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MVC Capital


mhdousa
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Anyone have thoughts on MVC Capital (MVC), a business development corporation?  It's trading at an almost 50% discount to its most recent NAV.  In 3/09, it was at an almost 65% discount.  It has very little debt and is giving off a nice 5-6% yield.  As far as I can tell, the managing principal, Michael Tokarz, has an excellent reputation.

Thanks.

-M

 

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"50% discount to its most recent NAV" --- I took a quick look at MVC and didn't feel very comfortable with the fact that NAV is not calculated based on liquid market value. It is based on valuation provided by their internal team. I tried to evaluate their holdings to see if I can draw conclusion about NAV but finally threw it into too hard bin. If NAV is suspect then 50% or even 90% disocunt is no comfort to me. If you are investing in it then best of luck but for me it went into "too hard bin".

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I actually looked at MVC last year.  I got interested when I saw that Third Avenue had a position in the company.  I was also intrigued by the insider buying by Tokarz.

 

However, like rranjan I also did not feel comfortable with the subjective assessment of fair value for the portfolio companies.  That combined with an ugly looking cash flow statement that seemed to show dividends being paid out primarily through equity and debt issuance rather than real profits scared me away.  Mind you, I made a very cursory assessment of the company, but still . . .

 

Also, after having read Barbarians at the Gate and Den of Thieves, I'm sort of distrustful of companies run by private equity (LBO) people.

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