FSK - Main Street Capital's Share Price Is Getting Ahead Of Itself But I Wouldn't Fight The Momentum
2024-04-22 09:00:00 ET
Summary
- Main Street Capital is a popular BDC with a large following on Seeking Alpha.
- I have seen a significant increase in investment in MAIN, but believe the valuation is becoming stretched.
- I plan to consider an exit strategy if MAIN's share price reaches $50 range.
Main Street Capital ( MAIN ) is one of the most popular business development corporations ((BDC)) on Seeking Alpha , with 72,800 followers. MAIN is the 7 th largest BDC by net assets ($2.48 billion) and the 5 th largest by market cap ($4.05 billion), yet it's the 2 nd most followed BDC on Seeking Alpha behind Ares Capital ( ARCC ) with 77,060 followers. I started a position in MAIN when it was trading in the mid-30s in May of 2022, and since then, my initial investment has increased by 31.18%, and I have generated an additional 16.50% from its distributions. MAIN has continuously delivered for its shareholders, and while the distribution has increased and special income continues to be returned, its share price is reaching a valuation that continues to make less sense to me. Momentum is something that I don't fight, and shares of MAIN could certainly continue higher, but if it rides Q1 earnings into the $50 range, I would really need to consider exiting my position. MAIN has turned into an investment that is delivering capital appreciation and significant income, and at a certain point, I need to think about locking in the gains. I would have no problem holding my shares if shares of MAIN retrace as it pays a healthy monthly distribution, but if the valuation continues to be stretched, I would seriously consider an exit....
Main Street Capital's Share Price Is Getting Ahead Of Itself, But I Wouldn't Fight The Momentum