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Main Street Capital (MAIN) reported Q1 2025 results that were, in short, within range of what we expected. Net Investment Income (NII) and Net Asset Value (NAV) basically came in right on target. That’s no small feat in a market full of surprises.

MAIN continues to benefit from issuing shares at a premium to NAV, which adds value for shareholders. During Q1, this premium peaked above 90% before easing to around 68%. That’s still high, but the drop reduces the effectiveness of new share issuance in boosting NAV.

A few other items worth noting: MAIN took some realized losses and marked down the value of its management team, MSC Adviser. Credit risk pressure continues, with a slight increase in non-accruals - consistent with what we projected earlier this year.

Still, the portfolio has its stars. MAIN’s exit from Pearl Meyer netted a 7.7x return, plus $32 million in dividends. That kind of payoff is why investors stick with MAIN through the occasional hiccup.

Once the 10-Q is out, I’ll update subscribers on any meaningful changes in dividend income from specific portfolio investments.

The big caveat? Valuation. MAIN trades at a premium that’s far above other BDCs. We admire the performance, but we’re patient investors. History shows the best returns come from buying MAIN during market sell-offs, when quality meets value.

In the meantime, we’re tracking more attractively priced peers offering higher yields and keeping MAIN on the radar for a better entry point.

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This article was compiled by my assistant. If there are any mistakes, blame him - I certainly will.