MAIN Updated Projections: Larger Supplemental Coming
MAIN Quick Update:
Yesterday, MAIN provided preliminary Q3 results for earnings, NAV, and portfolio details that have been taken into account with the updated projections.
Clearly, MAIN had an excellent quarter likely driving additional dividend increases and a larger supplemental dividend of around $0.15 to $0.20 per share announced in two weeks, as discussed below.
NAV per share increased by 2.2% to 2.4% partially due to the previous equity offering also taken into account with the updated projections.
Also discussed are its investment grade bonds/notes for lower-risk investors.
Stock market volatility is likely to remain high, and MAIN's 2026 note allows investors to lock in 7.6% annualized returns (same as MAIN's regular stock dividend yield).
MAIN Preliminary Estimates of Q3 2022 Results
On October 18, 2022, MAIN provided the following preliminary operating results for Q3 2022, which has been taken into account with the updated projections:
Main Street's preliminary estimate of third quarter 2022 net investment income ("NII") is $0.82 to $0.84 per share. Main Street's preliminary estimate of third quarter 2022 distributable net investment income ("DNII"), which is NII before non-cash compensation expense, is $0.87 to $0.89 per share.1
Main Street's preliminary estimate of net asset value ("NAV") per share as of September 30, 2022 is $25.92 to $25.97, representing an increase of approximately $0.55 to $0.60 per share, or 2.2% to 2.4%, from the NAV per share of $25.37 as of June 30, 2022, with this increase after the impact of the supplemental dividend paid in September 2022 of $0.10 per share. The estimated increase in NAV per share is primarily due to the record estimated NII described above in excess of the regular monthly dividends of $0.645 per share and supplemental dividend of $0.10 per share paid in the third quarter, the accretive impact from equity issuances during the quarter and net realized gains from our investment portfolio, partially offset by the impact of net unrealized depreciation from our investment portfolio.
“We are very pleased with our third quarter results which include new quarterly records for net investment income per share and distributable net investment income per share. These results include positive contributions from each of our core strategies, demonstrating the continued strength of our overall platform, the benefits of our differentiated and diversified investment strategies and the quality of our portfolio companies. We also continue to maintain an attractive pipeline of investment opportunities across both our lower middle market and private loan investment strategies. As a result of our strong performance, distributable net investment income for the third quarter exceeded our regularly monthly dividends paid by over 25%.”
Investment Portfolio Activity
$111.5 million in total LMM portfolio investments, which after aggregate repayments of debt principal and return of invested equity capital from several LMM portfolio investments, resulted in a net increase of $84.5 million in the cost basis of our LMM investment portfolio;
Net increase of $174.3 million in the cost basis of our private loan investment portfolio
Net decrease of $1.1 million in the cost basis of our middle market investment portfolio.
MAIN Suggested Limit Orders
The primary goal of this service is to provide timely updates on mostly higher quality BDCs with realistic target prices, as well as identifying which companies to buy and when to buy. We provide notices each time the BDC sector starts to pull back, including most recently on June 16, 2022, and over the last few weeks, which were/are excellent buying opportunities. As shown below, MAIN recently traded near its suggested ‘Low’ limit order price. This is an excellent example of how to use the suggested limit orders ranging between the “Low” and the “High” especially as the stock is now rebounding: