Medley Capital Corp. (MCC) has one of the best management teams among business development companies, a team with experience with working out problem loans and protecting investors from capital loss in case of company troubles, says Casey Alexander, Director of Research and Special Situations Analyst at Gilford Securities Incorporated.
“We have followed Medley Capital since its formation as a BDC in 2011 and happen to believe that this is one of the single best management teams out there in the BDC space. We think that Brook Taube, his brother Seth Taube and Andrew Fentress — they are the three-headed management team there — had significant middle market lending experience prior to the formation of Medley Capital, the BDC,” Alexander said.
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Alexander says, however, that MCC is currently trading at a premium, leading him to not recommend buying the stock at the moment merely due to price concerns.
“We are ‘neutral’ on Medley right now and that’s merely a function of price, being that Medley is trading at a 15% premium to net asset value,” Alexander said. “Medley is trading at a 15% premium to NAV with a 9.8% yield. If Medley were to return in the next 12 months to trading at NAV, an investor would actually suffer about 5% total return loss. Therefore we are not in a position to be able to recommend Medley at this point in time, simply because we just don’t like the price.
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