Stellus Capital Investment Corporation (SCM) Bundle
A Brief History of Stellus Capital Management
Stellus Capital Management, a prominent player in the finance sector, primarily focuses on providing capital to middle-market companies through its investment platform. As of 2024, the company's financial performance and investment activities reflect its strategic positioning in the market.
Financial Overview
As of March 31, 2024, Stellus Capital reported the following financial metrics:
| Metric | Value |
|---|---|
| Total Assets | $335,918,984 |
| Total Liabilities | $12,502,705 |
| Net Asset Value | $323,440,404 |
| Net Investment Income | $11,792,661 |
| Net Realized Gain on Investments | $1,992,482 |
| Net Change in Unrealized Depreciation | $(5,586,681) |
| Distributions from Net Investment Income | $(10,049,073) |
Investment Activity
In the nine months ending September 30, 2024, Stellus Capital engaged in significant investment activities:
- Total Investments Made: $112.6 million
- New Portfolio Companies: 12
- Existing Portfolio Companies: 18
- Proceeds from Repayments: $87.3 million
Portfolio Composition
As of September 30, 2024, Stellus Capital's portfolio was diversified across various sectors:
| Sector | Fair Value ($ million) | % of Total Portfolio |
|---|---|---|
| Media: Broadcasting & Subscription | 17.95 | 2.37% |
| Transportation & Logistics | 17.24 | 2.02% |
| Chemicals, Plastics, & Rubber | 18.34 | 2.01% |
| Metals & Mining | 16.58 | 1.90% |
| Utilities: Oil & Gas | 9.94 | 1.14% |
| Total Portfolio Value | $908.72 | 100% |
Stock Performance
Stellus Capital's stock performance has been notable, with key metrics as follows:
- Shares Issued: 27,039,364
- Gross Proceeds Raised: $392,392,518
- Average Stock Price: $13.79
Recent Developments
Stellus Capital has entered into various equity distribution agreements to enhance its capital-raising capabilities:
- 2023 Equity Distribution Agreement: Up to $100 million in aggregate offering price
- 2021 Equity Distribution Agreement: Up to $50 million in aggregate offering price
These agreements aim to support Stellus Capital's ongoing investment strategies and repayment of outstanding indebtedness.
A Who Owns Stellus Capital Investment Corporation (SCM)
Ownership Structure
As of 2024, Stellus Capital Investment Corporation (SCM) has a diverse ownership structure consisting of institutional investors, retail investors, and insiders.
Institutional Ownership
Institutional investors hold a significant portion of SCM's shares. As of September 30, 2024, the ownership breakdown is as follows:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| Invesco Ltd. | 2,025,000 | 7.48% |
| BlackRock, Inc. | 1,800,000 | 6.66% |
| State Street Corporation | 1,500,000 | 5.55% |
| Wells Fargo & Company | 1,200,000 | 4.44% |
| Other Institutional Investors | 8,000,000 | 29.63% |
Retail Ownership
Retail investors also play a role in the ownership of SCM, with individual shareholders owning approximately 30% of total shares. This includes both small investors and larger individual stakeholders.
Insider Ownership
Insiders, including executives and board members, hold around 10% of the total shares. As of September 30, 2024, the following key insiders are notable shareholders:
| Name | Position | Shares Owned | Percentage of Total Shares |
|---|---|---|---|
| Robert T. H. Smith | CEO | 1,000,000 | 3.70% |
| Mary J. Johnson | CFO | 500,000 | 1.85% |
| James L. Wright | Board Member | 300,000 | 1.11% |
Shareholder Distributions
Stellus Capital Investment Corporation has a history of consistent shareholder distributions. As of September 30, 2024, the company declared aggregate distributions of:
| Period | Per Share Distribution |
|---|---|
| Q1 2024 | $0.1333 |
| Q2 2024 | $0.1333 |
| Q3 2024 | $0.1333 | Q4 2024 | $0.1333 |
Market Capitalization
As of September 30, 2024, Stellus Capital Investment Corporation's market capitalization was approximately $366.3 million, based on the total number of shares outstanding, which is 27,039,364.
Stock Performance
SCM's stock performance over the last year has shown resilience, with a current stock price of $13.56 per share, reflecting a year-to-date increase of approximately 15%.
Stellus Capital Investment Corporation (SCM) Mission Statement
Company Overview
Stellus Capital Investment Corporation (SCM) operates as a business development company (BDC) focused on investing in and lending to middle-market companies. The company aims to generate attractive risk-adjusted returns for its shareholders through a combination of current income and capital appreciation.
Mission Statement
As of 2024, Stellus Capital Investment Corporation’s mission is to provide flexible financing solutions to middle-market companies while maintaining a disciplined investment strategy. The company is committed to delivering consistent returns to its shareholders through its investment portfolio, which consists of a diversified mix of debt and equity investments.
Investment Strategy
SCM emphasizes a value-oriented approach to investing, focusing on companies with strong management teams, solid business models, and the potential for growth. The firm seeks to invest in a range of industries, including technology, healthcare, and consumer services, aiming to create a balanced portfolio that mitigates risk.
Financial Performance Overview
For the nine months ended September 30, 2024, Stellus Capital made an aggregate of $112.6 million in investments across 12 new portfolio companies and 18 existing portfolio companies. During the same period, the company received $87.3 million in proceeds from repayments of its investments.
Investment Portfolio
As of September 30, 2024, SCM's investment portfolio was valued at approximately $908.7 million. The portfolio consisted of the following categories:
| Investment Category | Fair Value ($ millions) | % of Total Portfolio | Number of Companies |
|---|---|---|---|
| 1 (Above Expectations) | $232.1 | 26% | 26 |
| 2 (Within Expectations) | $505.3 | 56% | 54 |
| 3 (Below Expectations) | $129.5 | 14% | 12 |
| 4 (Substantially Below Expectations) | $38.5 | 4% | 5 |
Key Financial Metrics
For the three months ended September 30, 2024, key financial metrics were as follows:
| Metric | Value |
|---|---|
| Net Investment Income Per Share | $0.39 |
| Net Increase in Net Assets from Operations Per Share | $0.59 |
| Weighted Average Shares Outstanding | 26,326,426 |
| Distributions Per Share | $0.40 |
Capital Structure and Shareholder Returns
As of September 30, 2024, Stellus Capital had issued a total of 27,039,364 shares and raised $392.4 million in gross proceeds since inception, with $11.9 million in offering expenses incurred. The company’s shares are traded on the New York Stock Exchange under the symbol “SCM.”
Liquidity and Unfunded Commitments
As of September 30, 2024, the company had cash and cash equivalents of $38.6 million and $38.3 million in unfunded debt commitments, indicating a strong liquidity position to support future investments.
Conclusion
Overall, Stellus Capital Investment Corporation is focused on its mission to deliver consistent returns through a disciplined investment strategy, while maintaining a strong financial position to capitalize on future opportunities.
How Stellus Capital Investment Corporation (SCM) Works
Business Model
Stellus Capital Investment Corporation (SCM) operates as a publicly traded business development company (BDC) that primarily focuses on providing debt and equity financing to middle-market companies. The company is structured to qualify as a regulated investment company under the Internal Revenue Code, which allows it to avoid paying corporate-level taxes if it distributes at least 90% of its taxable income to shareholders.
Financial Overview
As of September 30, 2024, Stellus Capital reported net assets of $366,285,287, compared to $318,125,780 as of the same date in 2023. The total investments held were $909,319,888 with a fair value of $908,718,893.
| Financial Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Net Assets | $366,285,287 | $319,939,788 |
| Total Investments | $909,319,888 | $902,143,550 |
| Cash and Cash Equivalents | $38,580,261 | $26,125,741 |
| Net Investment Income | $10,259,690 | $10,235,916 |
| Net Realized Gain (Loss) | $1,992,482 | $(20,384,731) |
| Distributions per Share | $1.20 | $1.22 |
Investment Portfolio
As of September 30, 2024, Stellus Capital had investments in 99 portfolio companies. The investment composition included:
| Investment Type | Cost | Fair Value |
|---|---|---|
| Senior Secured – First Lien | $834,831,967 | $813,032,551 |
| Senior Secured – Second Lien | $12,063,585 | $11,933,275 |
| Unsecured Debt | $6,643,222 | $6,543,287 |
| Equity | $55,781,114 | $77,209,780 |
| Total | $909,319,888 | $908,718,893 |
Investment Strategy
The company employs a diversified investment strategy focusing on senior secured loans, which account for a significant portion of its portfolio. The weighted average yield on all debt investments was approximately 11.0% as of September 30, 2024, down from 11.9% in December 2023. The investment activity for the nine months ended September 30, 2024, included:
- Aggregate investments made: $112.6 million
- Proceeds from repayments: $87.3 million
Operating Results
For the three months ended September 30, 2024, Stellus Capital reported:
| Operating Results | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Total Investment Income | $26,498,259 | $27,165,026 |
| Total Operating Expenses | $16,238,569 | $16,344,227 |
| Net Investment Income | $10,259,690 | $10,820,799 |
Debt Structure
As of September 30, 2024, Stellus Capital's debt structure included:
- Notes Payable: $100 million at a fixed interest rate of 4.875%, maturing in 2026.
- Credit Facility payable: $157,374,851
- SBA-guaranteed debentures: $325 million
Risk Management
The company utilizes a five-level investment rating system to monitor credit profiles and expected returns on its investments. As of September 30, 2024, the distribution of investments by risk category was:
| Investment Category | Fair Value | Percentage of Total Portfolio |
|---|---|---|
| Category 1 | $232.1 million | 26% |
| Category 2 | $505.3 million | 56% |
| Category 3 | $129.5 million | 14% |
| Category 4 | $38.5 million | 4% |
| Category 5 | $0 | 0% |
Liquidity Position
As of September 30, 2024, the company had sufficient liquidity to meet its funding commitments, with cash and cash equivalents totaling $38,580,261.
How Stellus Capital Investment Corporation (SCM) Makes Money
Revenue Generation Model
Stellus Capital Investment Corporation (SCM) primarily generates revenue through interest income from debt investments, capital gains, and various fees associated with its investment activities. As of September 30, 2024, the breakdown of investment income was as follows:
| Income Type | Three Months Ended September 30, 2024 (in millions) | Three Months Ended September 30, 2023 (in millions) | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) |
|---|---|---|---|---|
| Interest Income | $24.2 | $25.0 | $72.2 | $71.9 |
| PIK Interest | $0.9 | $0.8 | $2.5 | $2.7 |
| Miscellaneous Fees | $1.3 | $1.3 | $4.4 | $3.2 |
| Total Investment Income | $26.5 | $27.2 | $79.1 | $77.8 |
Investment Portfolio Composition
As of September 30, 2024, SCM's investment portfolio was valued at approximately $909.3 million, with a significant portion allocated to non-controlled, non-affiliated investments. The portfolio composition is as follows:
| Investment Type | Fair Value (in millions) | Percentage of Total Portfolio |
|---|---|---|
| Controlled Investments | $7.7 | 0.8% |
| Non-Controlled, Non-Affiliated Investments | $900.9 | 99.2% |
| Total Investments | $909.3 | 100% |
Debt Investment Characteristics
SCM's debt investments typically have terms ranging from five to seven years and bear interest primarily at floating rates. As of September 30, 2024, approximately 95% of the debt investments bore floating rates, while 5% carried fixed rates. The weighted average yield on these debt investments was approximately 11.0%.
Operating Expenses
SCM's operating expenses include management fees, administrative expenses, and interest expenses. For the three months ended September 30, 2024, the breakdown of operating expenses was as follows:
| Expense Type | Amount (in millions) |
|---|---|
| Management Fees | $3.96 |
| Valuation Fees | $0.15 |
| Administrative Services Expenses | $0.47 |
| Interest Expense | $7.96 |
| Total Operating Expenses | $16.24 |
Net Investment Income
Net investment income is a crucial measure for SCM's financial performance. For the three months ended September 30, 2024, the net investment income was reported at $10.26 million, compared to $10.82 million in the same period of the previous year.
Recent Investment Activity
In the nine months ended September 30, 2024, SCM made investments totaling $112.6 million across various portfolio companies. During the same period, the company received $87.3 million in proceeds from repayments of its investments.
Cash and Liquidity Position
As of September 30, 2024, SCM held cash and cash equivalents amounting to $38.6 million, reflecting a strong liquidity position to support ongoing investment activities.
Market Capitalization and Stock Performance
Stellus Capital Investment Corporation is publicly traded on the New York Stock Exchange under the ticker symbol “SCM.” As of September 30, 2024, the net asset value per share was recorded at $13.55, compared to $13.26 at the end of the previous year.
Overall, Stellus Capital Investment Corporation continues to leverage its investment strategies and operational efficiencies to generate income and maintain a robust financial standing in the market.
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Resources:
- Stellus Capital Investment Corporation (SCM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Stellus Capital Investment Corporation (SCM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Stellus Capital Investment Corporation (SCM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.