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1. Company Snapshot

1.a. Company Description

Gladstone Investment Corporation is business development company, specializes in lower middle market, mature stage, buyouts; refinancing existing debt; senior debt securities such as senior loans, senior term loans, lines of credit, and senior notes; senior subordinated debt securities such as senior subordinated loans and senior subordinated notes; junior subordinated debt securities such as subordinated notes and mezzanine loans; limited liability company interests, and warrants or options.The fund does not invest in start-ups.The fund seeks to invest in manufacturing, consumer products and business/consumer services sector.


It seeks to invest in small and mid-sized companies based in the United States.The fund prefers to make debt investments between $5 million and $30 million and equity investments between $10 million and $40 million in companies.The fund seeks to invest in companies with revenue between $20 million and $100 million.


The fund invests in companies with EBITDA from $3 million to $20 million.It seeks minority equity ownership and prefers to hold a board seat in its portfolio companies.It also prefers to take majority stake in its portfolio companies.


The fund typically holds the investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.

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1.b. Last Insights on GAIN

Gladstone Investment Corporation faced challenges due to a high non-accrual ratio, which poses a risk to its financial performance. The company's recent acquisition of Global Grab Technologies, Inc. for $67.6MM in equity and senior secured debt may strain its resources. With 14 BDCs having base dividend coverage levels between 100% and 105%, and 16 below 100%, a system-wide BDC dividend cutting process is likely. Its Q1 earnings beat estimates, but a "Buy" rating on its baby bond GAINZ is due to its 7% yield, not common stock.

1.c. Company Highlights

2. Gladstone Investment Posts Strong Q2 Results Amidst Uncertain Economic Landscape

Gladstone Investment reported a robust financial performance in the second quarter of fiscal '26, with adjusted NII of $0.24 per share, in line with estimates. The company's total investment income rose to $25.3 million, up from $23.5 million in the prior quarter, driven primarily by an additional $1 million of interest income. The portfolio's weighted average yield increased modestly from 13.1% to 13.2%. The company's NAV per share increased to $13.53, up from $12.99 in the previous quarter, driven by net unrealized depreciation, net investment income, and accretion from issuing shares on the ATM program.

Publication Date: Nov -25

📋 Highlights
  • Adjusted NII Coverage: $0.24/share NII fully covers $0.08/month distribution (96c annualized).
  • Total Assets Growth: Portfolio expansion drove assets to $1.1B (+$90M QoQ) with 28 operating companies.
  • Investment Activity: $130M invested in Q1-Q2 FY26 (vs. $221M FY25 total) with 3 new portfolio companies.
  • Liquidity & Leverage: $174M credit facility availability and 193% asset coverage ratio maintained.
  • NAV Increase: Share price rose to $13.53 (+$0.54 QoQ) driven by $1.42 unrealized depreciation and ATM accretion.

Investment Strategy and Portfolio Performance

The company continues to execute its strategy of growing its portfolio through the acquisition of operating companies at attractive valuations. In the first six months of fiscal '26, Gladstone Investment invested approximately $130 million in three new portfolio companies. The existing portfolio has a few consumer-focused companies that have experienced good results, but the management is cautious due to supply chain disruption and tariff costs. As Dave Dullum mentioned, the company is taking a careful approach to mitigate the impact of tariffs, with some companies finding alternative sources for their products.

Valuation and Growth Prospects

With a P/E Ratio of 8.27 and a Dividend Yield of 10.88%, Gladstone Investment appears to be attractively valued. Analysts estimate revenue growth of 11.3% for the next year, which suggests a positive outlook for the company's top line. The company's ROE of 12.76% indicates a decent return on equity. The EV/EBITDA ratio of 13.19 suggests that the company's enterprise value is reasonable relative to its earnings before interest, taxes, depreciation, and amortization.

Liquidity and Capital Management

Gladstone Investment maintained strong liquidity and financial flexibility, with $174 million in availability under its credit facility. The company raised approximately $31.1 million in net proceeds through its common stock ATM program during the quarter. The management expects to access both the equity and debt markets to support new buyout opportunities and refinance upcoming debt maturities. The company's leverage remains in a strong position, with an asset coverage ratio of 193% as of September 30.

3. NewsRoom

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Gladstone Investment: Q2 Earnings Confirms Positive Outlook (Rating Upgrade)

Nov -28

Source: seekingalpha.com

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Dividend Power Dogs: 12 Ideal Safer November Stars

Nov -16

Source: seekingalpha.com

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Gladstone Investment Announces Intent to Redeem All Outstanding 8.00% Notes due 2028

Nov -14

Source: accessnewswire.com

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Gladstone Investment Corporation Prices Offering of 6.875% Notes due 2028

Nov -06

Source: accessnewswire.com

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Gladstone Investment (GAIN) Q2 2026 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Gladstone Investment (GAIN) Meets Q2 Earnings Estimates

Nov -05

Source: zacks.com

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Gladstone Investment Corporation Reports Financial Results for its Second Quarter Ended September 30, 2025

Nov -04

Source: accessnewswire.com

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Gladstone Investment Corporation Earnings Call and Webcast Information

Nov -03

Source: accessnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.00%)

6. Segments

Investment and Related Activities

Expected Growth: 8.0%

Gladstone Investment Corporation's 8.0% growth in Investment and Related Activities is driven by increasing demand for debt financing from small and medium-sized businesses, expansion into new industries, and a strong pipeline of investment opportunities. Additionally, the company's focus on diversifying its investment portfolio and improving operational efficiency have contributed to its growth.

7. Detailed Products

Debt Securities

Gladstone Investment Corporation provides debt financing to small and medium-sized businesses, offering a range of debt securities such as senior loans, subordinated debt, and mezzanine debt.

Equity Investments

Gladstone Investment Corporation makes equity investments in small and medium-sized businesses, providing capital for growth, acquisitions, and recapitalizations.

Structured Equity

Gladstone Investment Corporation offers structured equity solutions, combining debt and equity features to provide flexible financing options for businesses.

Second Lien Debt

Gladstone Investment Corporation provides second lien debt financing to businesses, offering a subordinated debt solution with a lower priority claim on assets.

Unitranche Debt

Gladstone Investment Corporation offers unitranche debt financing, combining senior and subordinated debt into a single financing solution.

8. Gladstone Investment Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Gladstone Investment Corporation operates in a niche industry, and there are limited substitutes for its investment services. However, the company faces competition from other investment firms and financial institutions.

Bargaining Power Of Customers

Gladstone Investment Corporation's customers are primarily institutional investors and high net worth individuals, who have limited bargaining power due to the company's specialized investment services.

Bargaining Power Of Suppliers

Gladstone Investment Corporation's suppliers are primarily investment banks, law firms, and other financial institutions, which have limited bargaining power due to the company's strong reputation and negotiating power.

Threat Of New Entrants

The investment industry has high barriers to entry, including regulatory requirements and capital requirements, which limits the threat of new entrants. Additionally, Gladstone Investment Corporation's established reputation and network effects make it difficult for new entrants to compete.

Intensity Of Rivalry

The investment industry is highly competitive, with many established players competing for market share. Gladstone Investment Corporation faces intense competition from other investment firms, private equity firms, and hedge funds.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.69%
Debt Cost 10.52%
Equity Weight 40.31%
Equity Cost 10.52%
WACC 10.52%
Leverage 148.10%

11. Quality Control: Gladstone Investment Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.95$

Current Price

13.95$

Potential

-0.00%

Expected Cash-Flows