Address of principal executive offices) (Zip code)
Paracorp Inc.
2140 South Dupont Hwy, Camden, DE 19934
(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
Date of fiscal year end: August 31
Date of reporting period: February 28, 2023
Item 1. REPORTS TO STOCKHOLDERS.
(a)
Statements in this Semi-Annual Report that reflect projections or expectations of future financial or economic performance of the Roumell Opportunistic Value Fund (the “Fund”) and of the market in general and statements of the Fund’s plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include, without limitation, general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. An investor should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. A copy of the prospectus is available at https://docs.nottinghamco.com/Roumell or by calling Shareholder Services at 800-773-3863. The prospectus should be read carefully before investing. |
For More Information on the Roumell Opportunistic Value Fund:
See Our Web site @ roumellfund.com
or
Call Our Shareholder Services Group at 800-773-3863.
(unaudited)
February 28, 2023
The Roumell Opportunistic Value Fund (the “Fund”) has a portfolio focused on highly-researched small and micro-cap securities (i.e., the Fund’s top ten holdings represented 48% of RAMSX as of February 28, 2023), which resulted in greater than average volatility during the period of September 1, 2022 to February 28, 2023. The increase in interest rates during 2022 has been, in the Advisor’s view, historic, with the two-year treasury yield climbing from less than 1% at January 1, 2022 to 4.8% at February 28, 20231. Significant interest rate hikes have a negative impact on stocks, as cash flows get discounted with a higher rate and multiples compress, with micro-cap securities typically hit the hardest.
We are confident that our portfolio is well positioned for 2023 and beyond. We added several new positions, while reducing and fully exiting others. At the end of February, the Fund had roughly 34% of its portfolio in cash and cash equivalents, providing ample dry powder to be opportunistic and giving us optionality should things get cheaper.
The known investment headwinds are rising interest rates, supply chain disruptions, the impact of the Russian invasion and the possibility of a “hard landing”, i.e., a recession. While these headwinds remain uncertain, we believe that the majority of the interest rate increases are behind us. The Fed could certainly raise more and keep rates higher for longer, but it is unlikely we will see anything near the magnitude experienced in 2022. Additionally, we are seeing signs of improved supply chain. The primary offsetting tailwind pertaining to our portfolio, as we see it, is price, price, and price.
Our portfolio returns will be determined by whether the risk we carry is being significantly mispriced. In our opinion, we own securities, possessing unique and undervalued assets. We don’t know when value will be realized, but we believe our portfolio will ultimately reward us and our investors handsomely given the embedded price to value in the portfolio. RAM partners continue to be aligned with our investors with a significant portion of our net worth in the Fund.
Please see the table below for the Fund’s historical performance information through the calendar quarter ended March 31, 2023.
Average Annual Returns | Past 1 Year | Five Year | Ten Year | Gross Expense Ratio1 |
Roumell Opportunistic Value Fund –Institutional Class Shares | (17.92)% | 2.43% | 1.34% | 1.26% |
60% Russell 2000 Value Index, and 40% Bloomberg Capital U.S. Government Credit Index | (10.96)% | 3.60% | 5.37% | N/A |
Russell 2000 Value Index | (12.96)% | 4.55% | 7.22% | N/A |
Bloomberg Capital U.S. Government Credit Index | (4.73)% | 1.16% | 1.50% | N/A |
S&P 500 Total Return Index | (7.73)% | 11.18% | 12.23% | N/A |
The quoted performance data represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain more current performance data regarding the Fund, including performance data current to the Fund’s most recent month-end, please visit ncfunds.com or call the Fund at (800)773-3863. Fee waivers and expenses reimbursements have positively impacted Fund performance.
1 www.cnbc.com/quotes
1Gross expense ratio as of the Fund’s most recent Prospectus dated January 1, 2023, and includes Acquired Fund Fees and Expenses. The Advisor has entered into an Expense Limitation Agreement with the Fund under which it has agreed to waive or reduce its fees in an amount that limits the Fund’s annual operating expenses (exclusive of (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions, (iii) acquired fund fees and expenses; (iv) fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including, for example, option and swap fees and expenses); (v) borrowing costs (such as interest and dividend expense on securities sold short); (vi) taxes; and (vii) extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees and contractual indemnification of Fund service providers (other than the Advisor)) to not more than 1.23% of the average daily net assets of the Fund (Net Expense Ratio) through December 31, 2023. The Expense Limitation Agreement may not be terminated prior to that date. Further, net annual operating expenses for the Fund may exceed those contemplated by the waiver due to acquired fund fees and other expenses that are not waived under the Expense Limitation Agreement.
Update on Largest Portfolio Holdings
The following highlights the portfolio’s three largest positions as of February 28, 2023 – CollPlant Biotechnologies, Opera, and Dundee Precious Metals – which we believe underscores the embedded value in our Fund’s shares and well illustrates our focus on price.
CollPlant Biotechnologies Ltd., CLGN. CLGN’s objective is to help people live longer, healthier lives. The company seeks to become a global leader in regenerative medicine. Collagen is the most abundant protein in the human body, found in the bones, muscles, skin, and tendons. It is the substance that holds the body together. Collagen forms a scaffold to provide strength and structure. Exogenous collagen is used for medical and cosmetic purposes, including the repair of body tissues. The company’s rh-Collagen bioink can be sold and/or licensed to many end-markets. The company’s collagen is plant-based, as opposed to bovine, derived and grown in tobacco plants, and to the company’s knowledge, the only plant-based collagen product. We believe CLGN has a highly-scalable business model.
In February 2021, CLGN announced a global commercialization agreement with Allergan Aesthetics, an AbbVie (ABBV) company (as of February 28, 2023 ABBV has a $272 billion market cap), for rh-Collagen in dermal and soft tissue filler products2. Allergan, the world’s leading company in dermal filler products2, was granted worldwide exclusivity to use CLGN’s plant-derived recombinant human collagen. Additionally, Allergan was granted the right of first negotiation for CLGN’s technology in two future products. CLGN received $14 million in an upfront payment, is entitled to receive an additional $89 million in milestone payments and is then eligible to receive royalty payments and a fee for the manufacture and supply of rh-Collagen to Allergan2. Based on company public statements, CLGN should receive its first milestone payment this year, which we estimate to be $10 million3.
In fact, we believe the ABBV partnership itself supports the company's current enterprise value, providing "free" optionality on the many other “shots on goal.” As of the date of this letter, the company’s market cap is $120 million, with $33 million in cash, and no debt4. Based on discussions with management, the company states that between its current cash balance and expected milestone payments, it is sufficiently self-funded and will not need to raise additional capital.
New developments3:
• | Successfully completed a 12-month preclinical study on its dermal filler product. |
• | Successfully completed a large animal study for its 3D regenerative breast implant program. |
2 CollPlant Announces Development and Global Commercialization Agreement with Allergan Aesthetics, an AbbVie company, for rhCollagen in Dermal and Soft Tissue Filler Products (prnewswire.com)
3 CollPlant BioTechnologies, Letter from the CEO, dated January 24, 2023
4 CollPlant Biotechnologies Ltd Form 6-K
• | Expanded commercial portfolio of rh-Collagen based bioink with two new products, Collink.3D 90 and Collink 50L (bioink in powder form providing expanded operational flexibility for certain end-markets). |
• | In November 2022, signed a collaboration agreement with Tel Aviv University and Sheba Medical Center to co-develop a bio-printed human and intestine model for drug discovery and personalized treatment of ulcerative colitis. |
The company recently noted, “We are currently involved in partnering discussions with several industry leaders and academic institutions3.” We believe the company will sign additional AbbVie-like licensing agreements providing upfront money, milestone payments, and ultimately royalty payments (in addition to the sale of its rh-Collagen product itself). Based on conversations with Management, we believe safety of rh-Collagen has already been established given the approval and subsequent sales of its wound-healing product in Europe. To be clear, it’s our view that as CollPlant succeeds in reinforcing the efficacy of its collagen product, it will be purchased by one of the leading biopharmaceutical companies.
CLGN, with multiple end-market opportunities, years of development of its unique plant-based collagen bioink, an unlevered balance sheet, with an AbbVie partnership and a $120 million market cap, is a deeply underappreciated security at its current price, in our opinion. As of February 28, 2023, CLGN was 7.6% of the Fund’s portfolio holdings.
Opera Limited, OPRA – American Depositary Shares (ADS). Opera is one of the world’s leading browser providers and an influential player in the field of integrated AI-driven digital content discovery and recommendation platforms5. Providing faster and more innovative web browsers, Opera is the everyday browser of choice for more than 324 million people. The company’s headquarters is in Oslo, Norway.
In our opinion, management is firing on all cylinders. For 2022, the company had revenue of $331 million, 32% year-over-year growth, and adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) of $68 million, a 21% margin (up from 12% in 2021)6. 2023 guidance is for revenue of $370 million - $390 million, representing 15% year-over-year growth at the midpoint, and adjusted EBITDA of $71 million - $81 million, a 20% margin at the midpoint6. Opera has been investing in its business for growth opportunities and therefore we believe normalized adjusted EBITDA margins would be in the 25% - 35% range.
As further proof of management’s commitment to maximizing and unlocking shareholder value, in addition to the remaining $33 million of its existing buyback authorization, Opera acquired the shares of a pre-IPO shareholder, 360, representing a 20.6% stake, at $5.50/ADS, or about $129 million6. Opera also recently declared a special dividend of $0.80/ADS, which amounts to roughly $71 million6. Finally, in early 2023, Opera settled its receivable from its 2022 sale of Nanobank. Instead of cash installments that would otherwise have been paid through Q2 2026, Opera agreed to take immediate full payment in OPay shares to add to its existing investment in OPay6. OPay is a one-stop mobile-based platform for payments, transfers, loans, savings, and other essential services for every individual. Currently, OPay has over 18 million registered app users and500,000 agents in Nigeria who rely OPay’s services.
In our opinion, Opera has a rock-solid balance sheet. After taking into consideration the transactions above, Opera started 2023 with cash of $60 million and $59 million of present value (PV) of receivables from the 2022 sale of Star X6. Opera holds a 9.5% ownership in OPay (up from 6.4%)6. Opera is also debt-free and will continue to generate cash flow.
5 Investor Relations | Opera Limited
6 Opera – Fourth Quarter 2022 Financial Highlights
Advisor’s Fair Value Estimate (in $millions, except for multiple and per share amounts):
We believe the share price discount to our estimate of fair value is, in part, due to the fact that Opera is 81% beneficially owned by its Founder/Co-CEO/Chairman, Yahui Zhoi. Such large ownership gives the founder control and prevents influence/activism by independent shareholders. We think this discount is overdone as the Chairman and management team have done an outstanding job building the business. As of February 28, 2023, OPRA was 7.5% of the Fund’s portfolio holdings.
Dundee Precious Metals Inc., DPM-TSE/DPMLF. Dundee Precious Metals is a Canadian based, international gold mining company engaged in the exploration, development, mining and processing of precious metals. Tickers DPM and DPMLF trade on the Toronto Stock Exchange in Canada and OTC in the United States, respectively. All amounts in this letter are in U.S. dollars.
At December 31, 2022, DPM had $433 million of cash, $41 million of investments and no debt7. DPM generated $166 million and $252 million of free cash flow for 2022 and 2021, respectively8. DPM’s cash flow and balance sheet strength are highlighted by its ever-increasing net cash balances of $150 million at year-end 20209, $334 million at year-end 20217, and $433 million at year-end 20227. DPM pays a quarterly dividend of $0.04/share, a 2.5% yield. The company repurchased $14 million of stock in 2022.
DPM recently released 2022 production results showing production of 273,000 ounces of gold and 31 million pounds of copper. The following compares 2022 actual production results to 2023 guidance and 2024/2025 outlook10:
2022 | 2023 | 2024 | 2025 | |
Actual | Guide | Outlook | Outlook | |
Gold ('000 ounces): | ||||
Chelopech | 179 | 150 - 170 | 160 - 180 | 160 - 185 |
Ada Tepe | 94 | 120 - 145 | 85 - 105 | 70 - 85 |
Total gold | 273 | 270 - 315 | 245 - 285 | 230 - 270 |
Copper (Mlbs): | ||||
Chelopech | 31 | 30 - 35 | 29 - 34 | 29 - 34 |
On January 16, 2023, Dundee Precious Metals announced the discovery of a high-grade deposit at the Čoka Rakita exploration prospect in eastern Serbia and reported “exceptional results” from recent drilling11. Čoka Rakita is located three kilometers southeast of the Company’s Timok gold project and is 100% owned by DPM. Given the potential of this new high-grade discovery, the Company now expects to focus on further exploration at Čoka Rakita in 2023. As a result, the Company is pausing further work on the Timok feasibility study.
7 Dundee Precious Metals, 2022 Fourth Quarter Report
8 Dundee Precious Metals, Fourth Quarterly and Year-End 2022 Financial & Operating Results, dated February 17, 2023
9 Dundee Precious Metals, 2021 Fourth Quarter Report
10 Dundee Precious Metals, Continues Record of Strong Free Cash Flow Generation; Announces 2022 Financial Results and Improved Three-Year Outlook
11 Dundee Precious Metals Press Release, dated January 16, 2023
On February 27, 2023, Dundee Precious Metals announced significant diamond drilling results at Tierras Coloradas, Ecuador, confirming the presence of a well-mineralized vein system12. The change in status of the Tierras Coloradas project from early to advanced stage exploration is in progress, and all regulations and authorizations required from the different Ecuadorian authorities are expected to be received by early 2024.
2022 free cash flow (FCF) of $166 million8 results in a 21% FCF yield on Enterprise Value (EV) of $793 million ($6.45/share * 190 million shares – $433 million cash) as of February 28, 20237. Assuming a FCF yield of 11% on Enterprise Value and adding back cash, investments at 50% and $40 million for the smelter, implies a value of $10.54 per share vs. a share price of $6.45 as of February 28, 2023.
In fact, the sum of DPM’s FCF since January 1, 2020 is $629 million13, which equates to 79% of EV. The last two years FCF (2021 and 2022)8 equate to 53% of EV. Although this free cash flow is not in perpetuity since mines have defined lives, the company effectively gets cash flows equivalent to its EV in just over four years, an extraordinary value proposition in our opinion, and thus why it’s one of the Fund’s largest holdings.
We feel the 2023 Guidance and 2024/2025 Outlook for production is quite attractive even before the new production from Loma Larga and Čoka Rakita come online. DPM is conservatively managed and has a fortress balance sheet. With a significant cash balance of $433 million, no debt, $41 million in marketable securities, significant free cash flow generation and very attractive assets, we believe DPM is significantly undervalued. As of February 28, 2023, DPMLF was 7.1% of the Fund’s portfolio holdings.
Thank you for your continued trust and confidence.
Best Regards,
Jim Roumell
Portfolio Manager
Roumell Opportunistic Value Fund
(RCRAM0323001)
12 Dundee Precious Metals, Press Release dated February 27, 2023
13 Dundee Precious Metals, 2020 Annual Information Form dated March 31, 2021
ROUMELL OPPORTUNISTIC VALUE FUND | ||||||||||
Schedule of Investments | ||||||||||
(Unaudited) | ||||||||||
As of February 28, 2023 | ||||||||||
Shares | Cost | Value (Note 1) | ||||||||
COMMON STOCKS - 58.19% | ||||||||||
Communication Services - 6.10% | ||||||||||
* | Allot Ltd. | 797,395 | $ 7,461,457 | $ 2,392,185 | ||||||
* | comScore, Inc. | 1,839,704 | 5,522,142 | 2,134,057 | ||||||
* | Spark Networks SE | 502,789 | 1,546,292 | 517,873 | ||||||
5,044,115 | ||||||||||
Consumer Discretionary - 2.97% | ||||||||||
* | Liquidity Services, Inc. | 193,562 | 2,536,487 | 2,450,495 | ||||||
Energy - 9.54% | ||||||||||
Liberty Energy Inc | 125,000 | 1,967,376 | 1,906,250 | |||||||
* | NexTier Oilfield Solutions, Inc. | 425,000 | 3,707,743 | 3,880,250 | ||||||
* | Tetra Technologies, Inc. | 588,420 | 2,176,908 | 2,094,775 | ||||||
7,881,275 | ||||||||||
Health Care - 10.40% | ||||||||||
* | Aridis Pharmaceuticals, Inc. | 446,588 | 2,132,339 | 251,876 | ||||||
*€ | Collplant Biotechnologies Ltd. | 577,909 | 7,778,824 | 6,276,092 | ||||||
* | Enzo Biochem, Inc. | 1,828,199 | 4,344,225 | 2,065,865 | ||||||
8,593,833 | ||||||||||
Industrials - 4.16% | ||||||||||
* | Acacia Research Corp. | 140,664 | 577,415 | 607,668 | ||||||
*€µ | FLYHT Aerospace Solutions Ltd. | 2,500,000 | 1,500,000 | 1,612,312 | ||||||
* | KVH Industries, Inc. | 123,122 | 1,162,128 | 1,218,908 | ||||||
3,438,888 | ||||||||||
Information Technology - 16.59% | ||||||||||
*€ | GSI Technology, Inc. | 1,703,269 | 10,683,991 | 2,776,328 | ||||||
* | Opera Ltd. | 685,087 | 6,196,183 | 6,193,186 | ||||||
* | Quantum Corp. | 1,687,553 | $ 10,625,448 | 1,906,935 | ||||||
* | Sonic Foundry, Inc. | 405,405 | 1,500,000 | 368,919 | ||||||
* | Stratasys Ltd. | 190,000 | 2,505,481 | 2,460,500 | ||||||
13,705,868 | ||||||||||
(Continued) |
ROUMELL OPPORTUNISTIC VALUE FUND | ||||||||||
Schedule of Investments - Continued | ||||||||||
(Unaudited) | ||||||||||
As of February 28, 2023 | ||||||||||
Shares | Cost | Value (Note 1) | ||||||||
COMMON STOCKS - Continued | ||||||||||
Materials - 7.12% | ||||||||||
Dundee Precious Metals, Inc. | 911,700 | 5,393,491 | $ 5,880,465 | |||||||
Real Estate - 1.31% | ||||||||||
Kite Realty Group | 50,000 | 849,805 | 1,086,000 | |||||||
Total Common Stocks (Cost $80,167,732) | 48,080,939 | |||||||||
Private Investments - 7.26% | ||||||||||
Financials - 2.21% | ||||||||||
*€ | EAS Investors I, LP (a) | N/A | 3,508,800 | 1,822,859 | ||||||
Information Technology - 5.05% | ||||||||||
*€ | Stream-IT App, Inc. (a) | 3,652,988 | 4,175,000 | 4,175,000 | ||||||
Total Private Investments (Cost $7,683,800) | 5,997,859 | |||||||||
WARRANT - 0.00% | Exercise | Exercise | ||||||||
Price | Date | Shares | ||||||||
Industrials - 0.00% | ||||||||||
*α | Sonic Foundry, Inc. | $ 5.50 | 7/20/2026 | 1 | - | |||||
Total Warrant (Cost $0) | - | |||||||||
U.S. TREASURY SECURITIES - 19.25% | Interest | |||||||||
Par | Rate | Maturity Date | ||||||||
* | United States Treasury Bill | $ 8,000,000 | 0.000% | 3/30/2023 | 7,974,538 | |||||
* | United States Treasury Bill | $ 8,000,000 | 0.000% | 5/11/2023 | 7,926,475 | |||||
Total U.S. Treasury Securities (Cost $15,908,933) | 15,901,013 | |||||||||
CORPORATE BOND - 0.23% | Interest | |||||||||
Par | Rate | Maturity Date | ||||||||
Industrials - 0.23% | ||||||||||
ErosSTX Global Corp. | $ 835,100 | 8.500% | 4/15/2023 | 188,917 | ||||||
Total Corporate Bond (Cost $1,148,892) | 188,917 | |||||||||
(Continued) |
ROUMELL OPPORTUNISTIC VALUE FUND | ||||||||||
Schedule of Investments - Continued | ||||||||||
(Unaudited) | ||||||||||
As of February 28, 2023 | ||||||||||
Value (Note 1) | ||||||||||
SHORT-TERM INVESTMENT - 13.75% | Shares | |||||||||
IB Money Market II | 11,366,065 | $ 11,366,065 | ||||||||
Total Short-Term Investment (Cost $11,366,065) | 11,366,065 | |||||||||
Investments, at Value (Cost $116,275,422) - 98.68% | $ 81,534,793 | |||||||||
Other Assets Less Liabilities - 1.32% | 1,089,213 | |||||||||
Net Assets - 100.00% | $ 82,624,006 | |||||||||
(a) Security is considered illiquid. The security is fair valued under procedures approved by the Fund's Board of Trustees. | ||||||||||
* | Non-income producing investment | |||||||||
α | Security for which market quotations are not readily available. The value of such security $0, and it has been fair valued under procedures approved by the Fund's Board of Trustees. | |||||||||
μ | All or a portion of the security is considered restricted. The total value is $1,612,312, or 1.95% of net assets. | |||||||||
€ | Affiliated investment. As of February 28, 2023, the Fund owns more than 5% of the outstanding shares of the company, making the security an affiliated investment. | |||||||||
(Continued) |
ROUMELL OPPORTUNISTIC VALUE FUND | ||||||||||
Schedule of Investments - Continued | ||||||||||
(Unaudited) | ||||||||||
As of February 28, 2023 | ||||||||||
Summary of Investments | ||||||||||
by Sector | % of Net | |||||||||
Assets | Value | |||||||||
Common Stocks: | ||||||||||
Communication Services | 6.10% | $ | 5,044,115 | |||||||
Consumer Discretionary | 2.97% | 2,450,495 | ||||||||
Energy | 9.54% | 7,881,275 | ||||||||
Health Care | 10.40% | 8,593,833 | ||||||||
Industrials | 4.16% | 3,438,888 | ||||||||
Information Technology | 16.59% | 13,705,868 | ||||||||
Materials | 7.12% | 5,880,465 | ||||||||
Real Estate | 1.31% | 1,086,000 | ||||||||
Private Investments: | ||||||||||
Financials | 2.21% | 1,822,859 | ||||||||
Information Technology | 5.05% | 4,175,000 | ||||||||
Warrant: | ||||||||||
Industrials | 0.00% | - | ||||||||
U.S. Treasury Securities | 19.25% | 15,901,013 | ||||||||
Corporate Bond | 0.23% | 188,917 | ||||||||
Short-Term Investment | 13.75% | 11,366,065 | ||||||||
Other Assets Less Liabilities | 1.32% | 1,089,213 | ||||||||
Total Net Assets | 100.00% | $ | 82,624,006 | |||||||
See Notes to Financial Statements |
ROUMELL OPPORTUNISTIC VALUE FUND | |||||||
Statement of Assets and Liabilities | |||||||
(Unaudited) | |||||||
As of February 28, 2023 | |||||||
Assets: | |||||||
Investments, at value (Cost $88,628,807) | $ | 64,872,202 | |||||
Investments in affiliates, at value (Cost $27,646,615) | 16,662,591 | ||||||
Deposits at Broker for Options | 4,273 | ||||||
Receivables: | |||||||
Investments sold | 2,014,903 | ||||||
Fund shares sold | 102,033 | ||||||
Dividends and interest | 52,621 | ||||||
Prepaid expenses: | |||||||
Professional fees | 18,177 | ||||||
Security pricing fees | 9,296 | ||||||
Registration and filing expenses | 8,401 | ||||||
Custody fees | 4,017 | ||||||
Trustee fees and meeting expenses | 600 | ||||||
Shareholder fulfillment fees | 189 | ||||||
Insurance fees | 168 | ||||||
Total assets | 83,749,470 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Investments purchased | 1,083,075 | ||||||
Fund shares purchased | 41 | ||||||
Accrued expenses: | |||||||
Advisory fees | 36,485 | ||||||
Compliance fees | 4,289 | ||||||
Administration fees | 857 | ||||||
Miscellaneous expenses | 423 | ||||||
Transfer agent fees | 259 | ||||||
Fund accounting fees | 35 | ||||||
Total liabilities | 1,125,464 | ||||||
Net Assets | $ | 82,624,006 | |||||
Net Assets Consist of: | |||||||
Paid in Beneficial Interest | $ | 133,222,061 | |||||
Accumulated Deficit | (50,598,055) | ||||||
Total Net Assets | $ | 82,624,006 | |||||
Institutional Class Shares of beneficial interest outstanding, no par value (a) | 18,373,983 | ||||||
Net Assets | $ | 82,624,006 | |||||
Net Asset Value, Offering Price and Redemption Price Per Share (b) | $ | 4.50 | |||||
(a) | Unlimited Authorized Shares | ||||||
(b) | The Fund charges a 1% redemption fee on redemptions made within 60 days of initial purchase. | ||||||
See Notes to Financial Statements |
ROUMELL OPPORTUNISTIC VALUE FUND | |||||||
Statement of Operations | |||||||
(Unaudited) | |||||||
For the fiscal period ended February 28, 2023 | |||||||
Investment Income: | |||||||
Dividends (net of withholding tax $16,393) | $ | 862,920 | |||||
Interest | 147,086 | ||||||
Total Investment Income | 1,010,006 | ||||||
Expenses: | |||||||
Advisory fees (Note 3) | 360,515 | ||||||
Administration fees (Note 3) | 41,500 | ||||||
Professional fees | 22,628 | ||||||
Registration and filing expenses | 18,527 | ||||||
Fund accounting fees (Note 3) | 17,313 | ||||||
Custody fees (Note 3) | 15,801 | ||||||
Shareholder fulfillment fees | 11,850 | ||||||
Transfer agent fees (Note 3) | 11,359 | ||||||
Compliance fees (Note 3) | 9,719 | ||||||
Security pricing fees | 6,564 | ||||||
Trustee fees and meeting expenses (Note 4) | 5,505 | ||||||
Miscellaneous expenses | 2,172 | ||||||
Insurance fees | 1,976 | ||||||
Total Expenses | 525,429 | ||||||
Expenses waived by Advisor (Note 3) | (43,436) | ||||||
Net Expenses | 481,993 | ||||||
Net Investment Income | $ | 528,013 | |||||
Realized and Unrealized Gain (Loss): | |||||||
Net realized loss from investments | $ | (6,704,798) | |||||
Net realized loss from affiliated investments | (3,042,129) | ||||||
Net realized loss on foreign currency | (2,873) | ||||||
Total realized losses | (9,749,800) | ||||||
Net change in unrealized appreciation on investments | 2,537,926 | ||||||
Net change in unrealized depreciation on affiliated investments | 6,628,441 | ||||||
Total net change in unrealized appreciation | 9,166,367 | ||||||
Net Realized and Unrealized Loss | (583,433) | ||||||
Net Decrease in Net Assets Resulting from Operations | $ | (55,420) | |||||
See Notes to Financial Statements |
ROUMELL OPPORTUNISTIC VALUE FUND | |||||||||||
Statements of Changes in Net Assets | |||||||||||
February 28, | August 31, | ||||||||||
For the fiscal year or period ended | 2023 (a) | 2022 | |||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 528,013 | $ | (1,012,824) | |||||||
Net realized gain (loss) from investments | (6,704,798) | (2,058,246) | |||||||||
Net realized gain (loss) from affiliated investments | (3,042,129) | (240,600) | |||||||||
Net realized loss on foreign currency | (2,873) | (39,586) | |||||||||
Net change in unrealized appreciation (depreciation) | |||||||||||
on investments | 2,537,926 | (33,645,060) | |||||||||
Net change in unrealized appreciation (depreciation) on | |||||||||||
affiliated investments | 6,628,441 | (16,214,895) | |||||||||
Net Increase (Decrease) in Net Assets Resulting from | |||||||||||
Operations | (55,420) | (53,211,211) | |||||||||
Distributions to Shareholders: | |||||||||||
Institutional Class Shares | - | (47,610,000) | |||||||||
Decrease in Net Assets Resulting from Distributions | - | (47,610,000) | |||||||||
Beneficial Interest Transactions: | |||||||||||
Shares sold | 18,164,409 | 52,823,773 | |||||||||
Redemption fee | 777 | 1,806 | |||||||||
Reinvested dividends and distributions | - | 34,788,291 | |||||||||
Shares repurchased | (16,106,902) | (48,093,371) | |||||||||
Increase (Decrease) in Net Assets from | |||||||||||
Beneficial Interest Transactions | 2,058,284 | 39,520,499 | |||||||||
Net Increase (Decrease) in Net Assets | 2,002,864 | (61,300,712) | |||||||||
Net Assets: | |||||||||||
Beginning of Period | 80,621,142 | 141,921,854 | |||||||||
End of Period | $ | 82,624,006 | $ | 80,621,142 | |||||||
February 28, | August 31, | ||||||||||
Share Information: | 2023 (a) | 2022 | |||||||||
Institutional Class Shares | Shares | Amount | Shares | Amount | |||||||
Shares sold | 4,218,169 | $ | 18,164,409 | 8,340,549 | $ | 52,823,773 | |||||
Redemption fee | - | 777 | - | 1,806 | |||||||
Reinvested dividends | |||||||||||
and distributions | - | - | 5,566,127 | 34,788,291 | |||||||
Shares repurchased | (3,802,211) | (16,106,902) | (5,837,632) | (48,093,371) | |||||||
Net Increase in | |||||||||||
Shares of Beneficial Interest | 415,958 | $ | 2,058,284 | 8,069,044 | $ | 39,520,499 | |||||
(a) Unaudited. | |||||||||||
See Notes to Financial Statements |
ROUMELL OPPORTUNISTIC VALUE FUND | ||||||||
Statement of Cash Flows | ||||||||
(Unaudited) | ||||||||
For the fiscal period ended February 28, 2023 | ||||||||
Cash flows from operating activities: | ||||||||
Net decrease in net assets resulting from operations | $ | (55,420) | ||||||
Adjustments to reconcile net decrease in net assets resulting | ||||||||
from operations to net cash provided by operating activities: | ||||||||
Purchases of investments | (31,795,357) | |||||||
Proceeds from sale of investments | 19,566,741 | |||||||
Net realized loss from investments | (9,749,800) | |||||||
Change in net unrealized depreciation on investments | 9,166,367 | |||||||
Amortization of securities | 108,075 | |||||||
Changes in Assets: | ||||||||
Decrease dividend and interest receivable | (11,598) | |||||||
Decrease prepaid registration and filing expenses | (4,630) | |||||||
Increase prepaid insurance fees | 1,976 | |||||||
Increase prepaid shareholder fulfillment fees | 3,142 | |||||||
Decrease prepaid trustee fees and meeting expenses | (100) | |||||||
Increase prepaid professional fees | 2,996 | |||||||
Decrease prepaid security pricing fees | (9,228) | |||||||
Increase prepaid custody fees | 3,410 | |||||||
Changes in Liabilities: | ||||||||
Increase accrued advisory fees | (101,756) | |||||||
Decrease accrued administration fees | 49 | |||||||
Decrease accrued fund accounting fees | (107) | |||||||
Increase accrued miscellaneous expenses | 72 | |||||||
Increase accrued transfer agent fees | 33 | |||||||
Increase compliance fees | 2,413 | |||||||
Net cash provided by operating activities | (12,872,721) | |||||||
Cash flows used in financing activities: | ||||||||
Fund shares sold | 18,164,409 | |||||||
Fund shares redeemed | (16,106,902) | |||||||
Redemption fee | 777 | |||||||
Distributions paid | - | |||||||
Net cash used in financing activities | 2,058,284 | |||||||
Net decrease in cash and cash equivalents | (10,814,437) | |||||||
Cash & Cash Equivalents: | ||||||||
Beginning of year | 10,818,710 | |||||||
End of year | $ | 4,273 | ||||||
Reconciliation of cash and cash equivalents reported on the Statement of Assets | ||||||||
and Liabilities: | ||||||||
Deposits at Broker for Options | $ | 4,273 | ||||||
Cash | - | |||||||
Total Cash and Cash Equivalents | $ | 4,273 | ||||||
See Notes to Financial Statements |
ROUMELL OPPORTUNISTIC VALUE FUND | |||||||||||||||||
Financial Highlights - Institutional Class Shares | |||||||||||||||||
For a share outstanding during each | February 28, | August 31, | |||||||||||||||
of the fiscal years or period ended | 2023 | (f) | 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||
Net Asset Value, | |||||||||||||||||
Beginning of Period | $ | 4.49 | $ | 14.35 | $ | 8.73 | $ | 9.15 | $ | 10.03 | $ | 9.07 | |||||
Income (Loss) from Investment | |||||||||||||||||
Operations: | |||||||||||||||||
Net investment income (loss) (b) | 0.03 | (0.07) | (0.05) | 0.04 | 0.07 | 0.14 | |||||||||||
Net realized and unrealized | |||||||||||||||||
gain (loss) on investments | (0.02) | (4.00) | 5.67 | 0.48 | (0.43) | 0.82 | |||||||||||
Total from Investment Operations | 0.01 | (4.07) | 5.62 | 0.52 | (0.36) | 0.96 | |||||||||||
Less Distributions: | |||||||||||||||||
From net investment income | - | - | (0.00) | (a) | (0.19) | (0.17) | (0.00) | (a) | |||||||||
From realized gains | - | (5.79) | - | (0.75) | (0.35) | - | |||||||||||
Total Distributions | - | (5.79) | (0.00) | (0.94) | (0.52) | (0.00) | |||||||||||
Redemption Fees | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | - | 0.00 | (a) | - | |||||||
Net Asset Value, End of Period | $ | 4.50 | $ | 4.49 | $ | 14.35 | $ | 8.73 | $ | 9.15 | $ | 10.03 | |||||
Total Return | (0.88)% | (h) | (39.70)% | 64.41% | 5.35% | (3.12)% | 10.63% | ||||||||||
Net Assets, End of Period | |||||||||||||||||
(in thousands) | $ | 82,624 | $ | 80,621 | $ | 141,922 | $ | 86,803 | $ | 79,353 | $ | 75,917 | |||||
Ratios of: | |||||||||||||||||
Interest Expense to Average Net Assets | - | - | - | - | - | 0.00% | (e) | ||||||||||
Gross Expenses to Average Net Assets (c) | 1.34% | (g) | 1.25% | 1.20% | 1.28% | 1.30% | 1.29% | ||||||||||
Net Expenses to Average Net Assets (c) | 1.23% | (g) | 1.23% | 1.20% | 1.23% | 1.23% | 1.23% | (d) | |||||||||
Net Investment Income (Loss) to Average | |||||||||||||||||
Net Assets | 1.35% | (g) | (0.95)% | (0.40)% | 0.51% | 0.67% | 1.52% | ||||||||||
Portfolio turnover rate | 46.93% | (h) | 47.07% | 171.08% | 162.86% | 79.74% | 62.59% | ||||||||||
(a) | Actual amount is less than $0.01 per share. | ||||||||||||||||
(b) | Calculated using the average shares method. | ||||||||||||||||
(c) | The expense ratios listed reflect total expenses prior to any waivers and reimbursements (gross expense ratio) and after any waivers and reimbursements (net expense ratio). | ||||||||||||||||
(d) | Includes interest expense. | ||||||||||||||||
(e) | Less than 0.01% of net assets. | ||||||||||||||||
(f) | Unaudited. | ||||||||||||||||
(g) | Annualized. | ||||||||||||||||
(h) | Not annualized. | ||||||||||||||||
See Notes to Financial Statements |
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
1. | Organization and Significant Accounting Policies |
The Roumell Opportunistic Value Fund (“Fund”) is a series of the Starboard Investment Trust (“Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund is a separate non-diversified series of the Trust.
The investment objective of the Fund is to seek capital appreciation and income. Roumell Asset Management, LLC (“Roumell Asset Management” or the “Advisor”) seeks to achieve the Fund’s investment objective by using an opportunistic investment strategy. The Fund's portfolio will primarily consist of (i) domestic and foreign equity securities (common stock, preferred stock, warrants, and securities convertible into common stocks); (ii) domestic and foreign fixed income securities consisting of government and corporate debt securities, "junk" bonds, municipal securities, and real estate investment trusts ("REITs"); and (iii) interest-bearing instruments consisting of treasury bills, other U.S. government obligations and bonds, collateralized repurchase contracts, money market instruments, and money market funds (collectively referred to as cash and cash equivalents). These securities may include illiquid securities with up to 15% of the Fund’s assets. The Fund may invest in these securities directly or indirectly through investments in other investment companies.
The Fund currently has an unlimited number of authorized shares, the Institutional Class Shares. Fund shares are subject to redemption fees of 1.00% if redeemed within 60 days of the issuance. The Date of Initial Public Investment of the Fund shares was December 31, 2010.
The following is a summary of significant accounting policies consistently followed by the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Fund follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946 “Financial Services – Investment Companies,” and Financial Accounting Standards Update (“ASU”) 2013-08.
Investment Valuation
The pricing and valuation of portfolio securities is determined in good faith in accordance with procedures established by, and under the direction of, the Trustees. Values are determined according to generally accepted accounting practices and all laws and regulations that apply. Using methods approved by the Trustees, the assets of the Fund are valued as follows:
• | Securities that are listed on a securities exchange are valued at the last quoted sales price provided by a third-party pricing service at the time the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded by the Fund. |
• | Securities that are listed on an exchange and which are not traded on the valuation date are valued at the bid price. |
• | Unlisted securities for which market quotations are readily available are valued at the latest quoted sales price, if available, at the time of valuation, otherwise, at the latest quoted bid price. |
• | Options are valued at the mean of the last quoted bid and ask prices at the time of valuation. |
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
• | Foreign securities listed on foreign exchanges are valued with quotations from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. |
• | Temporary cash investments with maturities of 60 days or less will be valued at amortized cost, which approximates market value. |
• | Securities for which no current quotations are readily available are valued at fair value as determined in good faith using methods approved by the Trustees. Securities may be valued on the basis of prices provided by a pricing service when such prices are believed to reflect the fair market value of such securities. |
Fair Value Measurement
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:
Level 1: Quoted prices in active markets for identical securities
Level 2: Other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.)
Level 3: Significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments)
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
The following table summarizes the inputs as of February 28, 2023, for the Fund’s assets measured at fair value:
Investments in Securities | Total | Level 1 | Level 2 | | Level 3 (a) | |||
Assets | ||||||||
Common Stocks* | $ | 48,080,939 | $ | 48,080,939 | $ | - | $ | - |
Private Investment Partnerships* | 5,997,859 | - | - | 5,997,859 | ||||
Warrant* | 0 | - | 0 | - | ||||
U.S. Treasury Securities | 15,901,013 | - | 15,901,013 | - | ||||
Corporate Bond* | 188,917 | - | 188,917 | - | ||||
Short-Term Investment | 11,366,065 | 11,366,065 | - | - | ||||
Total Assets | $ | 81,534,793 | $ | 59,447,004 | $ | 16,089,930 | $ | 5,997,859 |
*Please refer to Schedule of Investments for breakdown by Industry.
(a) The Fund had two Level 3 security during the fiscal year ended August 31, 2022 as indicated in the below table. The aggregate value of such securities is of net assets, and they have been fair valued under the procedures approved by the Board of Trustees.
The table below presents a reconciliation of all Level 3 fair value measurements existing at February 28, 2023:
Private Investments | Total Private Investments | ||||
Opening Balance | $ 6,535,572 | $ 6,535,572 | |||
Purchases | - | - | |||
Principal payments/sales | - | - | |||
Accrued discounts (premiums) | - | - | |||
Realized Gains | - | - | |||
Unrealized Gains | (537,713) | (537,713) | |||
Ending Balance | $ 5,997,859 | $ 5,997,859 | |||
The Fund’s investments in Level 3 Private Investments have been valued using various methodologies as outlined in the tables below. These may be adjusted for the change in Enterprise Value of a set of Guideline Public Companies or the date of the last capital raise. The unobservable inputs are the assumptions as to whether a company is an appropriate Guideline Public Company and an assumption as what percentile of performance the Private Company would fall within the set of Guideline Public Companies. Below are tables summarizing the unobservable inputs used along with a sensitivity analysis, which shows the impact on valuation of a change in the unobservable input.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Security | Unobservable Input - Guideline Public Company Performance | Estimated Fair Value as of February 28, 2023 | If Percentile of Guideline Public Company Performance was | Hypothetical Impact on Valuation |
EAS Investors I, LP | Median | $1,822,859 | 50th Percentile | 19% increase in value |
Security | Unobservable Input - Methodology | Estimated Fair Value as of February 28, 2023 | Impact on Valuation from Fiscal Period Ended August 31, 2022 to February 28, 2023 |
Stream-IT App, Inc. | Capital raise | $4,175,000 | 20% increase in value |
The following table represents investments in affiliates during the fiscal period ended February 28, 2023:
Security Name | Share Balance at Beginning of period | Purchases (Shares) | Sales (Shares) | Share Balance at 2/28/2023 | Realized Gain/Loss | Dividend/ Interest Income | Change in Unrealized Gain (Loss) | Fair Value at 2/28/2023 |
Collplant Biotechnologies Ltd. | 605,437 | - | 27,528 | 577,909 | $ (43,460) | $ - | $1,710,018 | $6,276,092 |
EAS Investors I, LP | N/A | N/A | - | N/A | $ - | $ - | $(1,189,540) | $1,822,859 |
FLYHT Aerospace Solutions Ltd. | 2,500,000 | - | - | 2,500,000 | $ - | $ - | $ 13,652 | $1,612,312 |
GSI Technology, Inc. | 1,937,404 | - | 234,135 | 1,703,269 | $ (1,059,875) | $ - | $(2,615,352) | $2,776,328 |
Qumu Corp. | 1,111,061 | - | 1,111,061 | - | $ (726,856) | $ - | $ - | $ - |
Stream-ITApp, Inc. | 3,652,988 | - | - | 3,652,988 | $ - | $ - | $ 651,827 | $4,175,000 |
TOTAL | 9,806,890 | - | 1,372,724 | 8,434,166 | $(1,830,191) | $ - | $(5,608,092) | $16,662,591 |
Foreign Currency Translation
Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities and income items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These amounts can be found on the Statement of Operations, if applicable.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Gains and losses are determined on the identified cost basis, which is the same basis used for federal income tax purposes.
Expenses
The Fund bears expenses incurred specifically on its behalf as well as a portion of general expenses, which are allocated according to methods reviewed annually by the Board.
Distributions
The Fund may declare and distribute dividends from net investment income (if any) annually. Distributions from capital gains (if any) are generally declared and distributed annually. Dividends and distributions to shareholders are recorded on ex-date.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in the net assets from operations during the reported period. Actual results could differ from those estimates.
Fees on Redemptions
The Fund charges a redemption fee of 1.00% on redemptions of Fund shares occurring within 60 days following the issuance of such shares. The redemption fee is not a fee to finance sales or sales promotion expenses but is paid to the Fund to defray the costs of liquidating an investor and discourage short-term trading of the Fund’s shares. No redemption fee will be imposed on the redemption of shares representing dividends or capital gains distributions, or on amounts representing capital appreciation of shares.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Federal Income Taxes
No provision for income taxes is included in the accompanying financial statements, as the Fund intends to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code applicable to regulated investment companies.
2. | Risk Considerations |
Opportunistic Investment Strategy Risk. There are risks associated with the Fund’s opportunistic investment strategy. The Fund is expected to be disciplined with its opportunistic investing, particularly with respect to the price it is willing to pay for the securities in which it is considering investing, and, as a result, may miss out on opportunities that have a reasonable risk/reward trade off. In addition, in periods of overall rising market levels (whether those rises are the result of speculative bubbles or the confirmation of underlying fundamentals), the Fund may not fully participate in market gains when it is heavily invested in Cash and Cash Equivalents. In such periods, mutual funds that are fully invested in equity securities will likely provide superior returns.
Non-diversified Fund Risk. The Fund is a non-diversified fund. In general, a non-diversified fund will invest a greater percentage of its assets in a particular issuer and will own fewer securities than diversified mutual funds. Accordingly, a non-diversified fund is generally subject to the risk that a large loss in an individual issuer will cause a greater loss for the fund than it would if the fund were required to hold a larger number of securities or smaller positions. A non-diversified fund may also have a more volatile NAV per share than diversified mutual funds. The Fund will limit investments in a single industry or group of industries (except U.S. Government and cash items) to less than 25% of the Fund’s total assets.
Sector Risk. Sector risk is the possibility that securities within the same group of industries will decline in price due to sector-specific market or economic developments. If the Fund invests more heavily in a particular sector, the value of its shares may be especially sensitive to factors and economic risks that specifically affect that sector. As a result, the Fund’s share price may fluctuate more widely than the value of shares of a mutual fund that invests in a broader range of industries. Additionally, some sectors could be subject to greater government regulation than other sectors. Therefore, changes in regulatory policies for those sectors may have a material effect on the value of securities issued by companies in those sectors. The sectors in which the Fund may more heavily invest will vary.
Liquidity Risk. Liquidity risk exists when particular investments would be difficult to purchase or sell, possibly preventing the Fund from selling such illiquid securities at an advantageous time or price, or possibly requiring the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its obligations.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
COVID-19 Risk. The outbreak of an infectious respiratory illness caused by a novel coronavirus known as COVID-19 has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many countries or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. As such, issuers of debt securities with operations, productions, offices, and/or personnel in (or other exposure to) areas affected with the virus may experience significant disruptions to their business and/or holdings. The potential impact on the credit markets may include market illiquidity, defaults and bankruptcies, among other consequences, particularly on issuers in the airline, travel and leisure and retail sectors. The extent to which COVID-19 will affect the Fund, the Fund’s service providers’ and/or issuer’s operations and results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken to contain COVID-19. Economies and financial markets throughout the world are becoming increasingly interconnected. As a result, whether or not the Fund invests in securities of issuers located in or with significant exposure to countries experiencing economic, political and/or financial difficulties, the value and liquidity of the Fund’s investments may be negatively affected by such events. If there is a significant decline in the value of the Fund’s portfolio, this may impact the Fund’s asset coverage levels for certain kinds of derivatives and other portfolio transactions. The duration of the COVID-19 outbreak and its impact on the global economy cannot be determined with certainty.
Cybersecurity Risk. As part of its business, the Advisor processes, stores, and transmits large amounts of electronic information, including information relating to the transactions of the Fund. The Advisor and the Fund are therefore susceptible to cybersecurity risk. Cybersecurity failures or breaches of the Fund or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of Fund shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, and/or reputational damage. The Fund and its shareholders could be negatively impacted as a result.
Common Stocks. The Fund’s investments in common stocks, both directly and indirectly through the Fund’s investment in shares of other investment companies, may fluctuate in value response to many factors, including the activities of the individual companies whose securities the Fund owns, general market and economic conditions, interest rates, and specific industry changes. Moreover, small- and micro-cap equities, where the Fund focuses, are generally more volatile than are large cap equities. Such price fluctuations subject the Fund to potential losses. In addition, regardless of any one company’s particular prospects, a declining stock market may produce a decline in prices for all equity securities, which could also result in losses for the Fund. Market declines may continue for an indefinite period of time, and investors should understand that during temporary or extended bear markets, the value of common stocks will decline. Common stock generally is subordinate to preferred stock and debt securities with respect to the payment of dividends and upon the liquidation or bankruptcy of the issuing company.
Small-Cap and Mid-Cap Securities Risk. The Fund may invest in securities of small-cap and mid-cap companies, which involves greater volatility than investing in larger and more established companies. Small-cap and mid-cap companies can be subject to more abrupt or erratic share price changes than larger, more established companies. Securities of these types of companies have limited market liquidity, and their prices may be more volatile. You should expect that the value of the Fund’s shares will be more volatile than a fund that invests exclusively in large-capitalization companies.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Micro-Cap Securities Risk. Some of the small companies in which the Fund invests may be micro-cap companies. Micro-cap stocks may offer greater opportunity for capital appreciation than the stocks of larger and more established companies; however, they also involve substantially greater risks of loss and price fluctuations. Micro-cap companies carry additional risks because of the tendency of their earnings and revenues to be less predictable (and some companies may be experiencing significant losses), their share prices to be more volatile and their markets to be less liquid than companies with larger market capitalizations. Micro-cap companies may be newly formed or in the early stages of development, with limited product lines, markets or financial resources, and may lack management depth. In addition, there may be less public information available about these companies. The shares of micro-cap companies tend to trade less frequently than those of larger, more established companies, which can adversely affect the pricing of these securities and the future ability to sell these securities. Also, it may take a long time before the Fund realizes a gain, if any, on an investment in a micro-cap company.
Risks Related to Investing in Other Investment Companies. The Fund’s investment strategy may involve investing in other investment companies. Investments in other investment companies subject the Fund to additional operating and management fees and expenses. For example, investors in the Fund will indirectly bear fees and expenses charged by the investment companies in which the Fund invests, in addition to the Fund’s direct fees and expenses. As a result, the cost of investing in the Fund will be higher than the cost of investing directly in such closed-end funds and also may be higher than other funds that invest directly in securities. The shares of closed-end funds frequently trade at a premium or discount relative to their net asset value. When the Fund purchases shares of a closed-end fund at a discount to its net asset value, there can be no assurance that the discount will decrease, and it is possible that the discount may increase. Furthermore, investing in other investment companies may affect the timing, amount, and character of distributions and therefore may increase the amount of taxes payable by you.
Shareholder Activism Risk. When the Advisor engages in activism on behalf of the Fund, the Fund will incur additional expenses, such as legal or filing costs. As a result, the cost of investing in the Fund may be higher than other funds that do not engage in such shareholder activism.
Large-Cap Securities Risk. Stocks of large companies as a group can fall out of favor with the market, causing the Fund to underperform investments that have a greater focus on mid-cap or small-cap stocks. Larger, more established companies may be slow to respond to challenges and may grow more slowly than smaller companies.
Preferred Stock Risk. Like shares of common stock, the value of preferred stock may fluctuate in response to many factors, including the activities of the issuer, general market and economic conditions, interest rates, and specific industry changes. Preferred stock may fail to pay dividends when expected. The rights of holders of preferred stock are generally subordinate to the rights associated with a corporation’s debt securities.
Convertible Securities Risk. Convertible securities are securities that may be converted into shares of stock. Due to the conversion feature, the interest rate or dividend preference of a convertible security is usually less than if the securities were non-convertible. The value of convertible securities tends to change when the market value of the underlying stock fluctuates and tends to fluctuate inversely with changes in interest rates.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Lower-rated Securities or “Junk Bonds” Risk. Fixed income securities rated below BBB by S&P or Baa by Moody’s are considered speculative in nature and may be subject to certain risks with respect to the issuing entity and to greater market fluctuations than higher rated fixed income securities. Lower rated fixed income securities are usually issued by companies without long track records of sales and earnings, or by companies with questionable credit strength. These fixed income securities are considered “below investment-grade.” The retail secondary market for these “junk bonds” may be less liquid than that of higher rated fixed income securities and adverse conditions could make it difficult at times to sell certain securities or could result in lower prices than those used in calculating the Fund’s net asset value. These risks can reduce value of the Fund’s shares and the income it earns.
Risks of Investing in Corporate Debt Securities. Corporate debt securities are fixed income securities issued by businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt securities. The credit risks of corporate debt securities vary widely among issuers. In addition, the credit risk of an issuer’s debt security may vary based on its priority for repayment. For example, higher ranking (senior) debt securities have a higher priority than lower ranking (subordinated) securities. This means that the issuer might not make payments on subordinated securities while continuing to make payments on senior securities. In addition, in the event of bankruptcy, holders of senior securities may receive amounts otherwise payable to the holders of subordinated securities. Some subordinated securities, such as trust preferred and capital securities notes, also permit the issuer to defer payments under certain circumstances. For example, insurance companies issue securities known as surplus notes that permit the insurance company to defer any payment that would reduce its capital below regulatory requirements.
Interest Rate and Credit Risk. Interest rates may rise resulting in a decrease in the value of the fixed income securities held by the Fund or may fall resulting in an increase in the value of such securities. Fixed income securities with longer maturities generally involve greater risk than those with shorter maturities. Issuers of fixed income securities might be unable to make principal and interest payments when due.
Maturity Risk. Maturity risk is another factor that can affect the value of the Fund’s debt holdings. In general, the longer the maturity of a fixed income instrument, the higher its yield and the greater its sensitivity to changes in interest rates. Conversely, the shorter the maturity, the lower the yield but the greater the price stability.
Government Debt Markets May Be Illiquid or Disrupted. Although generally highly liquid, the markets in which the Fund trades could experience periods of illiquidity, sometimes of significant duration.
Inflation Risk. Fixed income securities are subject to inflation risk. Because inflation reduces the purchasing power of income produced by existing fixed income securities, the prices at which fixed income securities trade will be reduced to compensate for the fact that the income they produce is worth less. This potential decrease in market value of fixed income securities would result in a loss in the value of the Fund’s portfolio.
Risks of Investing in REITs. The Fund may invest in REITs. The value of the Fund’s investments in REITs may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs. Shareholders of the Fund will indirectly be subject to the fees and expenses of the individual REITs in which the Fund invests.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Currency Risk. Currency risk is the chance that changes in currency exchange rates will negatively affect securities denominated in, and/or receiving revenues in, foreign currencies. The Fund’s investments in foreign securities exposes the Fund to foreign currencies and subjects the Fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being hedged. Adverse changes in currency exchange rates (relative to the U.S. dollar) may erode or reverse any potential gains from a portfolio’s investment in securities denominated in a foreign currency or may widen existing losses. Currency gains and losses could occur regardless of the performance of the underlying investment.
Foreign Securities Risk. Foreign securities involve investment risks different from those associated with domestic securities. Changes in foreign economies and political climates are more likely to affect the Fund than a mutual fund that invests exclusively in domestic securities. The value of foreign currency denominated securities or foreign currency contracts is affected by the value of the local currency relative to the U.S. dollar. There may be less government supervision of foreign markets, resulting in non-uniform accounting practices and less publicly available information about issuers of foreign currency denominated securities. The value of foreign investments may be affected by changes in exchange control regulations, application of foreign tax laws (including withholding tax), changes in governmental administration or economic or monetary policy (in this country or abroad) or changed circumstances in dealings between nations. In addition, foreign brokerage commissions, custody fees, and other costs of investing in foreign securities are generally higher than in the United States. Investments in foreign issues could be affected by other factors not present in the United States, including expropriation, armed conflict, confiscatory taxation, and potential difficulties in enforcing contractual obligations.
3. | Transactions with Affiliates and Service Providers |
Advisor
The Fund pays a monthly fee to the Advisor calculated at the annual rate of 0.92% of the Fund’s average daily net assets. For the fiscal period ended February 28, 2023,
$360,515 in advisory fees were incurred by the Fund, of which $43,436 were waived by the Advisor.
$360,515 in advisory fees were incurred by the Fund, of which $43,436 were waived by the Advisor.
The Advisor has entered into a contractual agreement (the “Expense Limitation Agreement”) with the Trust, on behalf of the Fund, under which it has agreed to waive or reduce its fees and to assume other expenses of the Fund, if necessary, in amounts that limit the Fund’s total operating expenses (exclusive of (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions, (iii) acquired fund fees and expenses; (iv) fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses); (v) borrowing costs (such as interest and dividend expense on securities sold short); (vi) taxes; and (vii) extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees and contractual indemnification of Fund service providers (other than the Adviser)) to not more than 1.23% of the average daily net assets of the Fund. The current term of the Expense Limitation Agreement remains in effect until January 1, 2024.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Administrator
The Fund pays a monthly fee to The Nottingham Company (the “Administrator”) based upon the average daily net assets of the Fund and calculated at the annual rates as shown in the schedule below subject to a minimum of $2,000 per month. The Administrator also receives a fee to procure and pay the Fund’s custodian, additional compensation for fund accounting and recordkeeping services, and additional compensation for certain costs involved with the daily valuation of securities and as reimbursement for out-of-pocket expenses. The Administrator also receives a miscellaneous compensation fee for peer group, comparative analysis, and compliance support totaling $350 per month. As of February 28, 2023, the Administrator received $2,172 in miscellaneous expenses.
A breakdown of the fees is provided in the following table:
Administration Fees* | Custody Fees* | Fund Accounting Fees (base fee) | Fund Accounting Fees (asset- based fee) | Blue Sky Administration Fees (annual) | |||
Average Net Assets | Annual Rate | Average Net Assets | Annual Rate | ||||
On the first $49 million | 0.100% | First $200 million | 0.020% | $2,250/month | 0.01% | $150 per state | |
On the next $250 million | 0.090% | Over $200 million | 0.009% | ||||
On the next $100 million | 0.080% | ||||||
On the next $300 million | 0.070% | *Minimum monthly fees of $2,000 and $417 for Administration and Custody, respectively. | |||||
On the next $500 million | 0.060% | ||||||
On the next $750 million | 0.050% | ||||||
On the next $1 billion | 0.040% | ||||||
On the next $2 billion | 0.030% | ||||||
On all assets over $99 billion | 0.035% |
The Fund incurred $41,500 in administration fees, $15,801 in custody fees, and $17,313 in fund accounting fees for the fiscal period ended February 28, 2023.
Compliance Services
For the fiscal period ended February 28, 2023, The Nottingham Company, Inc. provided services as the Trust’s Chief Compliance Officer. The Nottingham Company, Inc. is entitled to receive customary fees from the Fund for their services pursuant to the Compliance Services Agreement with the Fund.
Transfer Agent
Nottingham Shareholder Services, LLC (“Transfer Agent”) serves as transfer, dividend paying, and shareholder servicing agent for the Fund. For its services, the Transfer Agent is entitled to receive compensation from the Fund pursuant to the Transfer Agent’s fee arrangements with the Fund. The Fund paid the Transfer Agent $11,359 in transfer agent fees during the fiscal period ended February 28, 2023.
Distributor
Capital Investment Group, Inc. (the “Distributor”) serves as the Fund’s principal underwriter and distributor. The Distributor receives $6,500 per year paid in monthly installments for services provided and expenses assumed.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
4. Trustees and Officers
The Trust is governed by the Board of Trustees, which is responsible for the management and supervision of the Fund. The Trustees meet periodically throughout the year to review contractual agreements with companies that furnish services to the Fund; review performance of the Advisor and the Fund; and oversee activities of the Fund. Officers of the Trust and Trustees who are interested persons of the Trust or the Advisor will receive no salary or fees from the Trust. Each Trustee who is not an “interested person” of the Trust or the Advisor within the meaning of the Investment Company Act of 1940, as amended (the “Independent Trustee”) receives $2,000 per series per year, $200 per meeting attended, and $500 per series per special meeting related to contract renewal issues. The Trust reimburses each Trustee and officer of the Trust for his or her travel and other expenses related to attendance of Board meetings. Additional fees were incurred during the year as special meetings were necessary in addition to the regularly scheduled meetings of the Board of Trustees. The Trustees earned aggregate compensation of $6,605 during the fiscal period ended February 28, 2023.
Certain officers of the Trust may also be officers of the Administrator.
5. Purchases and Sales of Investment Securities
For the fiscal period ended February 28, 2023, the aggregate cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were as follows:
Purchases of Securities | Proceeds from Sales of Securities |
$31,795,357 | $30,761,729 |
For the fiscal period ended February 28, 2023, there were no long-term purchases or sales of U.S. government securities.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
The following table shows the realized gains and losses that resulted from sales of securities during the fiscal period ended February 28, 2023:
Description | Cost ($) | Sales Proceeds ($) | Realized Gain (Loss) (% of Cost) | Realized Gain (Loss)($) | |||
Algoma Steel Group, Inc. | $ 1,546,750 | $ 2,014,396 | (23.22)% | $ (467,646) | |||
Barnes & Noble Education, Inc. | 2,112,014 | 2,230,854 | 5.63% | 118,840 | |||
Cavco Industries, Inc. | 1,100,425 | 1,439,229 | 30.79% | 338,804 | |||
CollPlant Biotechnologies, Inc. | 378,196 | 334,736 | (11.49)% | (43,460) | |||
Comtech Telecommunications, Inc. | 2,409,692 | 1,186,031 | (50.78)% | (1,223,661) | |||
Dundee Precious Metals, Inc. | 3,484,807 | 3,413,332 | (2.05)% | (71,475) | |||
Enzo Biochem, Inc. | 1,363,650 | 889,747 | (34.75)% | (473,903) | |||
ErosSTX Global Corp. | 39,693 | 42,665 | 7.24% | 2,872 | |||
Eton Pharmaceuticals, Inc. | 2,148,535 | 1,610,629 | (25.04)% | (537,906) | |||
GSI Technology, Inc. | 1,532,384 | 472,509 | (69.17)% | (1,059,875) | |||
iMedia Brands, Inc. | 930,606 | 389,821 | (58.11)% | (540,785) | |||
Magnite, Inc. | 10,463,589 | 7,805,259 | (25.41)% | (2,658,330) | |||
NI Holdings, Inc. | 1,397,465 | 1,119,887 | (19.86)% | (277,578) | |||
Opera Ltd. | 2,233,624 | 1,729,606 | (22.57)% | (504,018) | |||
Quantum Corp. | 708,461 | 154,075 | (78.25)% | (554,386) | |||
Qumu Corp. | 2,938,749 | 999,955 | (65.97)% | (1,938,794) | |||
Tetra Technologies Ltd. | 1,248,070 | 1,439,308 | 15.32% | 191,238 | |||
Net Realized Loss (a) | $ | (9,700,063) |
(a) Net realized gain differs from total realized gains on the Statement of Operations due to realized
loss on foreign currency totaling $(49,737).
6. Federal Income Tax
Distributions are determined in accordance with Federal income tax regulations, which differ from GAAP, and, therefore, may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences.
Management has reviewed the Fund’s tax positions taken or to be taken on the federal income tax returns during the years ended August 31, 2019 through August 31, 2022 and through the fiscal period ended February 28, 2023, and determined that the Fund does not have a liability for uncertain tax positions. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the fiscal year, the Fund did not incur any interest or penalties.
ROUMELL OPPORTUNISTIC VALUE FUND |
Notes to Financial Statements (Unaudited) |
As of February 28, 2023 |
Distributions during the fiscal year or period ended indicated below were characterized for tax purposes as follows:
Fiscal Year/Period Ended | Distributions from Ordinary Income | Distributions from Long-Term Capital Gains |
February 28, 2023 | $ - | $ - |
August 31, 2022 | 46,921,000 | 689,000 |
At February 28, 2023, the tax-basis cost of investments and components of distributable earnings were as follows:
Cost of Investments | $ 116,275,422 | |
Gross Unrealized Appreciation | 1,095,023 | |
Gross Unrealized Depreciation | (35,835,652) | |
Net Unrealized Depreciation | $ (34,740,629) | |
7. Beneficial Ownership
The beneficial ownership, either directly or indirectly, of 25% or more of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of February 28, 2023, Charles Schwab held 39.84% of the Fund. The Fund has no knowledge as to whether all or any portion of the shares owned of record by Charles Schwab are also owned beneficially.
8. Commitments and Contingencies
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Trust entered into contracts with its service providers, on behalf of the Fund, and others that provide for general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. The Fund expects risk of loss to be remote.
9. Subsequent Events
In accordance with GAAP, management has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date of issuance of these financial statements. Management has concluded there are no additional matters, other than those noted above, requiring recognition or disclosure.
ROUMELL OPPORTUNISTIC VALUE FUND |
Additional Information (Unaudited) |
As of February 28, 2023 |
(b) Not applicable.
Item 2. | CODE OF ETHICS. |
Not applicable.
Item 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable.
Item 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable.
Item 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
Item 6. | SCHEDULE OF INVESTMENTS. |
A copy of the schedule of investments of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
Item 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
Item 11. | CONTROLS AND PROCEDURES. |
(a) | The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Investment Company Act of 1940, as amended, is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. |
Within 90 days prior to the filing date of the Shareholder Report on Form N-CSRs, Management carried out an evaluation of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on such evaluation, the Principal Executive Officer and Principal Financial Officer and Treasurer concluded that the Registrant’s disclosure controls and procedures were not effective due to a material weakness in the Registrant’s internal control over financial reporting as described below.
The Registrant's independent registered public accounting firm (the “Accounting Firm”) identified a “material weakness” (as defined below) in the Registrant’s internal control over financial reporting and its operation as of August 31, 2022. Specifically, the Roumell Opportunistic Value Fund did not have appropriate procedures in place to determine the fair value of investments in private securities and as a result there was a material adjustment to the Fund’s financial statements.
A material weakness (as defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2)) is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Registrant's annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness described above did not result in a material misstatement to the Registrant's financial statements or disclosures.
Management has implemented enhancements to the Registrant’s controls to remediate the weakness described above, including, among other things: requiring that the fair valuation designee update the fair valuation of private investments quarterly and arrange for an independent third party pricing firm to provide an independent valuation of the securities at least semi-annually in connection with the Fund’s financial statements.
(b) | Other than the steps taken to enhance the controls noted above, there were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 13. | EXHIBITS. |
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 are filed herewith. |
(a)(3) | Not applicable. |
(a)(4) | Change in Registrant’s independent registered public accountant is filed herewith. |
(b) | Certifications pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Starboard Investment Trust | ||
By: | /s/ Katherine M. Honey | |
Katherine M. Honey President and Principal Executive Officer | ||
Date: | May 11, 2023 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Katherine M. Honey | |
Katherine M. Honey President and Principal Executive Officer | ||
Date: | May 11, 2023 | |
By: | /s/ Ashley H. Lanham | |
Ashley H. Lanham Treasurer, Principal Accounting Officer, and Principal Financial Officer | ||
Date: | May 11, 2023 |