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Analyzing Main Street Capital's Results For Q2 2018 (Includes Updated Price Target)


  • This article assesses MAIN’s performance for Q2 2018 and compares results over the trailing 12 months.
  • First, MAIN’s income statement is analyzed for the three-months ended 9/30/2017, 12/31/2017, 3/31/2018, and 6/30/2018.
  • This includes comparing how MAIN’s reported results compared to my projections for the second quarter of 2018 regarding NII and NAV per share.
  • Second, this article performs an FMV investing rating analysis on MAIN’s portfolio companies over the prior several quarters.
  • My summarized thoughts on MAIN’s performance for Q2 2018, current price target, and buy, sell, or hold recommendation are stated in the “Conclusions Drawn” section of the article.

Focus of Article:

The focus of this article is to analyze Main Street Capital Corp.’s (NYSE:MAIN) results for the second quarter of 2018 and compare the company’s performance over the trailing 12 months (“TTM”). First, this article analyzes MAIN’s income statement (technically speaking the company’s “consolidated statement of operations”) for the three-months ended 9/30/2017, 12/31/2017, 3/31/2018, and 6/30/2018. This includes an analysis of MAIN’s net investment income (“NII”) and earnings per share (“EPS”) (also known as “net increase (decrease) in net assets resulting from operations”). Second, this article provides a fair market value (“FMV”) investment rating analysis on MAIN’s portfolio companies over the prior several quarters.

This assessment article will show past and current data with supporting documentation within two tables. I am writing this article due to the continued requests to provide this type of “in-depth” analysis on MAIN after the company reports quarterly earnings. This assessment article alone is not the only data/information that should be examined to initiate a position within MAIN. However, I believe this analysis would be a good “starting-point” to begin a discussion on the topic. My BUY, SELL, or HOLD recommendation, updated positive and negative catalysts/trends to consider, and current price target for MAIN are stated in the “Conclusions Drawn” section at the end of the article.

1) Assessing MAIN’s Quarterly Consolidated Statement of Operations:

To begin this analysis, Table 1 is provided below. Table 1 shows MAIN’s consolidated statement of operations for the three-months ended 9/30/2017, 12/31/2017, 3/31/2018, and 6/30/2018. Due to the fact MAIN’s performance is generally not “skewed” due to seasonal trends, I believe comparing the company’s performance over the TTM is the most appropriate type of quantitative analysis for this assessment article. In other words, it is deemed not ideal to compare the quarter of one year to the same quarter of

This article was written by

Scott Kennedy profile picture
Note: I am currently "teaming up" with Colorado Wealth Management to provide weekly CURRENT BV and NAV per share projections on all 20 mREIT and 15 BDC stocks I currently cover. These very informative (and “premium”) projections are provided through Colorado's S.A. Investing Group, The REIT Forum. In addition, this includes additional data/analytics, continuous sector recommendations (including ranges), and exclusive mREIT and BDC "rapid fire" chat notes immediately after earnings (followed by subsequent earnings assessment articles).


I cannot cover ABR or STWD in the mREIT sector due to indirect conflicts of interest.

Note: So, readers have continued to reach out and ask what I provide within Colorado Wealth Management’s Marketplace Service, the REIT Forum. I provide the following benefits vs. what I provide to the public:

1) Quarterly earning assessments of all 35 mREIT + BDC peers I cover. This includes rapid-fire "chat notes" the same/next day of earnings for each covered stock; followed by a detailed assessment article.

2) Subscribers can ask questions / engage in discussions with me daily via the REIT Forum chat feature (each weeknight and during the day on weekends). I answer all questions on the two sectors I cover. The REIT Forum’s chat feature takes precedence over my public responses and personal messages from non-subscribers.

3) Each week, I/we provide a “weekly recommendation” article (with tables for illustrative purposes) so readers can quickly find out which mREIT and BDC stocks have moved “in and out” of my BUY, SELL, or HOLD recommendation range. I believe this is highly valuable information that can lead to enhanced total returns or minimize an investor’s total losses.

4) For my mREIT + BDC articles, subscribers get “early looks” for all public articles I provide. This typically ranges from 1-3 days prior to public publication. For investors looking to “jump on” some of my ideas, prior to the general public being aware of such ideas, this is valuable.

5) Within the REIT Forum mREIT articles, subscribers are provided with one, or a combination of, the following benefits: a) additional tables; b) additional topics; and/or c) sector recommendation tables which are updated weekly using my CURRENT projected BVs for all 20 sector peers I cover. This includes access to sector “risk ratings”.

6) Within the REIT Forum BDC articles, subscribers are provided with one, or a combination of, the following benefits: a) additional tables; b) additional topics; and/or c) sector recommendation tables which are updated weekly using my CURRENT projected NAVs for all 15 sector peers I cover. This includes access to sector “risk ratings”.

7) I provide, for each BDC I cover, risk ratings on over 1500+ underlying portfolio companies. In addition, I provide monthly credit upgrades / downgrades on specific underlying portfolio companies. By having access to this valuable information, subscribers are provided “an edge” when it comes to assessing future BDC performance (which directly impacts stock price valuations).

8) I provide “real-time” chat messages regarding all purchase and sale decisions I make within my personal portfolio for the two sectors I cover. In the past, I have provided such disclosures, for free, via the StockTalks feature of S.A. (for transparency and credibility). However, since this provides additional value for subscribers, I “transitioned” these real-time disclosures to subscribers of the REIT Forum. I will continue to disclose publicly all stock purchase and sale decisions. However, they will only be within each applicable sector article which won’t be in real-time (could be a few days later or could be a few weeks until readers see what moves I made outside the REIT Forum).

I hope this provides some additional clarity on what I specifically provide to Colorado’s the REIT Forum Marketplace service.

I am a Certified Public Accountant (CPA) and Certified in Financial Forensics (CFF). I have also been a member of the American Institute of Certified Public Accountants (AICPA) for 24 years. My current title is partner at a national accounting firm. I have audit, tax, and consulting experience with entities in the following sectors: closed-end funds, energy, financials, healthcare, homebuilders, pharmaceuticals, private equity, REITs, and telecoms. I also have experience with C-corps., estates, high net worth individuals, LLCs, LLPs, S-corps., and trusts. I am an active investor. My investing fundamentals are based on both qualitative and quantitative information. By using my financial / analytical skills, I create specific investing ideas / strategies based on valuations and total returns. The two main sectors I currently provide articles on are mortgage real estate investment trusts (mREITs) and business development companies (BDCs).

Disclaimer: I cannot own and will not give an opinion on any investments my current employer has any direct or indirect professional services with (accounting, audit, tax, consulting, etc.). As such, most large-cap stocks are "off the table" regarding my articles. All accounting insight, analysis, and opinions stated within any articles I write (in regards to a specified stock) are entirely from my own personal research and analysis. I believe my articles are both informative and in some cases educational.

I appreciate my loyal readers and I’ll continue to try to provide high quality, in-depth articles.

Commonly Asked Questions:

Question 1): If you are only paid per article, why make your articles so long / detailed?

- I like to provide the “nuts and bolts” of a company. As such, I strive for my articles to have some sort of “hard to obtain” facts / figures. From this data, I like to fully discuss / analyze specific topics within a particular stock. This mainly consists of a quarterly projection article and a series of articles on a company’s dividend sustainability. In certain instances, I also write articles in regards to specific, material events that occur during a quarter.

- I believe a company’s quarterly results and upcoming dividend declarations are two of the most important topics readers are requesting information on. My analysis takes the “average” article several steps further to allow readers to have access to information that is rare to public viewership.

Question 2): How come you only write 1-2 articles a week (would like to see more)?

- As stated in my profile above, I have a full-time professional career. I write / analyze stocks in my free time. To provide these types of high quality / in-depth articles, I can’t see writing more than 2 articles a week. I believe “quality” should always be a higher priority versus “quantity”.

- As many readers should know by now (if you’ve followed me for a while), I'm not here for the monetary rewards. If that was the case, I’d write 5+ weekly articles and provide little to no engagement in each article’s comment section. I believe the comments section is as important as the article themselves b/c readers have a wide range of questions in relation to each article or the sector in general.

Question 3): What do you personally gain from writing these articles?

- I am not here trying to promote a company, book, or website. There’s nothing wrong with that. That’s just not what I’m about. I’m here for the “average Joe”.

- When I decided to write these articles, I based it on the notion I am filling a “special niche” per se. Using skills that have been built up over my professional career, my articles usually provide unique information that most writers either a) don’t have the technical expertise to provide or b) don’t bother providing due to the time it takes to compile such data. As such, I believe the S.A. community benefits from my articles. I solely do this b/c it’s a passion of mine and I like helping readers have accurate, reliable data that is not readily available. Yes, I understand this may seem “hard to believe” in this day and age.

Question 4): How come you do not write about more stocks?

- To give readers the level of detail that I provide in my articles, I amass large amounts of data every quarter (or even weekly). As a direct result, a large amount of time is consumed by obtaining / analyzing this data.

- If I expanded the stocks I research, it would most likely take away the quality of other articles I currently am writing about. Again, this gets back to the “quality vs. quantity” metric.

- There is a fairly large range of stocks / investment vehicles I cannot write about / provide an opinion on due to various conflicts of interests (regarding my professional career). This is a topic I take VERY seriously.

Analyst’s Disclosure: I am/we are long MAIN, MO, PSEC, TSLX. 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.

I currently have no position in ACSF, AINV, ARCC, FSIC, GAIN, GBDC, MCC, NEWT, OCSI, OCSL, SLRC, or TCPC.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (22)

peteF profile picture
Interesting price target for MAIN at approx' 41.95 vs 41.21 previous HIGH. This article fills me with many thoughts as I see a money pouring in to a 'successful' 10 yr Treasury auction even though it is of record issuance....amidst an overall tightening environment with QT and interest rates rising. Major US indexes are, like MAIN, near all time highs...but many measures of breadth on market prices are not as favorable as the FMV stats given here for MAIN. On balance, investors seem more eager to buy Treasuries than stocks.
deltadunarii profile picture
Thank you for the thorough analysis which reinforce my own beliefs. Long holder of MAIN and adding in small increments. Also much appreciate the price target estimates. I have my BUY target at a lot lower price ($35) but now I might nudge it higher based on your advice.

All the best,
Live this company and always buying more for the long term.
Scott Kennedy profile picture
Hi readers,

I appreciate all the positive feedback on the analysis.

Due to the fact 40+ companies that I cover have reported earnings (or will soon report), I will not be responding to most comments within this particular article (but I read all the positive feedback).

If you have a specific question when it comes to this analysis or MAIN in general, please send me a personal message (“pm”) through the inbox feature of S.A.


BartAtTheRanch profile picture

I am really impressed! I have never seen the historical credit quality tables presented as you have herein. Thanks for the incredibly great job! I just wish you had time to review yet more BDCs!

MyJourney profile picture
Scott, nearly all of your reviews result in HOLD. Just saying. Not a bad place to be for most companies we've already invested in.

Long MAIN, and appreciate your current analysis.
Scott Kennedy profile picture
Hi My Journey,

In the end, it all depends on where a particular stock is trading. I would point out recent / fairly recent articles on CHMI / TSLX / and BMNM recommended a BUY or a STRONG BUY.

So, while some stocks I have covered are currently within my HOLD range, I do have some in my BUY range as well. You just need to find each applicable stock / article.

UncleFred profile picture
Where’s the “Conclusions” section after all that??
Scott Kennedy profile picture
Hi Uncle Fred,

I would suggest to type in the search term "conclusions drawn" on this page and you should find that section of the article (it's towards the end of the article).

onetusk profile picture
A heart felt thank you.
SleepyInSeattle profile picture
Excellent article...thanks. I appreciate every article you have provided and look forward to more.
eaglebear profile picture
Appreciate your work!
07 Aug. 2018
Great update thanks.
Thanks for the update.
3 beach dogs profile picture
solid look under the hood. excellent work. appreciated.
nicholas davout profile picture
Excellent article, very well done. Thank you. Long MAIN in all my accounts from $25+.
Great read scott,Looking forward to the article on two.
Thanks for the update Scott. I know Main's quality is visible and quantifiable vs. its peers as you have demonstrated, however, I can't ever seem to get my head around the current premium to BV at current levels, and have not bought into their story. On another note it is interesting see the blow away "fmv vs. cost" that NEWT currently enjoys vs. the field. This gives me added faith in their story.

mbn profile picture
His Scott;

Thanks as always. It is amazing how quickly you are able to get these analysis out. I mean, earnings were just announced a short time ago.
tricksible profile picture
peacewarrior profile picture
Thanks ! Excellent analytics .
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