Prospect Capital's NAV, Dividend, And Valuation Compared To 10 BDC Peers (Post Calendar Q1 2016 Earnings) - Part 2

| About: Prospect Capital (PSEC)

Summary

This article compares PSEC’s recent dividend per share rates, yield percentages, and several other dividend sustainability metrics to 10 BDC peers.

This includes a comparison of PSEC’s recent cumulative undistributed NII, weighted average annualized yield on debt investments, and weighted average interest rate on outstanding borrowings to 10 BDC peers.

My current buy, sell, or hold recommendation, price target, and near-term dividend sustainability projection for PSEC is stated in the “Conclusions Drawn” section of the article.

In addition, my near-term dividend sustainability projection for each of the 10 other BDC peers within this analysis is stated in the “Conclusions Drawn” section of the article.

Author's Note: PART 1 of this article analyzed Prospect Capital Corp.'s (NASDAQ:PSEC) recent quarterly results and compared several of the company's metrics to 10 other business development company ("BDC") peers. PART 1 helps lead to a better understanding of the topics and analysis that will be discussed in PART 2. The link to PART 1's analysis is provided below:

Prospect Capital's Valuation, NAV, And Dividend Compared To 10 BDC Peers (Post Calendar Q1 2016 Earnings) - Part 1

This two-part article is a very detailed analysis comparing PSEC to some of the company's BDC peers. I am writing this two-part article due to the continued requests that such an analysis be specifically performed on PSEC. For readers who just want the summarized conclusions/results, I would suggest to scroll down to the "Conclusions Drawn" section at the bottom of the each part of the article.

Focus of Article:

The focus of PART 2 of this article is to compare PSEC's recent dividend per share rates, yield percentages, and several other dividend sustainability metrics to 10 other BDC peers. This analysis will show recent past data with supporting documentation within Table 3 below. This article will also project each company's "near-term" dividend sustainability, which is partially based on the metrics shown in Table 3 and several additional metrics shown in Table 4 below.

By analyzing each company's recent dividend per share rates, yield percentages, and several dividend sustainability metrics, one will better understand which BDC generally has a safer dividend rate going forward versus other peers who have a higher risk for a dividend decrease. This is not the only data that should be examined to initiate a position within a particular stock/sector or project future dividend per share rates. However, I believe this analysis would be a good "starting-point" to begin a discussion on the topic.

At the end of this article, there will be a conclusion regarding the following comparisons between PSEC and the 10 other BDC peers: 1) trailing 12-month yields based on a stock price as of 6/19/2015 and 6/17/2016 (for each respective time period), 2) annual forward yield based on a stock price as of 6/17/2016, 3) annual forward yield based on NAV as of 3/31/2016, 4) weighted average annualized yield on debt investments as of 3/31/2016, and 5) weighted average cash LIBOR floor as of 3/31/2016. I will also provide my current BUY, SELL, or HOLD recommendation and price target on PSEC.

Side Note: As of 6/17/2016, Apollo Investment Corp. (NASDAQ:AINV), Ares Capital Corp. (NASDAQ:ARCC), Fifth Street Finance (NYSE:FSC), Golub Capital BDC Inc. (NASDAQ:GBDC), Medley Capital Corp. (NYSE:MCC), Fifth Street Senior Floating Rate Corp. (NASDAQ:FSFR), and Newtek Business Services Inc. (NASDAQ:NEWT) had stock prices that "reset" lower regarding each company's monthly/quarterly dividend accrual. In other words, each company's "ex-dividend date" for the month/quarter has occurred. PSEC, Main Street Capital Corp. (NYSE:MAIN), Solar Capital Ltd. (NASDAQ:SLRC), and American Capital Senior Floating Ltd. (NASDAQ:ACSF) had stock prices that have not reset lower in reference to each company's monthly/quarterly dividend accrual (all monthly dividends with the exception of SLRC). Readers should take this into consideration when the analysis is presented below.

Dividend Per Share Rates and Yield Percentages Analysis - Overview:

Let us start this analysis by first getting accustomed to the information provided in Table 3 below. This will be beneficial when comparing PSEC to the 10 other BDC peers regarding quarterly dividend per share rates and yield percentages.

Table 3 - Dividend Per Share Rates and Yield Percentages

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(Source: Table created entirely by myself, obtaining historical stock prices from NASDAQ and each company's dividend per share rates from the SEC's EDGAR Database)

Using Table 3 above as a reference, the following information is presented in regards to PSEC and ten other BDC peers (see each corresponding column): 1) dividend per share rate for the calendar first quarter of 2016 (including any special periodic dividends), 2) stock price as of 3/25/2016, 3) trailing 12-month dividend yield (dividend per share rate from the calendar second quarter of 2015 through the calendar first quarter of 2016), 4) annual forward dividend yield based on the dividend per share rate for the calendar first quarter of 2016 using the stock price as of 3/25/2016 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter), 5) annual forward dividend yield based on the dividend per share rate for the calendar first quarter of 2016 using the NAV as of 12/31/2015 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter), 6) dividend per share rate for the calendar second quarter of 2016 (including any special periodic dividends), 7) stock price as of 6/17/2016, 8) trailing 12-month dividend yield (dividend per share rate from the calendar third quarter of 2015 through the calendar second quarter of 2016), 9) annual forward dividend yield based on the dividend per share rate for the calendar second quarter of 2016 using the stock price as of 6/17/2016 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter), and 10) annual forward dividend yield based on the dividend per share rate for the calendar second quarter of 2016 using the NAV as of 3/31/2016 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter). Let us now begin the comparative analysis between PSEC and the 10 other BDC peers.

PSEC:

Using Table 3 above as a reference, PSEC declared a dividend of $0.0833 per share for January, February, and March 2016. When the three monthly dividends are combined, this was a total quarterly dividend of $0.25 per share, which was unchanged when compared to the prior quarter. PSEC's stock price traded at $7.12 per share on 3/25/2016. When calculated, this was a trailing 12-month dividend yield of 14.04%, an annual forward yield to PSEC's stock price as of 3/25/2016 of 14.04%, and an annual forward yield to the company's NAV as of 12/31/2015 of 10.36%. When comparing each yield percentage to PSEC's BDC peers within this analysis, the company's trailing 12-month dividend yield continued to be slightly below average. However, it should also be noted PSEC's annual forward yield based on the company's latest dividend rate and its NAV as of 12/31/2015 continued to be materially and slightly above average, respectively.

When combining this data with various other analytical metrics, I correctly projected in a prior PSEC article the company's dividend would remain stable for May 2016, June 2016, July 2016, and August 2016. This projection was provided in the following prior article:

Prospect Capital's Dividend And NAV Sustainability Analysis (Pre-Fiscal Q3 2016 Earnings) - Part 2

To provide readers several additional, important metrics to consider regarding each BDC's dividend sustainability, Table 4 is provided below. Again, it should be noted there are additional dividend sustainability metrics that I perform for each company. However, those metrics are more elaborate in detail and require additional analysis/discussion, which I believe is beyond the scope of this particular article. That type of analysis would be better suited when analyzing each company on a "standalone" basis versus a comparison article. I have discussed these more elaborate metrics in prior PSEC, FSC, FSFR, MAIN, and NEWT articles (see my profile page for links to prior articles regarding those companies).

Table 4 - Several Additional Dividend Sustainability Metrics

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(Source: Table created entirely by myself, partially using data obtained from the SEC's EDGAR Database [link provided below Table 3])

Using Table 4 above as a reference, PSEC had a cumulative undistributed net investment income ("NII") ratio of (0.02) as of 3/31/2016 (see blue reference "C"). When comparing this ratio to the mean of (0.01) for the 11 BDC peers within this analysis, PSEC basically had an average overpayment of dividends when compared to the company's cumulative NII since its initial public offering ("IPO"). However, it should also be noted PSEC continued to maintain a sizable cumulative undistributed taxable income ("UTI") balance which needs to be taken into consideration regarding dividend sustainability. This specific metric was fully analyzed in the following prior PSEC article:

Prospect Capital's Dividend And NAV Sustainability Analysis (Pre-Fiscal Q4 2016 Earnings) - Part 1

PSEC had a weighted average annualized yield on the company's debt investments of 13.40% as of 3/31/2016 which was the highest out of the 11 BDC peers within this analysis (see blue reference "D"). In my opinion, another important metric to consider regarding any BDC's long-term future dividend sustainability is each company's weighted average cash London Interbank Offered Rate (LIBOR) floor. Even though each company's weighted average cash LIBOR floor has no current "material" impacts to near-term dividend sustainability, this metric will certainly affect each company's future dividend sustainability over the next several years.

Due to the minor net increase of LIBOR across all maturities during the calendar first and second quarters of 2016 (through 6/17/2016), I decided it was appropriate to update each BDC's weighted average cash LIBOR floor this quarter. As such, when compared to last quarter's analysis, Table 4 now provides each BDC's weighted average cash LIBOR floor as of 3/31/2016 instead of 9/30/2015.

Side Note: It should be noted obtaining this particular piece of data is very time consuming and "labor intensive" since most companies currently do not provide a specific weighted average cash LIBOR floor percentage at a specified point in time. As such, I hope readers appreciate that I have taken the time to continually provide/update this important metric. I was the first contributor on Seeking Alpha to provide such an analysis/metric. While a few other contributors have recently begun to provide a somewhat similar discussion/analysis regarding this metric, I continue to believe the percentages/data I provide regarding each company's weighted average cash LIBOR floor are the most accurate and reliable.

Unless stated otherwise, I intend to update this specific metric every other quarter. Due to time constraints with my professional career, I cannot cover all the stocks in the BDC sector. As such, I welcome other contributors to provide a similar metric for companies I currently do not cover. In the end, this helps readers have important information which should be one of the main goals for writing on this forum.

When the Federal Open Market Committee ("FOMC") eventually continues to increase the Federal ("FED") Funds Rate (current indications have recently been lowered to once during 2016; I continue to believe one [at most] rate hike will occur), a BDC's weighted average cash LIBOR floor will determine when the investment portfolio will begin to see an impactful net increase in investment income due to rising short-term interest rates/LIBOR on variable/floating-rate loans.

PSEC's weighted average cash LIBOR floor, when excluding the company's "collateralized loan obligation" ("CLO") portfolio, was 1.54% as of 12/31/2014. Out of the 11 BDC stocks within this analysis, PSEC had the highest weighted average cash LIBOR floor as of 12/31/2014. With that being said, PSEC's percentage as of 12/31/2014 was a modest reduction when compared to prior percentages. PSEC's weighted average cash LIBOR floor, when excluding the company's CLO investments, was 1.36% as of 12/31/2015. When calculated, this was a (0.18%) decrease during the calendar year 2015.

This general trend continued into the calendar first quarter of 2016. PSEC's weighted average cash LIBOR floor, when excluding the company's CLO investments, was 1.34% as of 3/31/2016 (see blue reference "E"). When calculated, this was a (0.02%) decrease during the calendar first quarter of 2016. Even though PSEC's weighted average cash LIBOR floor as of 3/31/2016 was still the highest out of the 11 BDC peers within this analysis, I believe the continued gradual reduction continues to be a step in the right direction.

As I have stated in various prior articles, it should also be noted one of the main determinants of a CLO's valuation (including current income accrual) is the current/projected future cash flows of the underlying investments which are directly impacted by movements within LIBOR/the forward LIBOR curve. Since most of PSEC's CLO investments have leveraged "floating-rate" liabilities, an increase to the forward LIBOR curve typically negatively impacts projected future discounted cash flows under most scenarios. Simply put, an increase to a CLO's "cost of funds" rate typically occurs. The following commentary by PSEC, via SEC disclosures, supports this notion:

"…An increase in LIBOR would materially increase the CLO's financing costs. Since most of the collateral positions within the CLOs have LIBOR floors, there may not be corresponding increases in investment income (if LIBOR increases but stays below the LIBOR floor rate of such investments) resulting in materially smaller distribution payments to the residual interest investors…"

In addition, under a scenario of heightened volatility in debt markets (including the increased likelihood of future defaults across the sector as a whole), there typically is an increase in the discount rate/margin applied in most cash flow models which negatively impacts valuations. A rise in defaults factually occurred within PSEC's CLO portfolio during the calendar first quarter of 2016.

As such, this was one reason why PSEC's CLO portfolio, as a whole, experienced net depreciation. However, it should also be noted CLO prices/valuations in general have modestly "rebounded" during the calendar second quarter of 2016. This should positively impact a majority of PSEC's CLO valuations during the calendar second quarter of 2016 (unless a material reversal in prices occurs during the last two weeks of the quarter). With that being said, readers should also understand each specific CLO investment needs to be separately valued as each securitization has different underlying loans which directly impacts overall performance (including different input factors/variables dependent upon the "tranche" of a particular securitization; impacts projected future discounted cash flows). Further discussion of this specific topic is beyond the scope of this article but will be further discussed in a future PSEC projection article.

The last metric shown in Table 4 above is each BDC's weighted average interest rate on all debt outstanding as of 3/31/2016. PSEC had a weighted average interest rate of 5.35% on the company's outstanding borrowings as of 3/31/2016 (excludes commitment fees; see blue reference "F"). When compared to a weighted average interest rate of 5.00%, 5.19%, and 5.30% as of 6/30/2015, 9/30/2015, and 12/31/2015 respectfully, I believe this was a slight detriment for PSEC. When compared to the 10 other BDC peers within this analysis, PSEC had the highest weighted average interest rate on all debt outstanding as of 12/31/2015 and 3/31/2016.

I believe there are several reasons why PSEC continued to have the highest weighted average interest rate on all debt outstanding. In my opinion, the most important reason was due to the fact PSEC had 0.00% of the company's outstanding borrowings in debt instruments that bore floating interest rates (which are mainly based on LIBOR) while 100.00% bore fixed interest rates.

So, while PSEC had the highest weighted average interest rates on all debt outstanding as of 3/31/2016, readers should also understand as/if LIBOR continually increases, the company's weighted average interest rate on its outstanding borrowings would likely increase at a less severe rate when compared to most (if not all) of the BDC peers within this analysis. Of course, between now and then many variables will change within each BDC which should be considered as well.

However, taking a "snapshot" of each BDC's weighted average interest rate on all debt outstanding as of 3/31/2016 allows readers to better understand which companies will experience generalized characteristics in the future. PSEC continued to minimally utilize the company's low-cost $885 million revolving credit facility over the past several quarters. As of 3/31/2016, PSEC's revolving credit facility bore interest of one-month LIBOR plus 225 basis points ("bps").

Instead, management has continued to issue Prospect Capital InterNotes® with most maturities generally ranging from five - six years at a fixed interest rate of 5.50%. Since it would appear LIBOR will continue to remain relatively suppressed over the next several quarters, I would like to see PSEC materially utilize the company's lower-cost revolving credit facility versus its higher-cost alternative debt financing. In the end, this would positively impact PSEC's NII.

Once again using Table 3 as a reference, PSEC declared a dividend of $0.0833 per share for April 2016, May 2016, and June 2016. When the three monthly dividends are combined, this was a total quarterly dividend of $0.25 per share which was unchanged when compared to the prior quarter. PSEC's stock price traded at $7.75 per share on 6/17/2016. When calculated, this was a trailing 12-month dividend yield of 12.90%, an annual forward yield to PSEC's stock price as of 6/17/2016 of 12.90%, and an annual forward yield to the company's NAV as of 3/31/2016 of 10.40%.

When comparing each yield percentage to PSEC's BDC peers within this analysis, the company's trailing 12-month dividend yield continued to be slightly below average. However, it should also be noted PSEC's annual forward yield based on the company's latest dividend rate and its NAV as of 3/31/2016 were slightly above average.

Comparison of PSEC's Trailing 12-Month Yields Based on a Stock Price as of 6/19/2015 and 6/17/2016, Annual Forward Yield Based on a Stock Price as of 6/17/2016, Annual Forward Yield Based on NAV as of 3/31/2016, Weighted Average Annualized Yield on Debt Investments as of 3/31/2016, and Weighted Average Cash LIBOR Floor as of 3/31/2016 to 10 Other BDC Peers:

A large number of readers have continued to request that I provide yield percentages, dividend per share rates, and other metrics for the BDC stocks I currently cover. As such, using Table 3 and Table 4 above as a reference, the following metrics are provided for PSEC and the 10 other BDC peers:

A) Trailing 12-Month Yields as of 6/19/2015 and 6/17/2016, Respectively (Based on Lowest to Highest Percentage as of 6/19/2015; Including Special Dividends) (Good "General" Indicator of "Back-Testing" Dividend Sustainability; Exceptions Apply):

1) GBDC: 7.65%; 7.41% (Stable Dividend Calendar Q2 2015 - Q2 2016)

2) MAIN: 8.29%; 8.31% (3% Dividend Increase Calendar Q2 2015 - Q2 2016)

3) SLRC: 8.47%; 8.45% (Stable Dividend Calendar Q2 2015 - Q2 2016)

4) ACSF: 8.86%; 11.08% (Stable Dividend Calendar Q2 2015 - Q2 2016)

5) ARCC: 9.47%; 10.84% (Stable Dividend Calendar Q2 2015 - Q2 2016)

6) NEWT: 9.56%; 34.65% (32% Dividend Decrease Calendar Q2 2015 - Q2 2016)

7) AINV: 10.78%; 14.63% (Stable Dividend Calendar Q2 2015 - Q2 2016)

8) FSFR: 11.90%; 10.56% (25% Dividend Decrease Calendar Q2 2015 - Q2 2016)

9) FSC: 12.82%; 14.97% (Stable Dividend Calendar Q2 2015 - Q2 2016)

10) MCC: 14.49%; 18.46% (Stable Dividend Calendar Q2 2015 - Q2 2016)

11) PSEC: 15.42%; 12.90% (Stable Dividend Calendar Q2 2015 - Q2 2016)

When comparing each company's trailing 12-month dividend yields, a general conclusion that can be drawn is that the lower a company's percentage was as of 6/19/2015, the lower the probability of a dividend decrease (or the higher the probability of a stable/increasing dividend) during the third quarter 2015 - second quarter of 2016. In addition, generally the higher each company's trailing 12-month dividend yield was as of 6/19/2015, the higher the risk for future dividend decreases over the same timeframe.

Again, there are some exceptions to this general "trend" but I believe one can see some broad correlations in each company's trailing 12-month dividend yields. For instance, since GBDC (rank 1), MAIN (rank 2), SLRC (rank 3), ACSF (rank 4), and ARCC (rank 5) had a relatively low trailing 12-month dividend yield as of 6/19/2015 (under 10%), I do not believe it was a surprise each company either had a stable or slightly increasing dividend per share rate during the third quarter 2015 - second quarter of 2016.

As one moves down this list, it is also not surprising FSFR (rank 8) had a material (at or greater than 10%) decrease to the company's dividend per share rate during the third quarter 2015 - second quarter of 2016 (especially when considering the company's low weighted average annualized yield percentage). Regarding NEWT and the company's material dividend decrease, this BDC had a unique event when it declared a "one-time" special periodic dividend of $2.69 per share during the calendar fourth quarter of 2015.

This dividend was a necessary distribution by NEWT pertaining to the company's taxable income during 2014 (the company converted to a BDC in November 2014). This event was fully discussed in a prior NEWT article. In my professional opinion, this added some "pressure" to the normal quarterly dividend during the calendar fourth quarter of 2015 and first quarter of 2016.

B) Annual Forward Yield Based on Stock Price as of 6/17/2016 (Based on Lowest to Highest Percentage) (One Good General Indicator of Near-Term Dividend Sustainability; Exceptions Apply):

1) MAIN: 6.65%

2) GBDC: 7.41%

3) SLRC: 8.45%

4) ARCC: 10.84%

5) ACSF: 11.08%

6) FSFR: 11.18%

7) NEWT: 11.31%

8) PSEC: 12.90%

9) AINV: 14.63%

10) FSC: 14.97%

11) MCC: 18.46%

C) Annual Forward Yield Based on NAV as of 3/31/2016 (Based on Lowest to Highest Percentage) (A Very Good General Indicator of Near-Term Dividend Sustainability; Exceptions Apply):

1) SLRC: 7.59%

2) FSFR: 8.05%

3) GBDC: 8.08%

4) FSC: 8.64%

5) ARCC: 9.21%

6) ACSF: 9.93%

6) NEWT 9.93%

8) MAIN: 10.20%

9) PSEC: 10.40%

10) AINV: 10.99%

11) MCC: 12.24%

D) Weighted Average Annualized Yield on Debt Investments as of 3/31/2016 (Based on Highest to Lowest Percentage) (Another Good General Indicator of Near-Term Dividend Sustainability; However Also Generally Heightens Risk for Investment Depreciation):

1) PSEC: 13.40%

2) MCC: 12.10%

3) AINV: 11.00%

4) FSC: 10.30%

4) SLRC: 10.30%

6) ARCC: 10.10%

7) MAIN: 9.91%

8) FSFR: 8.40%

9) GBDC: 7.60%

10) ACSF: 6.40%

11) NEWT: 6.00%

In regards to NEWT's low percentage, it should be noted a sizable percentage of the company's net ICTI comes from the capital gains associated with the sale of its small business administration ("SBA") Section 7(a) government-guaranteed loans. Premiums associated with these types of loans have ranged between 10% - 15% over the prior 5+ years.

Simply put, these premiums have remained very consistent, even during times when broader debt/credit markets have experienced volatility in pricing/yields. As such, NEWT's low weighted average annualized yield on debt investments is a bit deceiving when it comes to dividend sustainability.

E) Weighted Average Cash LIBOR Floor as of 3/31/2016 (Based on Lowest to Highest Percentage)

1) NEWT: Loans = Prime

2) FSFR: 0.92%

2) SLRC: 0.92%

4) ARCC: 0.93%

5) FSC: 0.99%

6) GBDC: 1.00%

7) ACSF: 1.01%

8) AINV: 1.09%

8) MAIN: 1.09%

10) MCC: 1.12%

11) PSEC 1.34%

Conclusions Drawn (PART 2):

This article has compared PSEC and 10 other BDC peers in regards to recent dividend per share rates, yield percentages, and several other dividend sustainability metrics. This article also discussed PSEC's near-term dividend sustainability. Using Table 3 as support, below were the recent dividend per share rates and yield percentages for PSEC:

PSEC: Monthly dividends totaling $0.25 per share for the calendar second quarter of 2016, 12.90% trailing 12-month dividend yield, 12.90% annual forward yield to the company's stock price as of 6/17/2016, and 10.40% annual forward yield to the company's NAV as of 3/31/2016

Since PSEC, as of 3/31/2016, had the highest weighted average annualized yield on the company's debt investments (positive factor), had an average cumulative undistributed NII (deficit) ratio (neutral factor), continued to have the highest weighted average cash LIBOR floor (negative factor), and the highest weighted average interest rate on all debt outstanding (negative factor), I believe the company should continue to have an annual forward yield to its NAV near the average of the 11 BDC peers within this analysis.

When combining this data with various other analytical metrics not discussed within this specific article (some factors were covered in PART 1), I believe the likelihood of PSEC having a stable dividend for the months of September 2016-October 2016 is a high (80%) probability*.

When combining the analysis above with various other analytical metrics not discussed within this specific article (some factors were covered in PART 1), the following probabilities regarding each of the 10 BDC peers' near-term dividend sustainability is provided:

GBDC: Very High (90%) probability of a stable dividend for the calendar third quarter of 2016

MAIN: High (80%) probability of a stable - slightly increasing dividend for the months of September 2016-November 2016*

NEWT: High (80%) probability of a stable - slightly increasing dividend for the calendar third quarter of 2016

FSC: High (80%) probability of a stable dividend for the months of September 2016-November 2016*

ARCC and SLRC: Modest to high (70%) probability of a stable dividend for the calendar third quarter of 2016

ACSF: Modest to high (70%) probability of a stable dividend for the months of August 2016-October 2016**

FSFR: Modest to relatively high (60%) probability of a stable dividend for the months of September 2016-November 2016*

AINV and MCC: Modest to relatively high (60%) probability of a stable dividend for the calendar third quarter of 2016

* = Monthly dividends have currently been declared through August 2016 (per GAAP)

** = Monthly dividends have currently been declared through July 2016 (per GAAP)

My BUY, SELL, or HOLD Recommendation:

PSEC recently closed at $7.75 per share as of 6/17/2016. This was a ($1.86) per share discount to PSEC's NAV of $9.61 per share as of 3/31/2016. This calculates to a price to NAV ratio of 0.8065 or a discount of (19.35%).

From the analysis provided above, including additional factors not analyzed within this article (some factors were covered in PART 1), I currently rate PSEC as a SELL when the company's stock price is trading at less than an (18%) discount to NAV as of 3/31/2016, a HOLD when trading at or greater than an (18%) but less than a (25%) discount to NAV as of 3/31/2016, and a BUY when trading at or greater than a (25%) discount to NAV as of 3/31/2016. These ranges are unchanged when compared to my last PSEC article.

As such, I currently rate PSEC as a HOLD. My current price target for PSEC is approximately $7.90 per share. This is currently the price where my HOLD recommendation would change to a SELL. This price target is unchanged when compared to my last PSEC article. My current re-entry price for PSEC is approximately $7.20 per share. This is currently the price where my HOLD recommendation would change to a BUY.

For support on my current BUY, SELL, or HOLD recommendation, I recently discussed some of PSEC's positive and negative factors/catalysts to consider in the following prior article (read the Conclusions Drawn section for quick access):

Prospect Capital Corp.'s Results for Fiscal Q3 2016 - My Assessment (Including Current Price Target)

Final Note: On 8/27/2015, I once again initiated a position in PSEC at a weighted average purchase price of $7.325 per share. I made a subsequent purchase in PSEC on 2/8/2016 at a weighted average price of $5.445 per share. My second purchase was approximately double the monetary amount of my initial purchase. When calculated, the weighted average purchase price on my PSEC position was $6.072 per share.

This weighted average per share price excluded all dividends received/reinvested. I sold my entire PSEC position on 3/2/2016 at a weighted average sales price of $7.495 per share as my price target, at the time, was met. All trades were disclosed to readers, in "real time," via the "StockTalks" feature of Seeking Alpha (and in prior PSEC articles). All proceeds from the sale of PSEC stock were "redeployed" into several other equity investments which had/currently have a positive total return.

Each investor's BUY, SELL, or HOLD decision is based on one's risk tolerance, time horizon, and dividend income goals. My personal recommendation will not fit each reader's current investing strategy. The factual information provided within this article is intended to help assist readers when it comes to investing strategies/decisions.

Disclosure: I am/we are long FSC, FSFR, GBDC, NEWT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I currently have no position in PSEC, ACSF, AINV, ARCC, MAIN, MCC, or SLRC.