SAR - Saratoga Investment Corp: The Leverage Is Too Excessive For Going Long
2024-03-28 16:09:30 ET
Summary
- Saratoga Investment Corp is a BDC that focuses on investing and issuing loans to lower-end middle market companies that are already in the cash-flowing phase.
- There is some exposure to collateralized loan obligations (CLOs) through separate subsidiaries and joint ventures, but these amounts are limited.
- On a YTD basis, SAR has underperformed the index.
- Looking at the fundamentals and the most recent earnings packet, the YTD price correction is not sufficient to justify the underlying risks.
- I elaborate on the key reasons why, in my opinion, SAR is too speculative for prudent investors.
Saratoga Investment Corp ( SAR ) is a business development company or BDC with a rather conventional focus - i.e., investing and issuing loans to the lower end of the middle market companies that are already cash flow positive with annual sales between $8 and $250 million, and EBITDA north of $2 million....
Saratoga Investment Corp: The Leverage Is Too Excessive For Going Long