SPMC

Sound Point Meridian Capital ($SPMC) CEO and Chairman Continue Buying Spree Amid 30% Drop from IPO

12/17/2025 00:45

Sound Point Meridian Capital ($SPMC) executives are making aggressive purchases as the stock has plummeted over 30% from its IPO price, drawing investor attention to this specialized investment company. Founded in 2022, SPMC is a closed-end management investment company that primarily invests in equity and mezzanine tranches of CLOs (Collateralized Loan Obligations) backed by below-investment grade U.S. senior secured loans. CEO Ujjaval Desai made three separate purchases totaling 3,162 shares between December 12-16, paying an average of $13.37-$13.84 per share for a total investment of $42,052. This represents his second wave of buying in two months, following October purchases of 20,000 shares worth $310,000 at prices between $15.36-$15.71. Chairman Stephen Ketchum has also been a consistent buyer throughout the company's brief public history. Starting with 7,326 shares in late August 2024, he purchased an additional 16,000 shares across five days in November at prices ranging from $19.85-$20.42, and added 6,000 more shares in April 2025. The timing of the CEO's recent purchases, coming after a significant decline from Ketchum's November buying levels, suggests management sees substantial value at current prices. The insider buying comes amid a sharp correction in SPMC's stock price. From its $20 IPO price in June 2024, shares have fallen to the mid-$13 range, representing a decline of over 30%. The stock has dropped 17.98% in the past month alone and is down 35.6% year-to-date. However, on a one-year basis, SPMC has still outperformed the S&P 500, suggesting the recent decline may be temporary. $SPMC's decline reflects broader challenges in the CLO market beyond company-specific issues. The below-investment grade loan market, where the company focuses its investments, faces pressure from rising interest rates and credit concerns. Recent bankruptcies in the auto sector have heightened Wall Street's credit risk concerns, with firms like Jefferies and UBS disclosing over $1 billion in exposure to First Brands, while CLO funds hold significant portions of such companies' first-lien term loans. Despite these headwinds, investors should note the structural opportunity in small-cap stocks. According to Morningstar analysis, U.S. small caps traded at a 15% discount to fair value as of late November, making them the most undervalued market segment. Expectations of Federal Reserve rate cuts and stable oil prices in 2026 create a favorable environment for small-cap performance. $SPMC's financial health remains solid despite market pressures. The company maintains a conservative 19.5% debt-to-equity ratio and holds $3.71 million in cash, providing adequate liquidity. Over the past twelve months, the company generated $96.19 million in revenue and $7.42 million in net income, achieving a 7.72% profit margin. This conservative capital structure should help mitigate downside risks during credit market stress. Analyst sentiment remains cautiously optimistic. The average price target of $17.50 implies upside potential of over 30% from current levels, with most analysts maintaining 'Buy' ratings. However, Clear Street recently lowered its price target from $20 to $18, reflecting tempered expectations amid market volatility. Key factors to monitor include the company's earnings announcement scheduled for February 12, 2026, which should provide detailed insights into how changing credit conditions have affected CLO portfolio performance. The pace of Federal Reserve rate cuts and stabilization in credit markets will also be crucial variables for stock recovery. The consistent insider buying, particularly the CEO's purchases at mid-$13 levels, sends a strong confidence signal about the company's intrinsic value. However, investors must carefully monitor structural changes in the CLO market and the potential spread of credit risks that could impact the company's specialized investment focus.