Hot Stock Alert: Saratoga Investment Corp. (NYSE: SAR)

Saratoga Investment Corp. (NYSE: SAR) spotted trading -7.46% off 52-week high price. On the other end, the stock has been noted 20.34% away from the low price over the last 52-weeks. The stock changed -2.21% to recent value of $26.56. The stock transacted 78896 shares during most recent day however it has an average volume of 105.25K shares. The company has 9.75M of outstanding shares and 6.73M shares were floated in the market.

Saratoga Investment Corp. (SAR) recently reported financial results for its 2020 fiscal third quarter. In addition, the Company reported that its Board of Directors has reported a dividend of $0.56 per share for the fiscal quarter ended November 30, 2019, payable on February 6, 2020, to all stockholders of record at the close of business on January 24, 2020.

“Our third quarter quarterly performance metrics were remarkably strong with LTM return on equity of 17.6%, adjusted NII per share of $0.61 per share, earnings per share of $1.37, and an additional increase in NAV per share this quarter of $0.83, or 3.4%, to $25.30. This quarter included another important realized gain, with our Censis equity investment recognizing an $11M gain through a sale,” stated Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “Our continued strong price and volume stock market performance also enabled us to issue a further $49.4M of equity accretively under our existing ATM program this quarter, essentially fully funding the equity requirement for our second SBIC license.  Drawing down debt under our second SBIC license at the 2-to-1 leverage ratio, our approximate all-in 3% cost-of-debt would be highly accretive to earnings and drive future earnings growth when invested consistent with our current portfolio. Recently we also reported a $0.56 per share dividend for the quarter ended November 30, 2019, unchanged from the previous quarter. Our liquidity is robust, providing us the ability to grow our AUM by a further 52% utilizing the current liquidity and committed credit facilities at our disposal and following the $50.0M baby bond repayment in December.

For the three months ended November 30, 2019, total investment income of $14.2M increased by $1.4M, or 10.6%, contrast to $12.8M for the three months ended November 30, 2018, and by 2.2% on a quarter-on-quarter basis from $13.9M for the three months ended August 31, 2019. This increased investment income was generated from an investment base that has grown by 9.7% since last year and was relatively unchanged from last quarter. In addition, these increases were achieved despite the weighted average current coupon on non-CLO BDC investments decreasing to 10.1% this quarter from 11.3% last year and 10.4% last quarter. The decrease in the current coupon is primarily Because of the reductions in LIBOR over these periods.

As contrast to the three months ended November 30, 2018, the investment income increase of $1.4M was offset by: (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from the $20.0M baby bond follow-on issuance last year; and (ii) increased base and incentive management fees generated from the management of this larger pool of investments. Total expenses, not including interest and debt financing expenses, base management fees, incentive fees and income tax benefit, increased from $1.4M for the three months ended November 30, 2018, to $1.5M for the three months ended November 30, 2019.

Net investment income on a weighted average per share basis was $0.46 for the three months ended November 30, 2019. Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income on a weighted average per share basis was $0.61. This compares to adjusted net investment income per share of $0.68 for the three months ended August 31, 2019, and $0.65 for the three months ended November 30, 2018. During these periods, weighted average ordinary shares outstanding increased from 7.5M shares for the three months ended November 30, 2018, to 8.3M shares and 10.0M shares for the three months ended August 31, 2019, and November 30, 2019, respectively. These share increases primarily reflect the 1.4M shares issued last quarter and the 2.0M shares issued this quarter pursuant to the At-the-Market (“ATM”) equity offering program, both of which were accretive to net asset value (“NAV”) per share.

The price moved ahead of -0.65% from the mean of 20 days, 2.92% from mean of 50 days SMA and performed 6.16% from mean of 200 days price. Company’s performance for the week was -0.56%, 6.45% for month and YTD performance remained 6.45%.