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Ronald Doyle "Lonnie" Mayne (September 12, 1944 – August 13, 197
was an American professional wrestler in the 1960s and 1970s who frequently went by the name Moondog Mayne. Mayne wrestled in various NWA territories as well as the WWWF. He died in an automobile accident on August 13, 1978.
Then of course there is the great state of Maine, where Edmund Muskie cried and lost the election:
However when $$$MR. MARKET$$$ thinks of Main these days, he mostly thinks about Main Street Capital Corporation. Now why would I eschew Moondog Mayne for a Texas company who think they are as smart as Wharton grads? Well, for one, they are in the middle of a money machine and their stock is going crazy. In reality, they are pretty good. Main Street's management team includes a unique group of professionals with over 100 years of investment experience, each of whom has significant experience in corporate finance, mergers and acquisitions and private equity investing. Main Street focuses on aligning our interests with those of our portfolio companies and developing long-term working relationships and partnerships with our portfolio company management teams.
Today I bought stock in MainStreet Capital (MAIN) at 29.24. I will sell it in 4 – 6 weeks at 33.81. Here’s why I like MAIN:
Well..darn it, you have to love the chart. This stock has marched upwards very consistently. In fact it’s up 60% in the last 12 months. That’s pretty good for a stock with a trailing PE of only 9. No, that’s REALLY good for such a cheap stock. What’s even better is that the stock pays a 5.7% dividend. So if you’re patient, you might even collect a dividend on top of your capital gains.
Main Street is a principal investment firm that provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street’s portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides "one-stop" financing alternatives within its lower middle market portfolio. Main Street’s lower middle market companies generally have annual revenues between $10 million and $150 million. Main Street’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies.
Who are these guys? They are just a bunch of bookies. They go out and get debt really cheap and plow it into middle market companies looking for some cash to get over some CAPEX or OPEX hurdles. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Then they make money on the spread. Main Street collects interest, fees and also makes profits when its equity investments appreciate in value. It uses the earnings from these varied revenue sources to pay shareholders a strong rate of return in the form of a dividend. They now have about $1 billion of capital under management.
They’ve developed a strategy that essentially looks for a market inefficiency and takes advantage of it. These companies are generally underserved from a capital perspective so MAIN is able to get good deals when they invest in them. It’s kind of like being the only White Castle open til 4 am on a college campus when the bars close…funny how those sliders are priced kind of high?
They invest debt and equity in the under‐served lower middle market companies. What they have found is that they can structure pretty rich deals with these companies since they don’t have a lot of competition in providing the capital nourishment since the lower middle market companies are an inefficient asset class with limited competition. They get intimately involved in the management of these companies and can see how their money is being put to work. Essentially they have really really good info on the companies, and management, they invest in.
They have been shrewd enough to invest in a high quality and DIVERSIFIED investment portfolio so that their cash flows from these investments are stabilized. They have investments in 131 companies so even if a couple flounder a little, it’s no big deal.
The firm seeks to charge a fixed interest rate between 12 percent and 14 percent, payable in cash, in case of its mezzanine loan investments. The firm typically invests in the form of term debt with equity participation and/or direct equity investments. It prefers to maintain fully diluted equity positions in its portfolio companies of 5 percent to 50 percent, and may have controlling interests in some instances. The firm also co-invests with other investment firms. It seeks to exit its debt investments through the repayment of the investment from internally generated cash flow and/or refinancing within a period of three to seven years. Sound familiar? Remember the payday loan companies that $$$MR. MARKET$$$ invested in several times over the last few years? Where do you think you can get a 14% loan? Their investments have low correlation to the broader debt and equity markets and thus have attractive risk-adjusted returns. It’s a prevailing market anomaly that they have continued to mine year after year.
A lot of these companies have a mostly a B or BB S&P rating which means they don’t mind paying out high interest rates on their loans. Mainstreet does a deep dive on the likelihood of survivability of these companies and they can take the money that they have borrowed cheaply and lend it to the Lower Middle Market company with a great deal of confidence. They know these companies will do well because they know the management personally. They know the CEO is not out fishing on his boat or fooling around with somebody’s wife. He’s yelling at his employees to make him more money. Mainstreet investors know these guys. They go to their houses and play with their pets.
They put their money where their mouth is. Mainstreet management invests their own money in these deals and they have a very successful track record. As long as we are in this super LOW LOW LOW interest rate environment, this company is going to be a money machine.
No wonder the stock price has been rewarded. This diversified investment company has delivered positive earnings surprises for four straight quarters with an average beat of 11.5%. On August 2, Main Street reported its second quarter results with earnings per share of 47 cents, beating the ANAL-yst estimate of 44 cents by 6.8% and the year ago-earnings of 41 cents by 14.6%.
Second-quarter results were aided by impressive growth in total investment income. Total investment income of $20.8 million surged 29.2% from the year-ago quarter. The fair value of Main Street’s total investment portfolio was $790.8 million as of June 30, 2012, up 20.2% from $658.1 million as of December 31, 2011.
The third quarter 2012 dividends represent an 11.5% increase from the dividends declared for the third quarter of 2011 and a 3.6% increase compared to the second quarter of 2012. Last fiscal year, the company paid $1.56 in form of dividends to shareholders. The ex-dividend date is on October 17, 2012. Coming up soon!! I’m in for the ride down on Main Street!
Sing it Bob Seger!!
I am HUGE!
$$$MR. MARKET$$$
was an American professional wrestler in the 1960s and 1970s who frequently went by the name Moondog Mayne. Mayne wrestled in various NWA territories as well as the WWWF. He died in an automobile accident on August 13, 1978.Then of course there is the great state of Maine, where Edmund Muskie cried and lost the election:
However when $$$MR. MARKET$$$ thinks of Main these days, he mostly thinks about Main Street Capital Corporation. Now why would I eschew Moondog Mayne for a Texas company who think they are as smart as Wharton grads? Well, for one, they are in the middle of a money machine and their stock is going crazy. In reality, they are pretty good. Main Street's management team includes a unique group of professionals with over 100 years of investment experience, each of whom has significant experience in corporate finance, mergers and acquisitions and private equity investing. Main Street focuses on aligning our interests with those of our portfolio companies and developing long-term working relationships and partnerships with our portfolio company management teams.
Today I bought stock in MainStreet Capital (MAIN) at 29.24. I will sell it in 4 – 6 weeks at 33.81. Here’s why I like MAIN:
Well..darn it, you have to love the chart. This stock has marched upwards very consistently. In fact it’s up 60% in the last 12 months. That’s pretty good for a stock with a trailing PE of only 9. No, that’s REALLY good for such a cheap stock. What’s even better is that the stock pays a 5.7% dividend. So if you’re patient, you might even collect a dividend on top of your capital gains.
Main Street is a principal investment firm that provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street’s portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides "one-stop" financing alternatives within its lower middle market portfolio. Main Street’s lower middle market companies generally have annual revenues between $10 million and $150 million. Main Street’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies.
Who are these guys? They are just a bunch of bookies. They go out and get debt really cheap and plow it into middle market companies looking for some cash to get over some CAPEX or OPEX hurdles. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Then they make money on the spread. Main Street collects interest, fees and also makes profits when its equity investments appreciate in value. It uses the earnings from these varied revenue sources to pay shareholders a strong rate of return in the form of a dividend. They now have about $1 billion of capital under management.
They’ve developed a strategy that essentially looks for a market inefficiency and takes advantage of it. These companies are generally underserved from a capital perspective so MAIN is able to get good deals when they invest in them. It’s kind of like being the only White Castle open til 4 am on a college campus when the bars close…funny how those sliders are priced kind of high?
They invest debt and equity in the under‐served lower middle market companies. What they have found is that they can structure pretty rich deals with these companies since they don’t have a lot of competition in providing the capital nourishment since the lower middle market companies are an inefficient asset class with limited competition. They get intimately involved in the management of these companies and can see how their money is being put to work. Essentially they have really really good info on the companies, and management, they invest in.
They have been shrewd enough to invest in a high quality and DIVERSIFIED investment portfolio so that their cash flows from these investments are stabilized. They have investments in 131 companies so even if a couple flounder a little, it’s no big deal.
The firm seeks to charge a fixed interest rate between 12 percent and 14 percent, payable in cash, in case of its mezzanine loan investments. The firm typically invests in the form of term debt with equity participation and/or direct equity investments. It prefers to maintain fully diluted equity positions in its portfolio companies of 5 percent to 50 percent, and may have controlling interests in some instances. The firm also co-invests with other investment firms. It seeks to exit its debt investments through the repayment of the investment from internally generated cash flow and/or refinancing within a period of three to seven years. Sound familiar? Remember the payday loan companies that $$$MR. MARKET$$$ invested in several times over the last few years? Where do you think you can get a 14% loan? Their investments have low correlation to the broader debt and equity markets and thus have attractive risk-adjusted returns. It’s a prevailing market anomaly that they have continued to mine year after year.
A lot of these companies have a mostly a B or BB S&P rating which means they don’t mind paying out high interest rates on their loans. Mainstreet does a deep dive on the likelihood of survivability of these companies and they can take the money that they have borrowed cheaply and lend it to the Lower Middle Market company with a great deal of confidence. They know these companies will do well because they know the management personally. They know the CEO is not out fishing on his boat or fooling around with somebody’s wife. He’s yelling at his employees to make him more money. Mainstreet investors know these guys. They go to their houses and play with their pets.
They put their money where their mouth is. Mainstreet management invests their own money in these deals and they have a very successful track record. As long as we are in this super LOW LOW LOW interest rate environment, this company is going to be a money machine.
No wonder the stock price has been rewarded. This diversified investment company has delivered positive earnings surprises for four straight quarters with an average beat of 11.5%. On August 2, Main Street reported its second quarter results with earnings per share of 47 cents, beating the ANAL-yst estimate of 44 cents by 6.8% and the year ago-earnings of 41 cents by 14.6%.
Second-quarter results were aided by impressive growth in total investment income. Total investment income of $20.8 million surged 29.2% from the year-ago quarter. The fair value of Main Street’s total investment portfolio was $790.8 million as of June 30, 2012, up 20.2% from $658.1 million as of December 31, 2011.
The third quarter 2012 dividends represent an 11.5% increase from the dividends declared for the third quarter of 2011 and a 3.6% increase compared to the second quarter of 2012. Last fiscal year, the company paid $1.56 in form of dividends to shareholders. The ex-dividend date is on October 17, 2012. Coming up soon!! I’m in for the ride down on Main Street!
Sing it Bob Seger!!
I am HUGE!
$$$MR. MARKET$$$
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