UPDATE: Ladenburg Thalmann Downgrades Main Street Capital to Neutral
Ladenburg Thalmann has published a research report on Main Street Capital (NYSE: MAIN) and has downgraded the company from Buy to Neutral after the company reported 4Q results in-line with consensus estimates.
In the report, Ladenburg Thalmann writes, "MAIN generally focuses on making secured debt investments balanced by significant equity investments. At FV, as of 3Q11 the investment portfolio had 59% 1st lien debt, 13% 2nd lien, and 28% in equity and warrants. The almost $28 million of announced LMM investments in 4Q11 was in line with our overall forecast and consistent with the company's investment strategy (see Figure 1). Still, we note that MAIN does not generally comment on activity in its private placement (including syndicated loans) or marketable securities portfolios as they are made on an opportunistic basis while the focus is on LMM. MAIN also announced the 4Q11 exit of its Merrick Systems, Inc. investment. In 2Q10 the company made a $2.51 million 13% secured loan to Merrick and purchased warrants for $0.45 million. The Merrick investment generated a 41% IRR and we estimate that MAIN sold its position for $4.35 million. The sale should generate a realized gain of approximately $1.4 million with a reversal of $0.6 million of unrealized appreciation. The total value of this exit was in line with our 4Q11 forecast."
Ladenburg Thalmann has also raised the price target on Main Street Capital, which is currently trading down $0.09 from yesterday's $21.40 closing price.
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