Main Street Capital Holdings (NYSE:MAIN)

CAPS Rating: 5 out of 5

Recs

4
Player Avatar JMRiv1986 (< 20) Submitted: 5/2/2011 1:48:14 PM : Outperform Start Price: $14.73 MAIN Score: +77.60

Main Street Capital should outperform the market at least until 2014 barring any major collapse of the economy again. MAIN is a business development company that invests in smaller, generally private companies. As of December 31 2010 MAIN had debt and equity investments in 44 companies with an average effective yield of the debt investments of 14.5%. Approximately 77% of their investments are debt investments, 91% of those debt investments were secured by first priority liens. The 33% remaining of their investments in companies are equity, warrants, etc. Currently the majority of their debt investments mature in the years 2013 and 2014, which is why barring a major collapse in the economy, or a significant jump in interest rates their dividend should remain safe and possibly increase at least until 2014. Set up as a RIC which means that they have to pay out 90% of their taxable income has to be paid out to shareholders as dividends. Opened up a RL position in MAIN today for the dividend, any appreciation in stock price will just be a bonus.

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