XAI Madison Equity Premium Income Fund ($MCN)

Thank you so much for joining us today for the MCN quarterly webinar. My name is Kimberly Flynn. I'm the President of XAI Investments. And we're so glad to be with you today. We're going to discuss Q1 performance. A lot of volatility in the equity market in Q1. So we have our experts here with us. We have Ray and Drew from Madison Investments, and you will hear from them momentarily. And so why don't we get right into the program, and I'll start with some of the housekeeping matters, including some of the disclosures. We will be discussing forward-looking matters. And as you know, actual results can differ materially from anything that's forward-looking. And these types of statements are speculative in nature and will likely vary significantly from actual results. So -- and with that, we're going to talk about performance for Q1 and past performance does not guarantee future results. So just bear that in mind as we go through the presentation today. [Operator Instructions] So this webinar will be available on our website in the Knowledge Bank, so xainvestments.com. We also have prior quarterly webinars with the Madison Investments team. So take a look if you'd like to review those. I am joined by Ray Di Bernardo and Drew Justman. They serve as portfolio managers for MCN. Ray has served since inception on the portfolio management team and carries that history with him in managing MCN today. And so we're really pleased to have both of them join us and provide color on the equity market. And then with respect to the option writing program, they can tell you, frankly, we've had yet another strong quarter. The team had a terrific 2025, delivering on the fund's investment objective and that outperformance relative to the market and relative to their benchmark continues in Q1. So why don't we get right into it? And this is a little bit -- if you turn to Slide 5, this is just a little bit more about the team at Madison. And Ray and Drew are supported by more than 15 research analysts in the equity department, and they draw upon that expertise in terms of informing their equity investment decision-making, but also in terms of the option writing program. So it's terrific that they have that team behind them. We've been working together now with Madison for some time. XAI took over MCN in December of 2024 as investment adviser. And Madison continued on as the portfolio manager of MCN and served in that capacity since the fund was founded. And we celebrated the 20th anniversary of MCN last year. So continuing to focus on putting a spotlight in the secondary market on MCN. The fund does trade in a category in the listed closed-end fund market alongside a number of other equity income covered call type strategies. MCN is the oldest. It's the original covered call strategy, and it's one of the remaining focused covered call strategies. Many of the competitor funds in the marketplace have very limited overrights and limited option income production. So we're -- we want to highlight that as we talk about how Madison is different from its peers in the secondary market. The performance on Slide 7 speaks to the quarterly track record that I mentioned in terms of the return on NAV and price superior to the benchmark, which is the CBOE buy right index. And Ray and Drew will speak to why that relative outperformance was earned in the quarter. We also saw strong relative performance for the fund on NAV. If you look at the 1-year return, which was 14.36% relative to the benchmark, which benchmark had a good year last year, but the 1-year figure is $11.35. So this is what we like to see in terms of strong absolute and relative performance for MCN. Let's talk a little bit now, Ray, I'm going to turn to you. And could you speak to some of the drivers of performance in Q1? And if you want to harken back to what differentiated the fund in 2025, feel free to do so.

Yes, sure. Kim. Appreciate that. Yes, I think clearly, there were a lot of moving parts in the first quarter of this year, some expected, some not expected. But I think looking back on how we started the current year, -- the market closed out 2025 very, very close to its all-time high, I think within 1.5% or so. I think the all-time high happened on Christmas Eve, and it's just sold off a touch before year-end. But very, very strong performance in the overall market last year. But the market was also very expensive, trading over 22x earnings. It doesn't get there very often or stay there for very long. So as a hedged equity strategy, we're always looking for to protect on the downside, and we felt there was more downside risk coming into the new year than upside potential. So we came into the year very defensively postured. We had a lot of option coverage, just shy of 87% of the equity exposure was covered by individual equity options. And -- and we came in positioned with more of a leaning toward defensive parts of the market, overweights in consumer staples, overweights in health care. We had a meaningful overweight in the energy sector, which is not typically a defensive sector, but we've had a long-term very positive view, and we have a very positive thesis going forward. And this was before the Iran conflict. Our view coming into the year was energy might have a bumpy start, but the market will start looking towards the back half of the year and the supply-demand balance looks very favorable for a long time. So we had an overweight in energy coming in. Now what happened I think if we break down the quarter into two pieces, the first 2/3 of the quarter, January, February, was pre-Iran conflict and then, of course, in March would be post Iran conflict. So before the bomb started dropping on Iran at the end of February, the market had already started to turn in terms of its leadership. Of course, last year and the previous year before that, the market really has been driven by mega cap growth stocks that had some sort of relationship with artificial intelligence. So it was the hyperscalers, the data center, the cloud companies, Microsoft, Amazon, Meta, of course, NVIDIA being the chip supplier to this massive infrastructure building in the AI field. So the focus was on building the infrastructure for AI. That got very expensive. And we were very concerned about that coming into the new year. And hence, we were underweight in the technology sector and underweight those areas and more defensive. What the market actually did was the leadership change, a couple of things happened. First of all, rather than focusing on the growth of the AI infrastructure, investors started to worry about the next step in the AI evolution, which is who could this possibly hurt? And areas like the software industry really took it on the chin early in the year as investors started to think there may not be as much need or demand for certain types of software if people can go out there and utilize AI on their own. Other areas that could be disrupted such as the insurance brokerage industry where people could use AI to help them get quotes and manage their way through the insurance process rather than having to go to a broker. Certain parts of the financial services industry could be disrupted because of higher use of AI and fee revenue could drop in certain areas. So it became -- AI became more of a worrisome trend about which areas of the economy, which areas of the market could be disrupted. And so we saw that early on. If we look back at the performance of various sectors prior to the Iran conflict beginning, the worst performers were the financial sector, the technology sector and the consumer discretionary sector. Tech and discretionary, both areas where we have a lot of those mega cap growth stocks residing. Communication services is another big area was only slightly positive. So they were the laggards in that first couple of months of the quarter. The leaders were areas where investors perceived very little negative impact, in fact, to be positive impact from AI and/or more of a defensive posturing, so we had energy outperforming. Even though crude prices weren't really moving much higher until we got later into February and the risk premium started to go up, people were looking beyond the current situation into the -- as we were into the later part of this year and expecting the energy sector to be positive. The materials sector, copper mining, aluminum mining, et cetera, uranium, consumer staples was also a top performer. These were all sectors that were up, energy up 25%, materials 17%, consumer staples up 16%. In a market that was not even up 1%. It was up 2/3 of 1% up until the end of February. So you had big leadership in these hard asset areas, energy and materials and some defensive areas like utilities and consumer staples and the laggards were the previous darlings. So that was before. Then we had the major disruption of the conflict in Iran. And from that point on, the market declined about 5%. The only sector that was positive in March was the energy sector. It continued to move higher. and every other sector was negative and in some cases, significantly so. So for the full quarter, energy was clearly the leader. It was up over 38% for the full quarter, but the laggards were the previous last year's big winners, consumer discretionary technology, et cetera. So we were positioned extremely well because of that. So the major drivers that we saw in terms of our ability to outperform not only the S&P 500 significantly, but the ByRight Index was our sector positioning where, again, overweight energy, overweight consumer staples and underweight technology. was the primary driver of our ability to outperform. Secondarily, our stock selection within the portfolio. Again, we're a relatively concentrated fund. We have anywhere at any given time between 30 and 50 individual stocks. So we don't look like the index. The stock selection was very positive, particularly in the energy sector, even though energy was up 38%, all of our holdings were up more than that. We also had the benefit of a number of other companies that did well that were not in the energy sector. So stock selection was also a very positive contributor to the success of the fund during the first quarter.

Ray, I think you stole Drew's questions, but that's okay. I appreciate it. So one of the things to bring Drew into the conversation, anything else that you might say? Obviously, energy was the top performer in terms of sectors this quarter. But anything -- maybe you could speak to the consistent underweight in technology and why that is and how this has helped the fund. Anything else, Drew, that you would add to what Ray has already said about your industry allocation?

Sure. I guess I'll just follow up on Ray's energy comments with a few comments on my own. I think our view is that we're in the early stages of an energy bull market. There is a brutal bear market in energy from roughly 2014 through the pandemic, and that caused significant underinvestment in finding sufficient energy sources. And so this translated into industry-wide discipline where they moved away from overspending on capital expenditures to discipline in growing their production volumes and focus on cash generation, which we really like. Importantly, the energy sector balance sheets have been cleaned up. They're much stronger than they were in prior cycles. And what we really like is that the companies are returning lots of cash to shareholders through regular dividends, special dividends and stock buybacks. All of this is happening at a time when energy sector valuations are attractive. Many companies have free cash flow yields near 10%. Ray mentioned that our bullishness on energy predated the Iran war -- and we think the Iran conflict provides some opportunity, but also maybe some risks. In terms of opportunities, we think many countries are now going to want to be self-sufficient in terms of energy production, and this will drive reinvestment across the sector. One risk is that oil prices get too high, and that can lead to demand destruction. So that's something we're monitoring. But big picture, energy historically has been between 8% and 15% of the S&P 500. It's only around 3.5% today. And so we think there's room for that percentage to go closer to its historical average. So we're bullish on energy here. Conversely, in terms of technology, we've been underweight recently, and that helped to fund in the first quarter. Ray mentioned technology stocks were leaders last year. They've been market darlings for much of the past decade. And we think valuations are now elevated at a time when competition is increasing and the businesses are changing from asset-light models to asset-intensive models by spending hundreds of billions of dollars on capital expenditures. Briefly, in terms of the competitive landscape, you have large customers that have been buying semiconductor chips from the likes of NVIDIA are now making their own chips to reduce cost and overreliance on NVIDIA and other manufacturers. This includes like Amazon and Google are making their own in-house chips. So we think that the overall environment is getting more competitive. And then perhaps more importantly, these companies were really asset-light models where they generated a lot of free cash flow with strong returns on invested capital. But now they're spending so much money investing in data centers that the business models are changing to asset-intensive. And normally, when you move to an asset-intensive model, that can pressure forward-looking return on invested capital. And so we think the combination of more competitive environment, asset-heavy models and falling return on invested capital are not a good recipe for the technology sector. And so we're underweight there.

That makes sense. Well, it's good news for our friends in Oklahoma and Texas. I'm originally from Oklahoma. It sounds like the energy space is going to be attracting capital if your thesis is correct. So Ray, let's go back to you. I think this is one of our -- I love hearing the story of Las Vegas Sands. And I think it was a top holding up until the fourth quarter, but I think you said it might have been called away. But I noticed that Las Vegas Sands is back in the top 5. You've got it at about a 3.5% holding. So maybe speak to that, Ray.

Yes. The Las Vegas Sands has been one of our favorite holdings for quite some time. And what had happened in the -- during the fourth quarter of last year was they announced quarterly earnings and which were very, very positive and the stock really surged for it. It went from, I think, a low of something like $47 and for a short period of time was very close to $70. So it had a very, very sharp move higher. We had some options written against the position. And in November, we allowed the position to get called away. So essentially, taking advantage of the short-term spike in price. And this is part of what we're doing generally with our equity exposures here. We're taking a long-term strategic view of a company with the idea of potentially holding it for a very long period of time because we like the fundamentals of the business and the way the company is managed. But we're also utilizing the call writing to essentially have shorter-term tactical decisions where in this particular case, it made sense for us to let the stock get called away, book our profits in the stock and then look for another opportunity to reenter. Now since kind of late November, early December, some additional fears came across from China in terms of growth and the growth of wealth generation in China. So the stock off of its short-term highs started to sell off a little bit as we went through December and through January as well. So we took that as an opportunity to buy back or start buying back the position on some weakness. So we benefited from the quick upturn, and we were starting to rebuild. I think we've done it in three tranches late in December of last year, late January and again, in the latter parts of March, adding back slowly. So we've kind of tiptoe back into the position. It's not as large as it was before, but we certainly feel very strongly about the future potential for the company. It's just a couple of interesting points about what's been going on over there. As I noted, the biggest macro risk is a slowdown in China. And that's certainly a bit of an overhang right now in the market, especially with the fact that China is being negatively impacted by the closure of the Strait of Hormuz and their demand for crude oil. So that's really keeping any China-related company kind of in moderate performance right now. So short term, there's likely going to be volatility. Long term, we continue to like the positioning of the company. Of course, it's split between Macau and Singapore. Those are the two largest gaming markets in Asia. It has a number of different hotel brands in Macau, the most recent of which I think I've talked about in the past, the Londoner, which is a complex of really five other brands within the Londoner complex. There's five different towers, different brands like the Conrad, the St. Regis, the Londoner Court. They've got a smaller area, which is a bespoke group of suites called Suites by David Beckham and they're kind of invitation-only suites. So very, very high-end accommodations. And then they have their other properties in Macau, the Venetian, the Parisian, the Plaza, the Four Seasons and the old Sands as well. So they've got a leading market share in Macau. And they've gone through some renovations with their properties. That's an ongoing thing with hotel and gaming companies always trying to keep their hotels fresh. So they finished the Londoner renovations. They're probably going to start the Venetian this year, but the Londoner is the key. That's the key growth property for them in Macau. And that's looking very, very positive. The crown jewel right now is Singapore, the Marina Bay Sands complex has just been lights out in terms of performance and the free cash flow that's generated from that property has now exceeded all of the Macau properties. So it's really operating and hitting on both cylinders. Right now, Singapore is leading the way. Macau is coming out of kind of a restructuring refurbishment phase, and we still like the company long term, and that's why we started to rebuild the position.

I think, Ray, every time you talk about Las Vegas Sands, I want to go on vacation, but I'm not going to hold out hope that I'll get that special invite to the David Beckham suites. But why don't we pivot and talk a little bit about distributions. So Drew, how has MCN's history of consistent distributions supported the fund's objective?

Yes. Kim, consistent distributions are an important part of the MCN strategy and objective, and we do monthly distributions. And we think this benefits investors as they provide regular cash flow, which can provide income if you want to earn some income or you can reinvest on a predictable schedule. So investors generally, I mentioned the steady income, they get extra yield as we collect option premiums from selling options. And so in addition to the dividend yield on the portfolio, we get extra yield from those written option premiums. And getting consistent distributions also can reduce volatility and help partially cushion lower price swings. And then there's also a convenience aspect where we manage the strategy inside the fund and investors outside it can get income without writing options themselves. So we view consistent distributions as a core and critical part of the MCN strategy and objective.

Yes, we agree. I mean I think it's fundamental for the health of any listed closed-end fund to have that regular consistent cash flow stream to shareholders. And the steady distributions have supported in the secondary. Ray, let's talk a little bit about how MCN has performed in periods of market volatility, even when you talked about Q1 being volatile due to the conflict in Iran. So how does changing market volatility impact underlying holdings and then how you think about option writing in a more volatile period?

Well, clearly, a covered writing strategy is a defensive equity strategy. Many people call that hedged equity strategy. So in periods of volatility, higher volatility, which is typically synonymous with a market that is going -- that is choppy or going down, this type of strategy is built for that type of environment where you do have a hedge to the downside and the hedge comes from the option writing part of the strategy. We also focus a lot on the stock side because the risk in any equity product is the quality of the underlying holdings. The options don't provide any additional risk. They provide more downside protection. But it really is the quality of the underlying holdings that matter. So we've always focused on high-quality companies, strong balance sheets, free cash flow generators, the companies that should hold out well in choppy or down markets anyway. And then when we add the option writing on top of that, we get additional downside protection as well. So typically, in higher volatile markets, as we've seen in the first quarter, option pricing becomes more favorable. We are sellers of call options. So the better the pricing, the more premium we receive and the more downside protection we can add to the portfolio. So it really is kind of an environment that is suited for the strategy. We expect to outperform in a down market. That doesn't necessarily mean the fund will always be positive in a strong down market, but we would be performing much more defensively than if you were just long only in the market. And as we saw in the first quarter, we had a market that was down and the fund was actually higher on an NAV basis and a price basis as well. So that's what we expect in the strategy. And I think it's important for us to understand the lane that we're in -- we are a defensive strategy. We don't want to increase the risk on the underlying holdings to stretch for higher option premiums as typically the more volatile the underlying stock, the higher the option premiums you could receive, but that just adds additional risk with the underlying position. So we don't want to do that. You'll always see our portfolio full of market leadership companies with strong balance sheets and free cash flow generators because that's our first line of defense when it comes to the kind of market that we saw in the first quarter. So volatility is great for this strategy. We perform well in this strategy, but we definitely want to maintain the discipline of being defensive and high quality through all market conditions because you just never know when this kind of volatility is going to pop up. It's too late to hedge 3 months after an event has occurred. It's important to be protected ahead of time. And if we have that discipline to maintain -- stay in our lane, maintain our defensive posturing, we'll be prepared for these events as they occur, even if that means underperforming when we have markets like we've had in the last couple of years, which have been straight up driven by a relatively narrow group of bank and cap growth companies. We're prepared to do that in order to protect on the downside.

Yes. I think that protection is important. And maybe, Drew, you could just speak to like if you're -- if someone is new to cover call investing, what are the reasons that they consider this? And I think Ray did a nice job speaking to the defensive nature of a cover call strategy. But what do you find when you're talking with investors?

Yes. We've alluded to some of these benefits. But when I think of the benefits of MCN and its covered call strategy, at the top of the list is income generation. We collect option premiums and then that gets distributed as income, which goes to the investor, and that helps them, they can put that money to work however they see fit. Ray also mentioned the benefits of downside protection. We collect option premiums and that can offset part of a decline in the underlying share price when that happens. A third benefit is in terms of you have potentially better exit planning, where if you're comfortable selling the stock at a certain level, you can write an option at that strike price and it can act like a planned sale target. And then in terms of the fourth benefit, and this has happened this year, covered call strategies and MCN work very well in sideways or choppy markets. We saw that the overall market was down in the first quarter, MCN was up. And then we're off to, I think, a pretty good start in the second quarter while the overall market is up. And so cover call situations tend to work very well in sideways markets. So I think those are the top four benefits as I see them.

Yes. I agree, and I think that's what we hear from MCN investors. Ray, let's talk a little bit about managing a covered call and how you manage MCN and how that differs from other approaches because there really has been a proliferation, especially on the ETF side. But I know the way you approach it is distinct. So I wanted to point out that those differences.

Yes. I think the way we've been managing the strategy right from inception has been fairly consistent in terms of not only what we've done with the fund, but what we here at Madison have done since our firm's inception back in the 1970s. It's really -- we have been known on the Street as a stock selection firm, a bottom-up research firm. And we maintained that philosophy when we launched MCN in 2004 rather than take an indexing approach to the underlying securities. We thought we have the capabilities. We have a strong experience in stock selection and bottom-up research. And that really, as I said earlier, provides the foundation for a high-quality portfolio. And as I noted, that's the risk in the portfolio is choosing what underlying stocks you have. So we choose not to index. And as I noted, we're a relatively concentrated firm in terms of the number of holdings. We have a high level of conviction with the number of -- with the holdings that we do have. And we're not going to look like the S&P 500 or by extension, the buy rate index, which is simply the S&P 500 with an option written against it. So there will be periods where we are not going to, from a performance perspective, be in sync with what's happening in the market. But it's important for us to maintain that discipline and maintain the quality. And I think that's the first thing that differentiates us is that we are an active stock selection underlying portfolio before we even get to the option overlay. The second differentiator to a large extent, is that we are active on the option side as well. And rather than providing umbrella coverage with an S&P 500 index option, which covers all of our equity exposure, we've chosen to utilize single stock options to cover each individual position. And the benefits of that are, first of all, typically, a single stock option will -- for a similar characteristic, will give you a higher premium than an S&P or an index option. And so that's an immediate benefit. We get more bang for the buck in terms of our downside protection by -- even if you're transacting in very large companies such as a Microsoft or Amazon, the volatility of a single stock is typically higher than a combination of 500 stocks in an index. So you get the benefit of higher option prices. Secondarily, and I think more importantly is we can take the characteristic of each option that is how long we want to write it out into the future, what strike price we want to utilize. We can tailor that to our view of each individual position. We're doing all of this work on the underlying position to begin with, and we may not have the same general view of stock A versus stock B. So it wouldn't be appropriate from our perspective to just utilize one option to cover both. We should be using a more specialized approach and covering each option or each position with options with characteristics that meet our view of the underlying stock. And that, I think, is really critical. So as Drew alluded to, we could have a stock where it's getting relatively expensive. We're looking to possibly trim a position or maybe exit the position at some point. We can write options that are closer to the money that give us bigger option premiums, bigger downside protection because we're expecting we would like to sell the stock. Anyway, we will allow it to get called away if the price goes through the strike price. In other situations, we may want to grow with the position longer and write options that are further out of the money, accept a lower premium, but participate more in the short-term upside in those companies. We're able to do that by utilizing equity options rather than index options. It's a very active approach. It's quite labor-intensive, but we think it makes most sense given the way that we've evolved as a firm managing covered writing strategies.

Great. We'll talk about now specifically the portfolio and which stocks are covered. And if you could speak to the sectors that are most covered by call options, that would be terrific. And I also just want to remind the audience to the extent you do have any questions for Ray or Drew, please use the Q&A bar at the bottom. We're approaching our last couple of planned questions, so I would love to have a couple of audience questions. So over to you, Ray, to talk about the state of MCN's option portfolio as of the end of March.

Yes. I noted earlier that we came into the year pretty defensively positioned even from an option writing perspective, almost 87% covered. We actually closed the year even higher than that at 92% covered. Again, we were pretty defensively postured. And the only areas that we had less than 100% coverage on our individual positions were in the energy sector, which benefited us because we were able to get a little bit more of the upside. We were still 65% or 66% covered in energy, but every other sector was essentially 100% covered. The only position that we didn't have covered aside from the energy holdings was one utility, AES, which was a transaction occurred during the quarter where the firm will be bought out and the option premiums kind of dried up because the ceiling is essentially set. So there's not a lot of volatility to be had when the price can only go to that takeout price. So AES was not covered, and it was a relatively smaller position because we'd already began selling the position prior to the end of the quarter. So really just a little bit of the energy sector was uncovered in that one utility. But again, we think north of 90% coverage is very defensive. Now in an interesting twist, typically, when a market goes down and you have a high level of option coverage, the option coverage is a positive contributor to performance. because you're getting that additional hedge when the market is going down. Even though the market went down in the first quarter, options actually held back performance a little bit because we had so many of our stocks actually going up that the options actually hedged some of that upside protection or upside performance. So in a kind of a weird way, the stock selection was so good during the quarter that the options actually hurt a little bit rather than helping because none of our -- not as many of our portfolio holdings actually declined with the market. So it's a good problem to have because we're typically going to be written significantly anyway, but it's not what most would expect when the market declines, you wouldn't expect an option coverage to go against you. It's just because the stock selection worked out so well. So that's how the coverage went in the first quarter. we're still remaining fairly defensively postured moving forward. Although as we've already seen in April and so far in May, the market has rebounded pretty strongly and being defensively positioned was hurting a little bit. But we're looking kind of -- we're looking beyond the short term here, and we think it still makes sense to be defensively positioned.

Great. We do have an audience question, and I want to run it by you to see if you or Drew follow some of these single stock ETFs. So the question is compare or contrast MCN to some of the new single stock ETFs that we see in the market. Some of those single stock ETFs says are yielding 15% to 30%. When I see this question, I'm wondering if these are some of the levered ETFs to get those kind of yields. But have you guys -- are you aware of those in the marketplace?

I'm wondering if the question is about the ETFs that are essentially -- you can get an ETF on NVIDIA performance on any single stock out there. They tend to be leveraged. They tend to be very, very volatile because it's just the whole fund is one stock. And I think because of that added significant volatility, you can generate a lot of option premium. And so it can technically look like the yield is very high. What people forget is when you're selling call options, and I'm assuming these ETFs are not selling call options. I think they're just levered -- the levered plays on an underlying position. But if you're selling call options, you're not guaranteed to make money on the option because the stock continues to go up, the option -- if you're short an option, you're going to lose money on the option. So you're capping your upside performance. I'm not sure that these single stock ETFs are really comparable to a covered writing strategy because I think they're just levered to the movement of an underlying stock.

Yes. But I think you bring up a good point, Ray, which is that they may be advertised as high yielding. But once again, you've got to pair the underlying equity position return gain/loss with what the option is doing and in combination, what that net return looks like. So I think that it is interesting. It's sort of an apples-to-oranges comparison, but a lot of investors are looking for yield so you can understand why that might catch the eyeballs. I think that was a helpful question, helpful explanation. If there's any other audience questions, we're happy to take them. I'm going to move to my final question. We'll go to Slide 20 and just look at the secondary market for MCN and its peer group, which is the cover call listed closed-end funds. These funds have all moved to a discount to NAV. MCN's current discount is negative 8.62%. That compares to going back to its inception in July of 2004. On average, the fund has traded at about a 5.8% discount. You see in the chart on the right-hand side, if you're tracking the orange line, MCN benefited from premium trading in the secondary market for most of the period between 2020 and 2024. So I think there's a real opportunity for improvement on price and potentially improvement on NAV. And the question is MCN has continued to perform very well on NAV. And Ray, what -- with that, I know this is not the best parlay, but in terms of just thinking out through the rest of the year, what are your thoughts? What is your outlook for MCN given your view on the equity market?

I think short term, obviously, it's a very murky environment. We're ultra, ultra short-term focused. I mean, tweet by tweet, essentially, we could have peace breaking out any second or war breaking out any second. We're not quite sure. So there's going to continue to be volatility, I think, for the short term. But it's important to note, the market has already gone way back up past previous all-time highs. We're trading about 7,200 on the S&P and closed out the year at $68.45. So we've had a huge rally so far this quarter that's discounting a lot of the best case scenario out there. So when we got into -- when we entered 2026, the expectation generally was we're going to have tame inflation, and we're going to have a trend to lower short-term interest rates. Right now, even under the best rosy scenario in our belief, inflation is going to be sticky. You're not going to restart oil flows immediately. Oil prices are going to remain higher than they were before for longer. Inflation is going to remain higher for longer than people expect. And as a result of that, the ability to drop short-term rates is going to be stickier than it was before. So the expectation for tame inflation and lower rates, I think, is pushed out into the future a lot. And the market, I think, is not discounting that at all. I think they're discounting the first part. The other thing is that we started the year, as I mentioned earlier, at historically high valuations. The market really didn't have a huge correction because of the Iran conflict. At very best within the first quarter, there was about a 9% decline from the high to low before the market rebounded a little bit. That's really not that significant. The market got down by the end of the quarter to 19x earnings. It's already back up to over 21x forward rolling 12-month earnings. Again, that 22 number is what we've always talked about. The market gets there, doesn't stay there for very long before rolling over. So investors are starting to discount the best case scenario, a quick resolution to the Iran conflict and getting back to normal a lot faster than we think is likely going to happen. So I think the market right now is discounting a lot of good things. And I don't think all of those good things are likely realistically going to happen. Some of them might, but not all of them. So I think we're in for continued volatility, and we're not just going to put Iran in the rearview mirror as quickly as investors think. So I think it makes sense that even though we've had this big rally so far this quarter, that it makes sense to keep some powder dry, remain defensive because I think the markets are going to get back to being choppy for much of the year. It's going to be all based on valuations and expectations. And I think right now, there's just too many positive things being discounted in the market and a lot of potential downside could come from that. So we run a hedged equity strategy here. Our job is to be cynical to a certain extent to always be more protective of the downside. And so that's kind of the lens that we view the world in. We think the market is a little bit too rosy right now, and I think a little cynicism is called for.

Well, I think your philosophy and approach is appropriate for defensive investors, and that's what they're looking for in a cover call strategy. So we aim to deliver that with MCN. We do not have any other audience questions. So what I'd like to just offer up is my e-mail or my phone, phone number, if people have questions want to follow up, Happy to address those offline. And thank you so much to Ray and Drew for bringing the equity option stories and real market color. It's always much appreciated. And we'll be back together again in August for the next quarterly update. So until then, please reach out. We're always happy to help, and we'll continue to support MCN in the secondary market. So thank you very much.