PennantPark Investment Corporation (NASDAQ:PNNT)
PennantPark Investment Corporation (PNNT), a business development company that invests in private companies via secured loans yesterday reported their fiscal fourth quarter 2016 financial results. PennantPark reported fourth quarter earnings of $0.21 per share which fell short of analyst expectations of $0.25 per share. PennantPark reported fourth quarter revenues of $32.2 million which fell short of analyst expectations of $35.7 million.
PennantPark Investment Corporation CEO’s Comments
CEO Arthur H. Penn said:
Given the continued weakness in energy and overall yield compression in the market, we have concluded, in consultation with our board of directors, that it is prudent to pay our $0.28 per share distribution for the December 2016 quarter, and then reduce the distribution to $0.18 per share for the March 2017 quarter...This is the first distribution reduction in our nearly 10 year history and it should allow us to return to the environment where we expect to meet or exceed our distribution with net investment income. In addition, we have concluded, in consultation with our board of directors, to extend our 16% waiver of base and incentive fees through December 31, 2017 as the energy investments need more time to maximize recoveries. Going forward, we intend to focus on lower risk, primarily secured investments, thereby reducing the volatility of our earnings stream. Market Wired
PNNT Technical Analysis
PNNT opened trading yesterday at $7.71 which was exactly the same as the previous day’s trading close price. PNNT closed trading yesterday at $7.69 and crashed down after market to $7.00, equivalent to a 9% decrease from the closing price. Taking a look at the daily chart we can see that the last time PNNT traded below these levels we have to go back to the week of July 8th when it traded $6.99. Taking a closer look at the daily chart we can see that before the spike down PNNT had been in an overall upward trend dating back to November 4th when it traded at $7.16.
PNNT has a float of 69.76 million shares and traded below the normal daily trading volume on Monday. For trading purposes, I would like to see PNNT open trading on Tuesday below $7.22 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.20 from my entry position fearing anything more than that and the stock would start to fill in the gap down.
Company Profile
PennantPark Investment Corporation is a business development firm specializing in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The firm invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, subordinated loans, mezzanine loans, and senior secured loans.
It seeks to invest in companies based in the United States. The firm seeks to invest between $10 million and $50 million in its portfolio companies. Its mezzanine loans, senior secured loans, and other investments in its portfolio companies are between $15 million and $50 million. The firm may also make non-control equity and debt investments. PennantPark Investment Corporation was founded on January 11, 2007 and is based in New York, New York.