This article is excerpted from a letter by MOI Global instructor Jim Roumell, partner and portfolio manager of Roumell Asset Management (RAM), based in Chevy Chase, Maryland. Jim is a valued participant in The Zurich Project.
MCC reported quarterly results that were disappointing, but not totally surprising to us. We expected that MCC would report additional losses from its legacy second lien loan portfolio and that is exactly what occurred. Most importantly to our thesis is that the losses were well below our stress case scenario. Even in our stress case scenario, the Net Asset Value (NAV) per share of MCC is significantly higher than where the stock currently trades.
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Disclosure: The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients, and the reader should not assume that investments in the securities identified and discussed were or will be profitable.