MVC Capital, Inc. (MVC)

MJKpayday (20.19) Submitted: 2/10/08 11:12 AM : Start Price: $14.61 MVC Score: 1.32

MVC is a company that buys interest in other companies that the regular Joe Can't. For example neither you nor I would be very well positioned to buy a stake in a Latvian BMW dealership, but MVC would be and has. There investments are split nearly 50/50 into equity investments and debt investing and when combined equal the Net Asset Value(NAV). This is where it gets interesting - Appreciation in debt investing or fixed income is difficult to ignore and more easily incorporated into the NAV, but private equity appreciation is very difficult to incorporate until an actual sale has occurred. The best analogy I can think of is buying real estate in say 1990 for 500K, depreciating it over the years and then on the balance sheet have it as a 400k asset meanwhile if you put up a for sale sign you may list it for 1.1M and have it sell for 1M at which time the sale would show the true value not just the book value.

MVC currently trades at about the Net Asset value, but I think that the real NAV could be more. Currently they've only sold 2 of the equity positions in the 30 or so in which they've invested. Both worked out very well and increased the NAV which would indicate that the value on the books was about half the sale value. Another reason I believe that the NAV may be undersold is the insider buying, which in many instances is higher than today's price.

Management is really what we're investing in when looking at MVC and in 2003 Tokarz took over the reins and since has recorded an appreciation of the NAV every quarter. Tokarz has 30+ years of experience and was the General Partner of KKR, another successful private equity investment firm.

MVC is an interesting play on a strong management team and what could be an understated balance sheet.

http://www.j3sg.com/Reports/Stock-Insider/Generate.php?DV=yes&tickerLookUp=mvc&Submit232=GO

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