Prospect Capital's Recent Valuation, NAV, And Dividend Compared To 10 BDC Peers - Part 2

| About: Prospect Capital (PSEC)
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Summary

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

This includes a discussion of the company's weighted average cash LIBOR floor and percentage of debt investments with floating interest rates (forward-looking data) in comparison to ten BDC peers.

This article also provides a comparison of PSEC's recent weighted average annualized yield on debt investments and weighted average interest rate on outstanding borrowings to ten BDC peers.

In addition, 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.

My near-term dividend sustainability projection for each of the ten 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 eight 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 8 BDC Peers (Post Calendar Q3 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 a comparative 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 ten 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 which 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 various comparisons between PSEC and the ten other BDC peers. I will also provide my current BUY, SELL, or HOLD recommendation and price target on PSEC.

Side Note: As of 12/20/2016, Apollo Investment Corp. (NASDAQ:AINV), Ares Capital Corp. (NASDAQ:ARCC), Fifth Street Finance (FSC), Fifth Street Senior Floating Rate Corp. (FSFR), Golub Capital BDC Inc. (NASDAQ:GBDC), Medley Capital Corp. (NYSE:MCC), Newtek Business Services Corp. (NASDAQ:NEWT), and Solar Capital Ltd. (NASDAQ:SLRC) 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, American Capital Senior Floating Ltd. (NASDAQ:ACSF), and Main Street Capital Corp. (NYSE:MAIN) had stock prices that have not reset lower in reference to each company's December 2016 dividend accrual. 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 ten other BDC peers regarding quarterly dividend per share rates and yield percentages.

Table 3 -Dividend Per Share Rates and Yield Percentages

(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 regard to PSEC and ten other BDC peers (see each corresponding column): 1) dividend per share rate for the calendar third quarter of 2016 (including any special periodic dividends); 2) stock price as of 9/23/2016; 3) trailing 12-month dividend yield (dividend per share rate from the calendar fourth quarter of 2015 through the calendar third quarter of 2016); 4) annual forward dividend yield based on the dividend per share rate for the calendar third quarter of 2016 using the stock price as of 9/23/2016 (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 third quarter of 2016 using the NAV as of 6/30/2016 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter); 6) dividend per share rate for the calendar fourth quarter of 2016 (including any special periodic dividends); 7) stock price as of 12/20/2016; 8) trailing 12-month dividend yield (dividend per share rate from the calendar first quarter of 2016 through the calendar fourth quarter of 2016); 9) annual forward dividend yield based on the dividend per share rate for the calendar fourth quarter of 2016 using the stock price as of 12/20/2016 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter); 10) annual forward dividend yield based on the dividend per share rate for the calendar fourth quarter of 2016 using the NAV as of 9/30/2016 (for monthly dividend payers, the latest monthly dividend per share rate during the quarter); and 11) trailing 12-month dividend increase (decrease) percentage (for monthly dividend payers, dividend per share rate fluctuation from December 2015 to December 2016). Let us now begin the comparative analysis between PSEC and the ten other BDC peers.

PSEC

Using Table 3 above as a reference, PSEC declared a dividend of $0.0833 per share for July, August, and September 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 traded at $8.25 per share on 9/23/2016. When calculated, this was a trailing 12-month dividend yield of 12.12%, an annual forward yield to the stock price as of 9/23/2016 of 12.12%, and an annual forward yield to the company's NAV as of 6/30/2016 of 10.39%. When comparing each yield percentage to its 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 6/30/2016 were slightly-to-modestly above average.

When combining this data with various other analytical metrics, I correctly projected in the following PSEC article that the company's dividend would remain stable for November 2016-January 2017:

Prospect Capital's Dividend And NAV Sustainability Analysis - Part 2 (Including November 2016-January 2017 Dividend Projections)

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

(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 weighted average annualized yield on its debt investments of 12.80% as of 9/30/2016, which was the highest out of the eleven BDC peers within this analysis (see blue reference "D"). The company had a materially higher weighted average annualized yield percentage when compared to the mean of 9.51%. However, when compared to the prior quarter, PSEC's weighted average annualized yield on its debt investments decreased (0.4%). This was a notable drop for just one quarter, which was mainly attributable to the decreased weighted average yield on PSEC's collateralized loan obligation ("CLO") portfolio.

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 ("forward-looking" data). Even though each company's weighted average cash LIBOR floor has no current "material" impacts on near-term dividend sustainability, this metric will certainly impact the companies' future dividend sustainability as early as next year. Due to the notable net increase of LIBOR across all tenors/maturities during the calendar third and fourth quarters of 2016 (through 12/20/2016), I decided it was appropriate to update each BDC's weighted average cash LIBOR floor this quarter. When the Federal Open Market Committee ("FOMC") eventually continues to increase the Federal ("Fed") Funds Rate (current indications are for two-three 25 basis point [bp] "rate hikes" in 2017), a BDC's weighted average cash LIBOR floor will determine when the investment portfolio will begin to see a notable net increase in investment income due to rising current/"spot" LIBOR on variable-rate loans.

Side Note: It should be noted that 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. 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 and coverage of several other sectors, 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 Seeking Alpha (at least in my professional opinion).

PSEC's weighted average cash LIBOR floor, when excluding the company's CLO portfolio, was 1.36% as of 12/31/2015. Out of the eleven BDC stocks within this analysis, it had the highest weighted average cash LIBOR floor as of 12/31/2015. With that being said, PSEC's percentage as of 12/31/2015 was a notable reduction when compared to prior percentages. Its weighted average cash LIBOR floor, when excluding the company's CLO investments, was 1.31% as of 9/30/2016 (see blue reference "E"). When calculated, this was a (5) bps decrease during the first three calendar quarters of 2016. Even though PSEC's weighted average cash LIBOR floor as of 9/30/2016 was still the highest out of the eleven BDC peers within this analysis, I believe the continued gradual net 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 variable-rate liabilities, an increase in the forward LIBOR curve typically negatively impacts projected future discounted cash flows under most scenarios until the cash LIBOR floor of a majority of underlying assets is surpassed. Simply put, an increase in a CLO's "cost of funds" rate typically occurs.

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 actually occurred within PSEC's CLO portfolio during the calendar first, second, and third quarters of 2016. As such, this was one reason why the company's CLO portfolio experienced minor net depreciation during the calendar third quarter, contrary to price increases within the middle market ("MM") and broadly syndicated loan market as a whole. Readers should also understand each specific CLO investment needs to be separately valued, as each securitization has different underlying loans directly impacting overall performance (including different input factors/variables dependent upon the "tranche" of a particular securitization). 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 next metric shown in Table 4 above is each BDC's weighted average interest rate on all debt outstanding as of 9/30/2016. PSEC had a weighted average interest rate of 5.35% on its outstanding borrowings as of 9/30/2016 (excludes commitment fees and loan issuance costs; see blue reference "F"). This compared to a weighted average interest rate of 5.19%, 5.30%, 5.35%, and 5.36% as of 9/30/2015, 12/31/2015, 3/31/2016, and 6/30/2016, respectively. When compared to the ten other BDC peers within this analysis, it continued to have the highest weighted average interest rate on all debt outstanding.

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 that the company had only 1.68% of its outstanding borrowings in debt instruments that bore floating interest rates (which are mainly based on LIBOR), while 98.32% bore fixed interest rates. So, while PSEC had the highest weighted average interest rates on all debt outstanding as of 9/30/2016, 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 9/30/2016 allows readers to better understand which companies will experience generalized characteristics in the future. PSEC has continued to minimally utilize its low-cost $885 million revolving credit facility over the past several quarters. As of 9/30/2016, its revolving credit facility bore interest at one-month LIBOR plus 225 bps. I would like to see the company materially utilize its lower-cost revolving credit facility versus its higher-cost alternative debt financing in the future. This includes its "at-the-market" ("ATM") 2024 Notes program and Prospect Capital InterNotes®. In the end, this would positively impact PSEC's NII/net ICTI over the next several years.

The last metric shown in Table 4 is each BDC's proportion of debt investments with floating interest rates as of 9/30/2016 (additional forward-looking data). PSEC's proportion of debt investments with floating interest rates was 87.72% as of 9/30/2016 (see blue reference "G"). Its percentage was slightly more attractive when compared to the mean of the eleven BDC peers within this analysis of 85.69%. I would point out AINV's and MAIN's proportion of debt investments with floating interest rates as of 9/30/2016 was 52.00% and 64.00%, respectively. Both percentages continued to remain materially below the mean of the eleven BDC peers within this analysis.

Once again using Table 3 as a reference, PSEC declared a dividend of $0.0833 per share for October, November, and December 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 traded at $8.35 per share on 12/20/2016. When calculated, this was a trailing 12-month dividend yield of 11.97%, an annual forward yield to the stock price as of 12/20/2016 of 11.97%, and an annual forward yield to the company's NAV as of 9/30/2016 of 10.41%. When comparing each yield percentage to PSEC's BDC peers within this analysis, all three yield percentages were slightly-to-modestly above average.

Various Comparisons Between PSEC and the Company's Ten 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 in ranking order. As such, using Table 3 and Table 4 above as a reference, the following metrics are provided for PSEC and the ten other BDC peers.

A) Trailing 12-Month Yields as of 1/1/2016 and 12/20/2016, Respectively (Including Annual Dividend Change; Based on Lowest to Highest Percentage as of 1/1/2016) (Good General Indicator of "Backtesting" Dividend Sustainability; Exceptions Apply):

1) GBDC: 7.70%; 8.29% (Stable Dividend Calendar Q4 2015 - Q4 2016)

2) MAIN: 9.15%; 7.37% (3% Dividend Increase Calendar Q4 2015 - Q4 2016)

3) SLRC: 9.74%; 7.76% (Stable Dividend Calendar Q4 2015 - Q4 2016)

4) FSC: 10.84%; 13.16% (Stable Dividend Calendar Q4 2015 - Q4 2016)

5) ARCC: 11.02%; 9.44% (Stable Dividend Calendar Q4 2015 - Q4 2016)

6) FSFR: 11.67%; 10.12% (Stable Dividend Calendar Q4 2015 - Q4 2016)

7) ACSF: 11.83%; 9.74% (Stable Dividend Calendar Q4 2015 - Q4 2016)

8) PSEC: 14.71%; 11.97% (Stable Dividend Calendar Q4 2015 - Q4 2016)

9) AINV: 15.33%; 11.88% (25% Dividend Decrease Calendar Q4 2015 - Q4 2016)

10) MCC: 15.96%; 13.85% (27% Dividend Decrease Calendar Q4 2015 - Q4 2016)

11) NEWT: 31.08%; 9.67% (0% Net Dividend Change Calendar Q4 2015 - Q4 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 1/1/2016, the lower the probability of a dividend decrease (or the higher the probability of a stable/increasing dividend) during the first to fourth quarters of 2016. In addition, generally the higher each company's trailing 12-month dividend yield was as of 1/1/2016, the higher the risk for a future dividend decrease (or the lower the probability of a stable/increasing dividend) over the same time frame. Again, there are some exceptions to this general "trend," but I believe one can see some patterns arise when analyzing each company's trailing 12-month dividend yields.

For instance, since GBDC (rank 1), MAIN (rank 2), SLRC (rank 3), and FSC (rank 4) had a relatively low trailing 12-month dividend yield as of 1/1/2016, I do not believe it was a surprise each company either had a stable or slightly increasing dividend per share rate during the first to fourth quarters of 2016 (in GBDC's and MAIN's case, also declaring special periodic dividends). As one moves down this list, it is also not surprising AINV (rank 9) and MCC (rank 10) had a material (at or greater than 10%) decrease to their respective dividend per share rate during the first to fourth quarters of 2016. Both these companies also continued to have the largest percentage of investments on non-accrual status as of 9/30/2016. As covered in Part 1, this was a negative trend that factored into each company's material dividend reduction. Regarding NEWT and its extremely high trailing 12-month dividend yield was as of 1/1/2016, 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, which pertained to its taxable income during 2014 (the company converted to a BDC in November 2014). This event was fully discussed in a prior NEWT article.

B) Annual Forward Yield based on Stock Price as of 12/20/2016 (Based on Lowest to Highest Percentage) (Another Good General Indicator of Near-Term Dividend Sustainability; Exceptions Apply):

1) MAIN: 5.99%

2) GBDC: 6.94%

3) SLRC: 7.76%

4) ARCC: 9.44%

5) ACSF: 9.74%

6) NEWT: 10.11%

7) FSFR: 10.12%

8) AINV: 10.19%

9) MCC: 11.72%

10) PSEC: 11.97%

11) FSC: 13.16%

Along with FSC having the highest annual forward yield based on a stock price as of 12/20/2016, it should also be noted the three recent non-accruals within the company's investment portfolio have put heightened risk on its near-term dividend sustainability.

C) Annual Forward Yield Based on NAV as of 9/30/2016 (Based on Lowest to Highest Percentage) (A Very Good General Indicator of Near-Term Dividend Sustainability; Exceptions Apply):

1) SLRC: 7.37%

2) GBDC: 8.02%

3) FSFR: 8.14%

4) AINV: 8.63%

5) ACSF: 8.82%

6) FSC: 9.03%

7) ARCC: 9.16%

8) MCC: 9.27%

9) MAIN: 10.27%

10) PSEC: 10.41%

11) NEWT 11.22%

Regarding this specific metric, I would point out that this type of comparative article two quarters ago correctly identified two BDC peers (AINV and MCC) with heightened risk of a near-term dividend reduction. It was determined that AINV and MCC had the highest annual forward yields based on each company's NAV as of 3/31/2016 of 10.99% and 12.24%, respectively. Since both companies declared a material dividend reduction for the calendar third quarter of 2016, I believe this specific metric proved to be highly useful.

D) Weighted Average Annualized Yield on Debt Investments as of 9/30/2016 (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: 12.80% (0.4% Decrease Compared to Prior Quarter)

2) MCC: 11.80% (0.2% Decrease Compared to Prior Quarter)

3) AINV: 11.00% (No Change Compared to Prior Quarter)

4) FSC: 10.40% (0.2% Decrease Compared to Prior Quarter)

5) MAIN: 10.02% (0.02% Decrease Compared to Prior Quarter)

6) SLRC: 10.00% (0.2% Decrease Compared to Prior Quarter)

7) ARCC: 9.70% (0.1% Decrease Compared to Prior Quarter)

8) FSFR: 8.60% (No Change Compared to Prior Quarter)

9) GBDC: 7.80% (0.2% Increase Compared to Prior Quarter)

10) ACSF: 6.26% (0.33% Decrease Compared to Prior Quarter)

11) NEWT: 6.25% (No Change Compared to Prior Quarter)

In regard 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% and 15% over the past 5+ years. Simply put, these premiums have remained consistent even during times when broader debt/credit markets have experienced heightened volatility in pricing/yields. In addition, NEWT continually recognizes dividend income from its many control investments. A majority of quarterly dividend income is recurring in nature. As such, the company'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 9/30/2016 (Based on Lowest to Highest Percentage):

1) NEWT: Floating Interest Rate Loans = Prime

2) SLRC: 0.91%

6) FSFR: 0.94%

4) FSC: 0.95%

5) ARCC: 0.98%

6) ACSF: 1.00%

7) AINV: 1.01%

8) GBDC: 1.02%

9) MAIN: 1.08%

10) MCC: 1.14%

11) PSEC 1.31%

F) Percentage of Debt Investments with Floating Interest Rates as of 9/30/2016 (Based on Highest to Lowest Percentage):

1) ACSF: 100%

1) FSFR: 100%

3) GBDC: 99.60%

4) NEWT: 96.71%

5) SLRC: 94.00%

6) ARCC: 88.89%

7) PSEC 87.72%

8) FSC: 80.95%

9) MCC: 78.70%

10) MAIN: 64.00%

11) AINV: 52.00%

Conclusions Drawn (Part 2)

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

Monthly dividends totaling $0.25 per share for the calendar fourth quarter of 2016; 11.97% trailing 12-month dividend yield; 11.97% annual forward yield to the company's stock price as of 12/20/2016; and 10.41% annual forward yield to the company's NAV as of 9/30/2016

In addition, since PSEC as of 9/30/2016 had the highest weighted average annualized yield on its debt investments (positive factor), had a notable cumulative undistributed taxable income ("UTI") balance (positive factor), continued to have the highest weighted average cash LIBOR floor (negative factor), the highest weighted average interest rate on all debt outstanding (negative factor), and a slightly higher percentage of floating interest rate debt investments (a neutral/slightly positive factor), I believe the company should continue to have an annual forward yield to its NAV near-to-slightly above the average of the eleven 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 February-April 2017 is a relatively high to high (75%) 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 ten BDC peers' near-term dividend sustainability are provided.

GBDC: Very High (90%) probability of a stable dividend for the calendar first quarter of 2017

MAIN: Very High (90%) probability of a stable-slightly increasing dividend for the months of March-May 2017**

ARCC and SLRC: High (80%) probability of a stable dividend for the calendar first quarter of 2017

FSFR: Relatively high to High (75%) probability of a stable dividend for the months of March-May 2017**

AINV, MCC, and NEWT: Modest to high (70%) probability of a stable dividend for the calendar first quarter of 2017

ACSF: Modest to high (70%) probability of a stable dividend for the months of February-April 2017*

FSC: Modest (50%) probability of a stable dividend for the months of March-May 2017**

* =Monthly dividends have currently been declared through January 2017 (per GAAP)

** =Monthly dividends have currently been declared through February 2017 (per GAAP)

My BUY, SELL, or HOLD Recommendation

PSEC recently closed at $8.35 per share as of 12/20/2016. This was a ($1.25) per share discount to the company's NAV as of 9/30/2016 of $9.60 per share. This calculates to a price-to-NAV ratio of 0.8702 or a discount of (12.98%).

When combining the analysis above with various other factors/analytical metrics not discussed within this specific article, I currently rate PSEC as a SELL when the stock price is trading at less than a (15%) discount to NAV as of 9/30/2016, a HOLD when trading at or greater than a (15%) but less than a (22.5%) discount to NAV as of 9/30/2016, and a BUY when trading at or greater than a (22.5%) discount to NAV as of 9/30/2016. These percentage ranges are unchanged when compared to my last PSEC article.

As such, I currently rate PSEC as a SELL (however, close to my HOLD range). My current price target for PSEC is approximately $8.15 per share. This is currently the price where my SELL recommendation would change to a HOLD. This price target is unchanged when compared to my last PSEC article. My current re-entry price for the stock is approximately $7.45 per share. This is currently the price where my recommendation would change to a BUY. This re-entry price is also unchanged when compared to my last PSEC article.

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

Prospect Capital Corp.'s Results for Fiscal Q1 2017 - My Assessment (Including Current Recommendation And Price Target)

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. All trades/investments I have performed over the past few years have been disclosed to readers in "real time" (that day at the latest) via the "StockTalks" feature of Seeking Alpha. Through this resource, readers can look up all my prior disclosures (buys/sells) regarding all companies I cover here at Seeking Alpha (see my profile page for a list of all stocks covered).

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

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, FSC, MAIN, MCC, NEWT, or SLRC.