CIRI finances impacted by market volatility
By CIRI Chief Financial Officer Daniel Mitchell
2022 will be defined by challenges stemming from geopolitical uncertainty, rising inflation and Federal Reserve interest-rate hikes. The cost of capital for U.S. firms are at the highest level in a decade, negatively impacting the value of CIRI’s investments in marketable securities. Ultimately, the challenges experienced by CIRI’s marketable securities portfolio will negatively impact the Company’s 2022 net income, Shareholders’ equity and distributions to Shareholders.
Coming off strong market performance over the last three years, with record returns in 2021, CIRI’s portfolio is well positioned to withstand the challenges brought about by this year’s market volatility.
The Company delivered healthy financial performance over the last three years despite significant headwinds from the COVID-19 pandemic, a contentious presidential election and the subsequent change in administration. Between 2019 and 2021, CIRI’s marketable securities portfolio brought in operating income of over $62 million. With 2022’s unfortunate market performance, this specific portfolio is forecasted to see losses that will claw back much of the marketable security gains reflected in the previous three years. Some of this year’s portfolio losses have the potential for recovery in the future, highlighting the importance of CIRI’s long-term investment strategy.
Excluding marketable securities, the Company’s projected net income is in line with expectations, helping to mitigate losses from this business segment.
CIRI and our auditors will be compiling the Company’s financial results in the first quarter of 2023 and will report our final 2022 financial performance in the upcoming Annual Report.