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1. Company Snapshot

1.a. Company Description

Great Elm Capital Corp.is a business development company which specializes in loan and mezzanine, middle market investments.It invests in the debt instruments of middle market companies.


The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment.It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

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1.b. Last Insights on GECC

Great Elm Capital Corp.'s recent performance was negatively impacted by increasing competition in the business development company (BDC) sector, as evident from the issuance of new baby bonds and preferred stocks with attractive yields. The company's leverage and non-accrual rates are higher than sector leaders, which may raise concerns among investors. Additionally, the company's recent public offering of $50 million of 7.75% notes due 2030 may lead to increased financial obligations. Despite strong Q2 earnings, with GAAP EPS of $1.02, exceeding analyst estimates, investors may be cautious due to sector-wide pressure.

1.c. Company Highlights

2. Great Elm Capital Corp. Posts Mixed Q3 Results Amidst Strategic Repositioning

Great Elm Capital Corp.'s Q3 2025 financial performance was marked by an EPS of $0.20, falling short of analyst estimates of $0.24. The company's Net Investment Income (NII) was $0.20 per share, down from the previous quarter due to decreased distributions from its CLO JV and higher interest expenses. The net assets as of September 30, 2025, stood at $140 million, with a NAV per share of $10.01.

Publication Date: Nov -19

📋 Highlights
  • NAV Impact from First Brands:: Direct exposure to First Brands reduced NAV by $16.5 million in Q3 2025.
  • Private Investment Success:: Nice-Pak generated a 38% IRR over three years, significantly boosting returns.
  • Financial Flexibility:: $25 million in cash and $50 million revolver availability provide $75 million of deployable capital.
  • Dividend and Share Repurchase:: Approved $0.37 per share dividend and $10 million share repurchase program.
  • Non-Yielding Assets:: $20 million in non-yielding assets, including CoreWeave, expected to generate additional capital post-cost recovery.

Financial Flexibility and Deployment

Despite the challenges posed by First Brands' bankruptcy, which adversely impacted NAV by $16.5 million, Great Elm Capital Corp. has strengthened its financial position. The company raised significant equity at NAV, doubled its revolver size, and reduced the interest rate by 50 basis points, resulting in ample deployable cash. As of the end of Q3, the company had over $25 million in cash and $50 million in revolver availability, providing substantial dry powder for future investments.

Investment Strategy and Pipeline

The company remains focused on deploying capital into high-quality, income-generating investments, prioritizing credit fundamentals and downside protection. Great Elm Capital Corp.'s pipeline is centered on secured and income-generating opportunities, with a particular emphasis on investing at the top of the capital structure. The company is working on closing a private credit transaction with a return profile in the teens, accompanied by warrants, indicating its pursuit of investments with upside potential.

Valuation and Dividend

With a P/B Ratio of 0.66 and a Dividend Yield of 20.03%, Great Elm Capital Corp.'s valuation appears to reflect its current financial situation and dividend payout. The Board of Directors approved a $0.37 dividend for the fourth quarter, maintaining a consistent return to shareholders. Analysts estimate revenue growth at 4.0% for the next year, suggesting a moderate expansion trajectory.

Outlook and Conclusion

CEO Matt Kaplan expressed confidence in the company's ability to generate sustainable returns and deliver increasing value to shareholders. With its strengthened financial position and focus on high-quality investments, Great Elm Capital Corp. is poised to capitalize on emerging opportunities, supported by its significant dry powder and financial flexibility.

3. NewsRoom

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Head to Head Review: Great Elm Capital Group (NASDAQ:GECC) vs. ONEX (OTCMKTS:ONEXF)

Nov -30

Source: defenseworld.net

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Great Elm Capital Under Pressure: Time To Reconsider Your Bond Position?

Nov -19

Source: seekingalpha.com

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The Four Horsemen Of The BDC Apocalypse

Nov -08

Source: seekingalpha.com

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Great Elm Capital Corporation (GECC) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Great Elm Capital (GECC) Q3 Earnings Lag Estimates

Nov -05

Source: zacks.com

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Great Elm Capital Corp. Announces Third Quarter 2025 Financial Results

Nov -04

Source: globenewswire.com

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Great Elm Capital Corp. (“GECC”) Schedules Third Quarter 2025 Earnings Release and Conference Call

Oct -31

Source: globenewswire.com

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Great Elm Capital's Yield Swells To 19.6% On First Brands Group Exposure

Oct -31

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.00%)

6. Segments

Investment and Related Activities

Expected Growth: 7.0%

Great Elm Capital Corp.'s 7.0% growth in Investment and Related Activities is driven by increasing demand for alternative investment strategies, expansion into new markets, and strategic partnerships. Additionally, the company's focus on diversifying its investment portfolio and improving operational efficiency have contributed to its growth.

7. Detailed Products

Debt Investment

Great Elm Capital Corp. provides debt investment solutions to companies, offering a range of debt financing options to support their growth and operations.

Equity Investment

The company invests in equities of public and private companies, providing capital for growth, acquisitions, and recapitalizations.

Real Estate Investment

Great Elm Capital Corp. invests in real estate properties, providing financing solutions for property acquisitions, developments, and redevelopments.

Structured Finance

The company provides structured finance solutions, including collateralized loan obligations and other bespoke financing structures.

Asset-Based Lending

Great Elm Capital Corp. offers asset-based lending solutions, providing financing secured by a company's assets, such as inventory, equipment, or real estate.

8. Great Elm Capital Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Great Elm Capital Corp. is moderate, as there are some alternative investment options available to investors, but they may not offer the same level of returns or diversification benefits.

Bargaining Power Of Customers

The bargaining power of customers is relatively low, as Great Elm Capital Corp. is a niche player in the investment management industry, and customers may not have many alternative options.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate, as Great Elm Capital Corp. relies on a network of external managers and investment professionals, but has some flexibility to negotiate terms.

Threat Of New Entrants

The threat of new entrants is high, as the investment management industry is relatively easy to enter, and new firms may be attracted to the market.

Intensity Of Rivalry

The intensity of rivalry is high, as Great Elm Capital Corp. operates in a competitive industry with many established players, and must differentiate itself to attract and retain investors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.68%
Debt Cost 8.47%
Equity Weight 41.32%
Equity Cost 11.60%
WACC 9.76%
Leverage 142.00%

11. Quality Control: Great Elm Capital Corp. passed 3 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

Stock-Card
ArrowMark Financial

A-Score: 7.9/10

Value: 5.7

Growth: 6.3

Quality: 8.1

Yield: 10.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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Trinity Capital

A-Score: 7.9/10

Value: 7.3

Growth: 5.6

Quality: 8.5

Yield: 10.0

Momentum: 6.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Bain Capital Specialty Finance

A-Score: 7.2/10

Value: 7.2

Growth: 6.3

Quality: 8.0

Yield: 10.0

Momentum: 2.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Gladstone Investment

A-Score: 7.1/10

Value: 6.5

Growth: 4.3

Quality: 7.1

Yield: 10.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Great Elm Capital

A-Score: 6.7/10

Value: 7.0

Growth: 7.3

Quality: 6.2

Yield: 10.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Oxford Lane Capital

A-Score: 5.6/10

Value: 5.3

Growth: 2.7

Quality: 7.0

Yield: 10.0

Momentum: 0.5

Volatility: 8.3

1-Year Total Return ->

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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

7.91$

Current Price

7.91$

Potential

-0.00%

Expected Cash-Flows