PhenixFIN: Trading At A Discount To Book With Hidden Tax Assets

Summary

• PhenixFIN's internalized management and aggressive buybacks have driven strong NAV growth, and significant insider alignment sets a solid foundation for value creation.
• The ECC Capital transaction unlocks a hidden asset: a massive deferred tax asset at ECRO, potentially offering substantial upside not reflected in current book value.
• PFX's concentrated portfolio, equity-heavy approach, and limited liquidity pose risks, but also differentiate it from traditional BDCs and create tracking opportunities.
• Valuation remains attractive, with potential 30% upside based on EPS before hidden ECRO value, despite ongoing G&A drag and lack of regular distributions.

EschCollection

PhenixFIN (NASDAQ:PFX) is a Business Development Company (“BDC”) formerly known as Medley Capital Corporation and has gone through a transformation under new management. Their management structure was internalized at the beginning of 2021. The new structure has resulted in

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PFX, ECRO either through stock ownership, options, or other derivatives. 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.