Stellus Capital’s shares declined modestly by 0.8% following a quarter marked by a decline in net asset value driven by realized and unrealized losses on debt investments and elevated nonaccrual loan levels, tempering investor confidence despite stable core income and maintaining dividends.
- Core net investment income was $0.27 per share, with total realized income of $0.29 per share, including $0.75 million in realized gains.
- Net asset value decreased by $0.28 per share, primarily due to $0.08 per share of dividends paid in excess of earnings and $0.20 per share of net realized and unrealized losses related mainly to debt investments.
- The investment portfolio at fair value declined to $990 million from $1.01 billion, with 117 portfolio companies at quarter-end.
- Nonaccrual loans increased to six companies, representing 9.2% of total cost and 5.2% of fair value of the portfolio, higher than desired and a clear risk factor.
- Management announced a $20 million share repurchase program at a roughly 25% discount to net asset value, reflecting undervaluation concerns but also uncertain outlook on dividends, which may normalize lower over time.
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