Great Elm Capital: Being Suppressed By Higher Interest Rates

Summary

• Great Elm Capital offers a high 14.5% dividend yield and strong Q1 earnings, but persistent NAV declines and inconsistent distributions remain concerns.
• The portfolio's heavy CLO exposure and below investment grade credit risk make GECC vulnerable in a high interest rate environment.
• Despite no current non-accruals and diversified holdings, increased leverage and declining cash position raise caution for future stability.
• I maintain a hold rating, as GECC's risks outweigh its income appeal until interest rates fall or portfolio quality improves.

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Overview

Great Elm Capital (NASDAQ:GECC) is a Business Development Company but differentiates itself from peers through its unique portfolio strategy. However, this strategy has also demonstrated that it can be the source of weakness. I previously covered GECC and

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.