No Hope In Sight For Medley Capital

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About: Medley Capital (MCC), Includes: FSAM
by: William Packer
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William Packer
Debt, bonds, REITs, Long/Short Equity
Summary

Medley Capital Corp. has the worst management in the BDC universe that I know of.

Shareholder activism for BDCs has been unsuccessful and will continue to be unsuccessful given the external managers 14% equity stake.

The BDCs expenses are too high for it to be profitable long term.

BDC leverage reform now allows MCC to leverage 2:1 when they are currently unable to maintain NAV (Net Asset Value) when using much more conservative leverage today.

Management has already stated on the MDLY conference call last quarter that they intend to take full advantage of the new leverage rules going forward for MCC, which is expected to increase their management fees on the newly borrowed capital by 1.75% plus interest expense, resulting in poor ROI to shareholders but benefits to the manager.

Medley Capital Corp. Has Continually Underperformed Their Peers Over Time

Medley Capital Corp (NYSE:MCC) has failed to deliver positive shareholder returns since 2014. The company continues to display results each quarter that includes