PennantPark Investment Corp. (NASDAQ:PNNT)

CAPS Rating: 4 out of 5

Close-end Management Invt Comp


Player Avatar topsecret10 (< 20) Submitted: 2/23/2010 3:20:18 PM : Outperform Start Price: $6.51 PNNT Score: -7.71

I have been following this company for a little while,and I did quite a bit of research before coming to the conclusion that this Is one extremely misunderstood and undervalued stock. The chart Is basically an arrow pointing upwards,and Insiders have been snapping up shares for awhile. Also the company has been Increasing Its dividend since 2007. With a current dividend of $1.04 and a yield over 10 %,this looks like a no-brainer. PennantPark Investment Corporation (Nasdaq: PNNT) is an externally managed investment company that generates both current income and capital appreciation through debt and equity investments. The company is registered as a business development company under the Investment Company Act of 1940 and is considered a regulated investment company. They invest primarily in U.S. middle-market private companies in the form of mezzanine debt, senior secured loans and equity investments. Investment Strategy— Their investment objective is to generate both current income and capital appreciation through debt and equity investments. Their portfolios will be comprised of investments in subordinated loans, referred to as mezzanine debt, and senior secured loans made to private U.S. middle market companies.
They employ a disciplined approach in selecting investments that meet value-oriented investment criteria. Their value-oriented investment philosophy focuses on preserving capital and ensuring that their investments have an appropriate return profile in relation to risk. When market conditions make it difficult for them to invest according to their criteria, they are highly selective in deploying their capital. They do not intend to pursue short-term origination targets. They believe this approach will enable us to build an attractive investment portfolio that meets their return and value criteria over the long-term.
We believe it is critical to conduct extensive due diligence on investment targets. In evaluating new investments we, through our investment adviser, conduct a rigorous due diligence process that draws from our investment adviser’s experience, industry expertise and network of contacts. Among other things, our due diligence is designed to ensure that each prospective portfolio company will be able to meet its debt service obligations
We may also invest in equity securities, such as preferred stock, common stock, warrants or options received in connection with our debt investments or through direct investments. We expect that our investments in mezzanine debt, senior secured loans and other investments will range between $10 million and $50 million each, although this investment size will vary proportionately with the size of our capital base.
While our primary focus is to generate current income and capital appreciation through debt and equity investments in thinly traded or private U.S. companies, we may invest up to 30% of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in high-yield bonds, distressed debt, private equity, securities of public companies that are not thinly traded and securities of middle-market companies located outside of the United States. We expect that these public companies generally will issue debt securities that are non-investment grade.
These qualities give the PennantPark an advantage over other capital providers in middle-market companies:
•Management expertise
•Disciplined investment approach with strong value orientation
•Focusing sourcing, due diligence, structuring and monitoring process generating positive risk-adjusted returns
•Ability to source and evaluate transactions through our investment adviser's research
•Trusted relationships throughout middle-market sponsor community
•Flexible transaction structuring

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