Q3 2020 Pennantpark Investment Corp Earnings Call
[music].
Welcome to the Pennantpark investment Corporation third fiscal quarter 2020, <unk> earnings Conference call Today's conference is being recorded.
At this time all participants have been placed in a listen only mode. So called will be open for question and answer session. Following this speakers remarks, if he would like to ask a question at that time simply press star one on your telephone keypad. If he would like to withdraw your question pest start you on your telephone keypad.
Now my pleasure to turn the call over to Mr. Art, Penn Chairman and Chief Executive Officer, I had it Park investment Corporation Mr. King you May begin your conference.
Good morning, everyone I'd like to welcome you to Kinda Park investment Corporation's third fiscal quarter 2020 earnings Conference call.
I'm joined today by different or Chief Financial Officer.
Please start off by disclosing some general conference call information included discussion about forward looking statements.
Thank you worked hard like to remind everyone that today's call is being recorded. Please note that this call. These are property up kind of park investment Corporation, and that's any unauthorized stuck up to be calling in for me is strictly prohibited.
Audio replay of the goal will be available or using the telephone numbers again provided in our earnings that's what he said whether on our website.
I'd like to go north and come to the comfort our safe Harbor disclosure in our press release regarding forward looking information.
Today's conference call. My also making forward looking statements and projections and yeah. That's your towards our most recent filings.
40 board of directors that could cause actual results could differ materially from these protection, we do not come to think dropping all forward looking statements like.
Required by law.
Good thing called people, our latest 50 filings please visit our website.
Then apart that calls for cost that you want to 90 roughly 1000.
I'd like to turn to go back to our chairman and Chief Executive Officer Art.
Thanks for the first we hope that you your families who knows you work with are staying healthy.
Pleased to report the kind of part continues to operate smoothly and effectively.
Remains committed to working diligently on behalf of our investors.
Going to spend a few minutes discussing how we fared in the quarter ended June thirtyth.
Well he was positioned for upcoming quarters, our capital structure and liquidity the value proposition or stock the financials and then open up for Q1 day.
Despite the challenging economic conditions brought on by the pandemic. We're pleased to we accomplished several key goals this past quarter.
We achieved a 7% increase in adjusted and maybe that's a market stabilized during the quarter.
We also achieved our goal of reducing leverage and increasing liquidity.
We're particularly pleased with her announcement of the formation of kind of bark senior loan fund P. SLF, our joint venture with Pantheon, a leading global private markets investor.
Initial 35 million dollar equity investment made by pantheon isn't an existing portfolio of loans at an attractive price of 94.5 cents on the dollar.
They plan to invest an additional $30 million of equity over time into the JV at fair market value.
Additionally, our leverage will decrease by about $245 million, which bolsters our balance sheet.
The equity from pantheon into our platform not only validates the value proposition of our existing portfolio. It also helps scale, but kind of bark platform to continue to be a leading let me partner in the market. It creates additional capital for future investment into the attractive new vintage of loans that we are seeing in the market.
We believe that our rigorous underwriting process and disciplined approach has successfully positioned us to manage through the challenges ahead.
We have an excellent team of talented and dedicated professionals, many with decades of experience managing through the multiple economic cycles to help ensure the best possible outcome in this type of difficult environment.
Although we never predicted a global pandemic as you may now we've been preparing for an eventual recession for some time.
Prior to the Cup in 19 crisis, we proactively position to portfolio has defensively as possible.
In the past several years, we've generally been moving into first lien secured positions higher in the capital structure and into a more diversified portfolio.
The overall portfolio was constructed to withstand market and economic volatility.
As of June Thirtyth average debt to EBITDA in the portfolio was 4.6 times and the average interest coverage ratio the balance by which cash income exceeds cash interest expense.
2.9 times.
We had only one non accrual on our book out of 86 different names and PNNT <unk>.
This represents only 2.5% of the portfolio cost and 2.3% at market value.
We are largely avoided some of the sectors that had been hurt the most by the pandemic such as retail restaurants health clubs apparel and airlines, although PNNT. He does have exposure to oil and gas which will discuss later.
Portfolios highly diversified with 86 companies and 30 different industries.
Deception PNNT, he hasn't dropped to $5.9 billion at an average yield of 12%.
Compares to an annualized realized loss ratio of about 24 basis points.
Annually. If we include both realized and unrealized losses, the annualized loss ratio was only 37 basis points annually.
The strong track record includes our energy investments are primarily subordinated debt investments made prior to the financial crisis.
And now some portion of the pandemic.
You'll recall that in 2007 justice today.
He was focused on financing middle market financial sponsor transactions.
Our performance for the global financial crisis, and recession with solid.
But to the onset of global financial crisis in September 2008, we initiated investments, which ultimately aggregated $480 million.
Our playbook that is similar to our playbook now we focused primarily on the existing portfolio to preserve capital, while raising the bar, becoming even more highly selective on new investments.
The investments performed well average EBITDA of the underlying portfolio companies fell about 7% to the bottom of the recession.
According to the Bloomberg North American high yield index. The average how you'll company EBITDA was down about 42% during that timeframe.
As a result, we have few defaults and attractive recoveries on that portfolio.
Our our off this underlying investments was 8%, even though they were done prior to the financial crisis and recession.
I'm proud of this downside case track record.
We've had only 14 companies going nonaccrual out of 254 investments since inception over 13 years ago.
Further we are pleased that even while we've had those non accruals, we've been able to preserve capital for our shareholders.
Now, let's turn to the outlook you had in coming quarters in our portfolio was positioned.
We think communicating on a frequent basis with management teams.
Private equity sponsor owners of our portfolio companies.
As mentioned previously we're gratified that our historical focus has protected us from some of the worst in areas of the economies such as retail restaurants health clubs apparel and airlines.
I'm pleased with the way our portfolio companies have moved to rapidly just cost.
Focused on shoring up liquidity.
Looking forward to the quarter ended September thirtyth and beyond it remains a meaningful uncertainty about the timing and pace of the economic recovery and its impact on the portfolio.
Nevertheless, where things stand today are analysis suggests that the vast majority of the companies in our portfolio.
Sufficient liquidity to pay their interest payments as they come due in the coming quarters.
With regard to investments in the energy industry those investments represent 8.3% of the overall portfolio, there's no material updates since last quarter.
It was challenging from a pricing perspective in oil prices will briefly negative.
That's remedy T X have spent have suspended all drilling activities.
We used to all non essential capital expenditures expenses and personnel.
Revenues and cash flow will materially reduced as the entire industry is conserving liquidity.
Well hedges in place are helpful. They only partially mitigate the impact of low oil prices.
We are encouraged that with a partial reopening of the economy oil prices seem to have stabilized around $40.
It may trend higher in coming months.
On the positive side many of our portfolio companies on industries, such as government services defense contracting software communication cyber security, which collectively comprise a substantial portion of the portfolio or less impacted by covered.
Focus has been on traditional middle market companies, where we have benefited from terms carbon infrastructure is much more attracted to lenders and those of larger companies.
These terms enable us to see potential challenges and portfolio companies and be position to assist and protect our capital much sooner than the low to no covenant loans, what your typical of larger borrowers due to the covenant protections. We have negotiated we've been able to be at the table quickly with borrowers as a result, we have negotiators increased protections, including more equity from sponsors.
As was enhanced economics, including amendment fees and increased yield.
Inevitably in certain cases, there may need to be a broader restructuring of the capital stack or too.
As we have proven over 13 years and business, where adapted dealing with and maximizing value over time in these situations.
With regard to our financials I'll give some summary highlights and of evil go into more detail.
Investment income was 16 cents per share above our dividends of 12 cents per share.
Our GAAP debt to equity ratio net of cash was 1.5 times.
Regulatory debt to equity ratio net of cash, which excludes Sps he debt was 1.4 times.
As many of you know in early 2009 in response to the GFC, we started marketing many of our liabilities our credit facilities in bonds to market to better align your asset and liability values.
This reduces the volatility of NPV in times of market volatility such as we have today.
The additional benefit at that time and for the ensuing decade without a reduced the volatility of our leverage as calculated for regulatory asset coverage test.
Last year, the FCC guided us there for the regulatory asset coverage purposes, and were prefer we mark liabilities or cost not market, which we now do for that test.
As a result will be highlighting both GAAP leverage and regulatory asset coverage leverage.
With regard to any D. R gap anybody was $7, an 82 cents as of June Thirtyth.
Proximately, 1.4% from the prior quarter.
Which reflects both the markup of assets offset by the markup of certain liabilities.
Assuming liabilities were not mark to market adjusted in AG would have been $7 from 46 cents up approximately 7% from the prior quarter.
With regard to leverage we've been targeting a regulatory debt equity ratio of 1.1 to 1.5 times.
Our net regulatory asset coverage ratio of 1.4 times within the range this past quarter.
Pro forma for the creation of the P. SLF JV with pantheon, our net regulatory asset coverage ratio would be 0.9 times.
We had ample liquidity to fund a revolver draws and work in compliance with all of our facilities at June Thirtyth.
We have readily available borrowing capacity in cash liquidity to support our commitments.
Had a strong capital structure with diversified funding sources and no near term maturities have afford and $75 million revolving credit facility maturing in 2024 with the syndicate of banks.
34 million of SPD debentures maturing in 2026, and 86 million of unsecured notes maturing in 2024.
We've been consistent dialogue, whether lenders and her thankful for their support.
Regarding our capital structure over the last few quarters. We have discussed two initiatives one of them has been a p. SLF JV that is now in place.
Or other initiative is our application to the S. BA following up on the Green Light letter we received for our has to be I see three.
We are still in process with the SPX.
Let's spend a minute on our new JV with pantheon P. SLF.
Pantheon invested $35 million to take a 28% stake in an SPV. There previously existed as a wholly owned subsidiary of PMT.
As a result of this JV the subsidiary and its $245 million credit facility from BNP moved off balance sheet.
The portfolio Tfl life is entirely first lien senior secured loans and has a fair value of $356 million.
Pantheon investment values of loans at 94.5 cents on the dollar which is a small discount to the June thirtyth fair value of 96.6 cents on the dollar.
As a result, the transaction is dilutive to anybody by about $2 million or four cents per share.
With the BNP facility moving off balance sheet at par due to the mark to market that credit facility. The additional impact a gap NPV is 8 million or 12 cents a share.
As a result, the impact on adjusted anybody is four cents a share any impact on GAAP any maybe 16 cents per share.
22.5 million of 35 million invested by Pantheon was invested into the SPV any other 12.5 million was paid in cash to be an anti.
The entity and pantheon investments are split into approximately 70% subordinated debt and 30% equity.
The subordinated debt has a LIBOR spread of 800 kind of LIBOR floor of 1%.
Target leverage for for P., SLS is 1.5 times debt to equity.
With regard to our stock price, we believe that the share price of PNNT. He does not accurately reflect the long term value of the company.
As stated earlier in the early the average debt to EBITDA over underlying portfolio as of June Thirtyth was 4.6 times.
Translating this into the language value investors at the stock price. It PNNT. He today well below any D is every company defaulted, we the shareholders without a portfolio of companies at a multiple of about two times cash flow even in a recession with potential declines in cash flow value investors should be able to appreciate that attractive at low multiples.
We continue to review I will look to selectively make new investments our focus continues to be on companies and structures that are defensive have reasonable leverage covenant protections and attractive returns.
The outlook for new financings is attractive we believe that middle market lending is a vintage business.
Coming against each of loans is likely to be the most attractive we've seen since the 2009 to 2012 time period.
Leverage levels are lower equity cushion higher yields are higher and the package of protections, including covenants are tighter.
After and drawing about five years of late late cycle market for middle market lending.
As refreshing to have attractive risk reward available to us.
Let me now I'll turn the call over to leave our CFO to take us through the financial results.
Thank you art.
For the quarter ended June Thirtyth net investment income totaled 16 cents per share.
Looking at some of the expense categories, a base fees totaled $4.6 million taxes in general and administrative expenses totaled $1.5 million and interest expense totaled $8 million.
Additionally, they tend to key all the $1.9 million was fully late.
Net unrealized gain on our investments was $29 million or 44 cents per share.
Net unrealized depreciation on our credit facilities was 37 cents per share.
Our net investment income exceeded our dividend by four cents per share.
Consequently, any deeper care went from $7.71 to $7.82 per share.
I just couldn't Eddie excluding the mark to market or liabilities was set in dollar 46 cents per share up 7% from $6.97 per share.
I agree thought and eat was primarily due to all 2% valuation increase all our investment portfolio.
That's already Minder, our entire portfolio credit facility and senior notes, our mark to market by all of our board of directors each quarter using the equity price provided by independent valuation firms.
Securities and exchanges or independent broker dealer calls when active markets are available under you guys see 828 25.
In cases, where broker dealer quotes are inactive who use independent valuation firms to volume thing investments.
Although the portfolios that are the weighted average yield of 8.7%.
On June Thirtyth, our portfolio consisted of 86 companies across 30 different industries.
Neil was invested 59% in first lien secured loan.
18% in second lien secured that 5% subordinated debt.
18% in preferred and common equity.
94% of the portfolio had a floating rate probably 92% has a lot more more average LIBOR floor, either 1% now let me turn to go back to armed.
Thanks, Steve.
To conclude we want to reiterate our mission our goal is to generate attractive risk adjusted returns through income coupled with long term preservation of capital.
Everything we do is aligned to that goal, we try to find less risky middle market companies and have high free cash flow conversion, we capture that free cash flow primarily in debt instruments, we pay out those contractual cash flows in the form of dividends to our shareholders.
In closing I'd like to thank extremely talented team of professionals for their commitment and dedication.
Thank you off for your time today and for your continued investment and confidence in US that concludes our remarks at this time I would like to open up the call questions.
Thank you if he would like to ask a question. Please take note by pressing star one on your telephone keypad. If you are using his speakerphone. Please make sure. Your mute function is turned off to a lot of your signal to reach our equipment again press star one ask a question.
And we'll take our first question from Kyle Joseph with Jefferies. Please go ahead.
Hey, good afternoon, guys. Thanks for having the I'm, taking my questions I'm.
Just wanted to get a sense are you touched on that.
Bet here obviously.
Investment activity, which was light in the quarter, but given what you get done with your balance sheet in the increase in that think capacity. Following the JV you know how quickly can we expect a new deal environment to ramp I know you mentioned that it should be an attractive vintage here, but you know how quickly I should we expect me to read new originations Jarrett.
However.
Thanks, Kyle look we're only seeing green shoots right now in terms of kind of new flow. We're encouraged by the new flood or saying, it's a it's very attractive risk adjusted returns higher higher yields lower leverage more equity tighter covenants.
So encouraged and it'll be financed through a combination of our existing portfolio getting refinance for sure. Some of our existing portfolio is going to turn it over over time as well as judicious and careful.
Growth, yes, our leverage is you know is at a very nice level or we want to be careful and thoughtful about you know about what we do so a combination of.
Of taking advantage of repayments that we own actually had as well some some careful growth you know into the future.
Yeah, sure and then too so balancing that yeah, we got a lot of moving parts in terms of the JV the rate environment.
Anticipated yields on them.
On new investments. So just balancing that can you give us a sense there.
For the outlook on yields for the portfolio kind of near term medium term and then and then longer term.
Sure a it's a great question I look we're seeing a yields on new issues up maybe 100 to 150 in some cases up 200 basis points from where they were.
Just five or six months ago.
Importantly, you know with all of that he is the credit.
The underlying credit we think is is more conservative and has better capital preservation attributes. So you know a typical down the middle of fairway deal today, we think it's probably levered four to four and a half times debt to EBITDA.
And and generates an l. plus 600, L plus 700 kind of.
LIBOR spread you know a six months ago that might have been five to five and a half times debt to EBITDA with a LIBOR spread of 5% to 5%.
Over LIBOR. So the overall package is very attractive today in addition to having even tighter covenants now.
Our bulk is always kind of been below five times, we specifically wanted to keep it below five times.
But this vintage who will be very attractive risk adjusted returns.
Got it thanks very much for answering my questions.
So.
And we'll take our next question from Robert Dodd with Raymond James. Please go ahead.
Hi, guys. So some questions that was really since the JV congratulations on that structure I mean, it suits in the <unk> point in the paper, but somebody saying everything in that JV spend because.
That does meet the close to warm up to this formation that JV the mix all asset.
In the same center on balance sheet is going to skew much more towards.
Much button away from tells me that he had been shifting so can you give us any any telephone.
Good.
That approach to the mob about what that when do you all that's on lastly, our total gross.
As well much consolidating the the JV portfolio in some stuff how do you think of that sort of see mix portfolio or is the intent to just could you maybe take notice so sweet mix on balance sheet.
I'm glad it's going to stand Soma was set the JV formation.
Yeah, Yeah, so to a couple couple of comments and that Robert and Thank you first we're only selling you know a minority position, 28% of that first lien portfolio pantheon wanted to invest more and they big that's why we took 35 million today and they want invest potentially up to 30 million in the future. So you know we only want indices.
Well, a minority piece of that of that portfolio, which we think is a really good portfolio in that portfolio and in of itself.
And should grow over time, and then you you've talked about what's on balance sheet that also has been mostly pivoting towards first lien than the last couple of years, and that's where we're going to continue to do by and large I'm not to say that if there is a fantastic second lien deal that's compelling we're always.
Thinking about that but generally.
We're looking for capital preservation first and foremost we do have.
Equity as it has a chunk of that portfolio that over time.
We want to we want to exit you know kind of the pandemic probably pushed those plants back a year.
But we still have some equity that we think it's very promising and should get a have a nice exit here over the coming year or two and until we are we exit you know those those equity investments I think we're going to stay pretty cautious and conservative for the rest of being intake and then as we exit those over time, we can assess and see where the market is to see what.
The the pro forma.
Six of investment should be but I think where we're focused on capital preservation.
Over the next year or two exiting those equity investments and it's kind of price as possible.
Got it all on the topic of that's obviously you gave some color independent box with band.
The exit suspended drilling, but oversee oil hired some.
Rebounded somewhat stabilized at 40 I think it.
He buys this week.
Wall would.
Well the full Wolfcamp, however, you want or need to look like for you guys to kinda reactivate drilling programs at laminate Gx and what would the Catholic do what they have sufficient capital.
Those were the activated at least be Bam has quietly.
And yet any color you can get little list.
Well, a quarter, where hunker down there I think it's starting a 55 or $60. Then you then it starts to be a more realistic debate and I think to be quite Frank we would love to outside capital or look to exit those investments you know hit from when you know oil gets back up to those those levels. When you know I think it just.
I am we're extending the option as long as we can't spend time, we think we can extend for quite awhile.
And should oil kind of hit those those are those levels and we hope it doesn't some point that might be good tied to exit those investments.
Got it and if I got one more.
He said.
He said the vast majority in companies have liquidity to pay interest he has gotten for et cetera, obviously bashing job seasonal.
So those what you've done an evaluation.
And.
And the no vast majority, but yet.
How are the discussions going with them I mean against them all sponsors or whatever I mean, what's being done. So those were the liquidity situation. This still.
Perhaps you know there's a gap there yeah, it's really thankfully and then kind of.
You know if you wanted to ask me Robert three months ago, if we'd be standing here today talking about you know hop NPV for the corridor and very minor non accruals I would've been shopped in astounded and thrilled and more here today and quite frankly, BNL or touch where we're in really good shape. I mean, certainly there are gonna be some companies.
Mostly related to travel related things that where there's going to be.
Some issues.
And there it's kinda case by case, a with the sponsors what are they put equity in.
Or not you know, how we amended things how we get paid to do that.
Do we roll up our sleeves and take control in certain cases that makes the most sense. So case by case its its its name by name and what's the outlook for the particular name is what sponsors willing to do what we're willing to do but it's a very very small thankfully very small piece of the portfolio at this point now the disclaimer as we're not out of the words.
Right so.
Now we have to see how the fall fall goes and what the public health issues are and what the vaccine issues are and and all that but kind of if you say, we're kind of midway through the pandemic around the where do you think we're halfway through it a corridor the way through it mostly through it will feel and we're feeling pretty good about this portfolio.
I've got I appreciate it thank you.
Thank you.
Well take our next question from Paul Johnson with Keefe, Bruyette and lets please go ahead.
[noise], Hey, you guys. Thanks for taking my questions.
I had another question on the JV or I'm, just curious how do you plan on structuring the JV do you do you intend on those.
Solely an equity investment or possibly by containing it into the debt investment and along with equity investment.
Yeah. So similar to a good question Paul it's similar to our joint venture hover at Pflp with <unk> with Kemper. This JP will be split there will be about 70% subordinated debt.
L plus 800 revival floor of 1% and the rest will be will be equity.
Okay, great. Thanks for that and then I guess I'm also on the JV I realize it probably has definitely it's one of your thought process, but I just given the higher out equity allocation in your portfolio on the balance sheet I think it's like 18% of so it's fair value.
With the formation of Janney.
We expect to have any kind of issue with the limitation in nonqualified asset bucket.
No. That's a good question them or who are we've got plenty of plenty of dry powder in that 30% bucket you know the amount of foreign investments at the minimum so.
Not really not related issue and you know we look we think the market well see through this JV like they see through all the other JV.
And understand the underlying assets are first lien debt, but in terms that qualifying asset as you wouldn't see problem. Okay.
Okay and then.
A little bit he's out a little below it modifications waivers June.
Dealing with a quarter or just curious if that's sort of activity has moderated a quite a bit so far or if you're still sort of saying kind of the same level of other requests coming out of this type.
Oh, yes. Thanks, that's yes, we have seen you know less overtime.
You know there was it was more activity going on in that area kind of an April were still seeing salminen. We're still have some of the work or a process on but it would be the momentum or the the.
The pacing of those amendment request has certainly slowed down you know as time is going on.
Thanks for that.
Last question.
He has to do and then you mentioned or just the outlook for copel or less less.
Proving.
The pension plan turning to.
The plan, where there is going to be so very attractive investments I.
I mean, it's far it's how you evaluate type portfolio I'm curious, how do you balance or how do you consider you know and investment like ran energy.
It even if the environment today, just stayed static and nothing changed Energy's, obviously still challenged I mean, do you ever consider being the leading possibly the opportunity cost us holding on to an investment that large.
Versus you know what could be pretty attractive areas for new capital can be deployed and I say that I also realize it's much easier said than bond you.
Yeah make a sale on sort of these types of assets, especially in this environment.
Yeah. So great question, we think it out all the time, we of course always way.
The existing portfolio against new new loans and.
We look forward to the day, where we can get an attractive exit opportunity on ramp.
Okay. Thanks for taking my questions. So.
Thanks.
Well take our next question from Rick Shane with JP Morgan. Please go ahead.
Hey, Eric how are Ya.
Okay.
Oh, I think the exit ramp what we talked about on these calls.
I was talking about the JV I mean that that's the topic today you have to you're right.
Talk about it.
Yeah I appreciate that all its actually good if it for me because I did want to talk about the JV a little bit.
You know you've had a couple of questions on the JV adequate we've had two questions on sort of.
Entering the origination market I'm, assuming you then where the leverage is on the overall portfolio right now that the incremental deployment of capital will be true JV does that is that likely to be intent.
I think it's gonna be it's there could be both I mean, the JV and without the you know.
On balance sheet PNNT tea.
But.
Both add on investments so and then I think both the JV and the balance sheet well I've repayments. You know we are starting to some repayments happening and of course, it's an opportunity to.
Upscale yield you know on the portfolio.
Got it and in that actually leads to my final question.
Given the actual boat market structure, right now and physical structure in terms of being able to do things like due diligence do you think that your origination.
Channels will change a little bit would you do more clubs syndicated transactions simply because there are advantages to collaborative due diligence.
Either your company, you're putting through a couple of different issues together, which is a good question I haven't thought about it that way you're putting in me.
Challenge of due diligence question along with.
You know kind of diversification club type.
Type things like I think.
I, you know hadn't really thought about putting the two together, but you know you. It's an interesting interesting way to think about things certainly due diligence is more challenging today certainly go if we want to get deals done we we'll figure it out how much can we can do on desktop how much we or how are people.
When we work with King can actually do physical due diligence how much were relying on independent third parties like sponsor or consultants.
You can do everything almost everything without you know actually going and kicking the tires. The question is what do you do ultimately kicked the tires and and and how how best to do that so.
I don't think hang on I think we can get deal done I think we can get deals done I think we will we are figuring out how to how to not physically send you know for people to a factory somewhere.
And so I think you know deals will get done in terms of the bite sizes.
You know you're kind of question I think alluding to the fact that because you can't do fall due diligence everyone wants to be more diversified because you just don't want to take a big hit by the something then have a big big pickup.
I don't know if that's really what you're thinking about but I think the marketing in of itself is focused on diversification right now I mean, some folks who we partner with I've come to US and said you know we really do want to just have more diversified portfolio jumped to as a thing as a matter of risk management and managing our portfolios I think that's happened to naturally.
Regardless of the of the due diligence question I don't know if I answered your question Rec button. If I haven't please please please so drilling a little bit warrant.
No you absolutely did it it's really it is interesting and it's fascinating how every business is evolving at this point. So I appreciate taking the questions.
Once again, if he would like to ask a question. Please press star one well take our next question kind of Aaron can all private investor. Please go ahead.
Hi can you hear me okay.
Yep.
Buyer.
Thanks for taking the question. So one question one follow up in the first is I would assume that many of your portfolio companies had taken advantage of that payment protection program. Another Cmos correct.
Okay.
Yes.
Okay got we all his time scale.
Can you hear me now.
Yeah I can hear.
The question is just do you have a sense of how much of your portfolio has benefited from the PPP or other short term stimulus plan and thus how will they managed through that should those should this program for a loss which could be.
Quite evident in this fall or or later this year.
Thank you that's it that's a good question, yeah, we'd say a handful of our companies.
Did participate triple P. typically they would be companies are already in an FDIC or they're already in NSP program. So.
They are already car part of the SB a world.
Based on what we've seen those those funds has certainly been accretive and helpful and enhance the liquidity.
That said since most of our companies.
Had been have professional management teams are sponsorship.
They are looking through the Triple C. They're looking at the long term trends.
And they're doing what they need to do to bolster their liquidity either through cost cuts or managing their working capital capital spend your programs capital expenditure programs, you know very tightly so.
As I said in the prepared remarks, we're feeling pretty good about their liquidity.
The underlying portfolio Triple P. included in some portion of those.
Of those names so just to use that a segue we haven't yet seen any fed main street, if it needs to be program. I think is now up and running we haven't yet seen impact our portfolio.
But were or you're sitting around that we're going to see you know see what happens with that program.
Great. Thanks.
A quick follow up maybe thier.
Stock as you as you talked about.
Arms.
Okay.
The one could argue that rather than investing in any any new deal that maybe eight 910%.
Well you could be in Baton Rouge socket.
Yes.
<unk>.
Purchase of.
Stock.
That's correct.
Yeah.
Yeah I'm your got it.
Yeah, you're cutting out I think you're you're asking about.
Stock buyback, that's my in France that you're asking about stock buyback and something that we.
We look at all the time, we've done to stock buybacks in our history Pennantpark one.
We've completed about a year ago. So we bought back at a 60 million of stock and of course, a time today the market cap.
That's a relatively large amount of capital relative to these multi market cap. The company. It's something we think about all the time in a world where we are focused right now mostly on liquidity.
Thank you show that we can get through the pandemic I think we've kind of put put that on hold for a while.
At least the next few quarters until we get through the pandemic and then you know will pick it up again, we just want to make sure we have excess liquidity to deal with most importantly, our existing portfolio companies get through the pandemic and that's why my comments about kind of a new originations are somewhat muted.
We just really want to want to preserve capital at this point preserve liquidity I certainly would you want to look at new deals US you know, but we are we're very focused on getting through the pandemic in as good a fashion as possible. So I know it's got answered. Your question. Your question was a little unclear looks like her.
You may be on a cell phone, but.
Aaron anything else or did I answer your question.
No. Thanks, a lot sorry, sorry for the communication difficult at Enron and cellphones, okay. Thanks, a lot.
Thank you.
Okay.
It appears there are no further questions at this time, Mr. Pena like to turn the conference back to you for any additional or closing remarks.
Just want to thank everybody for being on the call. The day reminder, that the next time, we are doing a call. It is our 10-K. So we'll be a couple of weeks later than normal probably mid November.
Before the speaking to people then if anybody wants to jump between now and we're happy to we're happy to don't you. Thank you very much for your time today.
This concludes today's call. Thank you for your participation you may now disconnect.
And Oh.
Oh.
Uh huh.
Sure.
[music].
Oh through.
[music].
Oh.
[noise] Oh.
[music].
Uh huh.
And.
Oh.
[music].
Oh.
Oh sure.
Uh huh.
Oh [noise].
Oh.
[noise].
Oh [noise].
[noise].