Ladenburg Thalmann analyst Mickey Schleien reinstated coverage of Great Elm Capital Corp. with a "neutral" rating.
Schleien wrote in a March 15 research note that despite the stock's discount to net asset value and the double-digit dividend yield, he believes that Great Elm Capital shares are fairly valued considering the very high level of portfolio concentration and payment-in-kind income.
Schleien noted that Great Elm Capital reported strong fourth-quarter 2017 results. He said the large quarter-over-quarter increase of the company's net investment income per share in the fourth quarter of 2017 was driven by payment-in-kind toggle accruals on the company's investment in Avanti Communications.
Schleien said Great Elm Capital had improved its liquidity with the issuance of unsecured notes after fourth quarter 2017. He said the company is poised for an unrealized gain from Avanti's restructuring, as the move is expected to lead to lower second-lien debt interest rate and the conversion of third-lien debt to common equity.
His net investment per share estimate for Great Elm Capital is $1.19 for 2018.
