Summary
- Gladstone Investment Corp.'s share price has surged a whopping 34.3 percent year-to-date.
- The rate of price appreciation is not sustainable, and shares are overbought over the short haul.
- Gladstone Investment Corp.'s shares are probably fully valued today, and expose investors to considerable downside risks.
- An investment in GAIN yields 6.5 percent (not counting special dividends).
Gladstone Investment Corp.'s (GAIN) shares are not a screaming Buy at today's stretched valuation. In fact, I think investors buying into Gladstone Investment Corp. today are likely to overpay, and may underestimate associated downside risks. Gladstone Investment Corp.'s shares are also overbought over the short haul, indicating overly bullish investor sentiment. An investment in GAIN at today's price point yields 6.5 percent (not counting special dividends).
Gladstone Investment Corp. - Portfolio Overview
Gladstone Investment Corp. is structured as a business development company, or BDC, which means the company is required by law to distribute the majority of its earnings/taxable income to shareholders.
That being said, though, Gladstone Investment Corp. is not your typical BDC in the sense that the company has a much less defensively-positioned investment portfolio compared to its peers. Only 67 percent of Gladstone Investment Corp.'s portfolio consists of secured first and second lien debt while the remainder, 33 percent, is made up of common and preferred equity.
