RENN Global Entrepreneurs Fund, Inc.
2009 Annual Report

Dear Fellow Shareholder,

 

Dear Shareholder,

The big questions facing investors today are:  (i) how do we achieve long-term success in a short-term world, and (ii) how do we take advantage of opportunities yet manage risks?  As portfolio managers, we are addressing these questions by implementing our strategy “The Entrepreneurial Difference.” 

The Fund has now completed six months as a registered non-diversified closed-end fund, having formerly operated as a Business Development Company.  Shareholders voted to change the name to RENN Global Entrepreneurs Fund, Inc.  If the past can tell us about the future, we know that superior returns come from investing in successful entrepreneurial companies and staying with them for a long period of time.  Today, a very large number of entrepreneurs reside in the United States and China.  Thus, we direct our attention primarily to those two countries. 

In the previous six-month report we detailed how we were adding US-traded Chinese companies to the portfolio.  There are now nine Chinese companies in our portfolio representing 38% of the total assets.  China remains the fastest growing country in the world, and this should continue for years to come.  As of December 31, 2009, your portfolio had unrealized gains in 7 of the 9 Chinese holdings.  The Fund only invests in Chinese companies that have met or are expected to meet US listing standards.   

Many of the US portfolio companies are showing good growth in earnings.  Among these are Access Plans, Inc. (OTC:ALHC), Global Axcess, Inc. (OTC:GAXC), and Bovie Medical (NYSE:BVX).  The extensive work continues on legacy issues seeking to realize value.  Integrated Security Systems, Inc. (OTC:ISSI) would be in this category.  Additionally, a merger partner for CaminoSoft Corp. (OTC:CMSF) is being sought to realize some benefits from this public company shell. 

A new US portfolio position has been added in PHC, Inc. (NYSE:PHC), a company which specializes in treating mental disorders.  Some of the other holdings, such as PetroHunter Energy Corp. (OTC:PHUN) and Points International, Ltd.  (OTC:PTSEF), are taking steps to change their business strategy which could add to their market value. 

At year-end, December 31, 2009, our net asset value was $4.07 per share with a market close of $2.60 on the NYSE-AMEX.  This is a discount of 36% to net asset value.  This discount is too high in our opinion, considering the past record and the future potential of the Fund.  As our new strategy becomes better known, perhaps this will change. 

Optimism continues about our strategy.  A brief history of the Fund:  RENN Global Entrepreneurs Fund, Inc. was incorporated in 1994 as a Business Development Company with an offering price of $10.00 per share and began publicly trading in 1996.  Beginning with $39 million in net capital, the Fund has distributed $83.4 million in cash and deemed dividends ($68.9 million after consideration of taxes and the amounts retained from the deemed dividends). 

The continued support from our shareholders is appreciated.

 

Sincerely,

 

Russell Cleveland  

President