Long GAIN @ 9.37 gives you an 8% dividend and places you solidly behind the small business market. It’s book value is 9.82.
Gladstone Capital is a business development company that invests in small and medium sized private businesses, seeking to achieve returns from current income and capital gains through debt and equity investments up to $30 million.
On its balance sheet, the company has $183 million in Debt and $471 million of Investments. This is not a typical private equity structure where leveraged buyouts are common and debt can be excessive.
What matters with Gladstone is how good the underlying companies are… and that goes back to the talent of the investment team.
GAIN should continue to payout the $0.75 dividend, and I think will see long-term appreciation if the investments produce solid results. Considering they look for companies with $3 – $10 million EBITA, I think it’s safe to say that’s a real possibility.