Patria Investments Ltd (PAX) Cash Flow Statement

The OCF/NI ratio has been above 1 in most quarters, with 2025Q1 at 6.39, suggesting that non-cash items like unrealized carry and stock-based compensation are inflating net income relative to cash. This implies that the firm is retaining sufficient cash to fund organic growth initiatives and potential acquisitions without relying on external financing. However, the 2026Q2 OCF of $0 is a notable anomaly, possibly due to timing of fee collections, which warrants monitoring.

The small scale of investment activity suggests that Patria is not actively managing a large securities book, consistent with its asset management model where client funds are held off-balance sheet. The occasional sales (e.g., $3.2M in 2025Q4) may represent rebalancing or liquidity management. This low activity implies that the cash flow statement's investing section is not a significant driver of value, and the focus remains on fee generation.

Dividends have been stable around $23-24M per quarter, representing a payout ratio of roughly 100% of net income in some quarters, which may limit retained capital for growth. The buyback in 2026Q1 was the first in recent quarters, suggesting management sees value in repurchasing shares. However, the sustainability of these returns depends on the stability of management fees, which are more predictable than performance fees. Investors should monitor whether capital returns are funded by operating cash flow or by drawing down cash reserves.

The absence of deposit data is consistent with the company's business model, which does not involve taking deposits. Instead, the firm's cash flow is influenced by the timing of management fee receipts and performance fee realizations. The variability in OCF, from $9.7M in 2024Q2 to $100.1M in 2025Q1, reflects the lumpy nature of performance fees, which are recognized upon exits. This highlights the importance of analyzing distributable earnings rather than GAAP net income for assessing cash generation.

The negative provision in 2026Q2 suggests that Patria is releasing reserves previously set aside for credit losses, which may indicate improving credit quality in its investment portfolio. However, this reversal also inflates net income and cash flow, masking underlying operational performance. The prior income statement analysis noted a provision reversal of -$11.6M, which contributed to net income of $10.5M. This warrants caution, as such reversals are not recurring and may not reflect the true credit risk of the portfolio.