The latest market rout has been particularly harsh on Medley Management (NYSE:MDLY), a credit focused fund manager beaten up on weak Q3 earnings, energy exposure of around 6% of its portfolio, and a fee reduction for managing one of its business development companies (Medley Capital, ticker MCC). However, at a recent $3.45 price per share, the stock trades at an insanely low 3.7x earnings, and 4.6x our estimates for 2016 free cash flow (FCF) just from its management fees.
With a 23% yield, the market appears to be pricing in a big dividend cut in the near future for MDLY. While anything is possible, we believe it is less likely based on continued growth in assets
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