Janney Montgomery Scott Initiates Coverage on Gladstone Investment Corp (GAIN) June 17, 2009 9:39 AM EDT
Janney Montgomery Scott initiates coverage on Gladstone Investment Corp (Nasdaq: GAIN) with a Buy. Fair value estimate $5.
Janney analyst says, "This is a high risk, potentially high reward investment. GAIN is a regulated investment company/business development company (RIC/BDC). GAIN has emerged from a difficult FY09 with a sustainable dividend and low leverage. It is now positioned to rebuild its portfolio if it is able to obtain additional debt capital. In FY09, failure to receive renewal of its previous line of credit forced the sale of substantially all of the company s syndicated loan portfolio at a 33.5% discount to cost. GAIN's current facility is smaller and carries a higher interest rate. This will limit new investments and reduce margins, driving net investment income (NII) and the C."
Gladstone Investment Corporation was primarily established for the purpose of investing in subordinated loans, mezzanine debt, preferred stock and warrants to purchase common stock of small and medium-sized companies in connection with buyouts and other recapitalizations.