Baird Maintains Its Positive View On Main Street

Rowe applauded Main Street's differentiated sourcing, investing platform, the growing diversity of its investment portfolio and the operating leverage associated with its internally managed structure.

Differentiated Sourcing And Platform

The analyst believes Main Street had continued its differentiated operating strategy, allowing it to take in attractive risk-adjusted returns. "Unlike the majority of its BDC peers, MAIN does not rely on outside sponsors to generate investment opportunities and instead sources its deal flow internally. By being able to employ customizable 'one-stop' financing solutions for its portfolio companies, MAIN is able to benefit from attractive risk-adjusted pricing and terms on its investments," stated Rowe.

Related Link: Main Street Raises Monthly Dividend From $0.18 To $0.185/Share

Diverse Investment Portfolio

Main Street's heavy exposure to senior secured debt investments allowed its capital structure to afford "some downside protection, while at the same time, the meaningful equity component of this portfolio provides the opportunity for significant capital gains," stated Rowe.

'Attractive Dividend Opportunity'

Main Street's dividend payout provides an attractive 8 percent yield. "With a sizable liquidity position, healthy asset quality, and the likelihood for continued investment growth and realized portfolio gains, we feel confident MAIN can maintain and grow its dividend over time," stated the Baird analyst.

Interest Rate Risks

One primary risk to Rowe's estimates was heightening interest rates. "A movement higher in interest rates could place stress on MAIN's portfolio companies and its stock price as the demand for higher yield plays would likely weaken, and in turn lower the demand for the stock," stated the analyst.

According to TipRanks, Bryce Rowe has an 82 percent success rate and a +9.7 percent average rate of return.

At time of writing, Main Street Capital traded at $34.12, up 0.18 percent on the day.

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