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- Gladstone Investment is a BDC focusing on lower middle market US entities with EBITDA of $4m to $15m, with a stock trading at a 2.5% premium to NAV.
- GAIN’s portfolio is oriented around floating-rated debt investments, while its debt structure is mostly fixed-rated, which increases the interest-rate related risk.
- GAIN’s non-accruals have increased significantly and the share of first lien loans is lower than in the case of some more defensive and higher-quality BDCs.
- The Company’s dividend coverage is weak and investors may face dividend cut in the upcoming quarters.
Introduction & Investment Thesis
Gladstone Investment (NASDAQ:GAIN) is a business development company (BDC) concentrating on the lower middle market, US entities with EBITDA ranging from $4m to $15m. GAIN remains industry-agnostic; however, its current investment portfolio is oriented around three main sectors:
- business/consumer services
- manufacturing
- consumer products
GAIN concentrates on debt investments. As with many BDCs, GAIN’s stock price benefited from the high-interest rate environment. Considering its current stock price, GAIN trades at ~2.5% premium to its NAV, which stood at $13.01 per share as of June 30, 2024.
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