Wave a Flag for PennantPark

06/16/2020 5:00 am EST

Focus: FINANCIALS

Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

The market rally has been fueled by government stimulus on the front end, and the prospects of a V-shaped economic recovery over the past couple of weeks, notes Bryan Perry, editor of Cash Machine.

Now that it seems like we are getting to the other side of the valley of total uncertainty, I’m comfortable that we’ve seen the downside of any and all dividend risks for all our holdings.

PennantPark Investment (PNNT) reported fiscal Q2 net investment income per share of $0.15 that handily beat the average analyst's estimate of a loss of $0.19 per share.

PNNT’s adjusted net asset value (NAV) per share hit $7.71 on March 31, 2020 vs. $8.79 at Dec. 31, 2019. The lower NAV per share resulted from an increase in the overall net unrealized depreciation of the company’s portfolio, including unrealized depreciations in its investments and its credit facilities as of March 31, 2020.

All of this was primarily due to the immediate adverse economic impact of the COVID-19 pandemic, the continuing uncertainty surrounding its long-term effects as well as the repricing of credit risk in the broadly syndicated credit market.

PNNT’s yield on debt investments at the end of the quarter was 9.1%. PNNT's portfolio totaled $1.354 billion and consisted of $815.2 million of first-lien secured debt, $261.6 million of second-lien secured debt, $64.4 million of subordinated debt and $212.8 million of preferred and common equity.

At the end of the quarter, PNNT had no portfolio companies on non-accrual. However, it had to reduce its quarterly dividend from $0.18 to $0.12 to preserve capital. Buy PNNT under $7.

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