Follow-up on GSC Investment Corp.

On December 31, 2009, GSC Investment (ticker: GNV) announced the results of the recent dividend payout of $1.825 in cash and stock. Shareholders had until December 17, 2009 to elect whether to receive a portion of the dividend in cash with the remainder in shares of common stock. Shareholders who elected to receive the cash received a combination of cash and common stock.

1)       The total payout was $2.1 million in cash and 8,648,725 shares of common stock or 104% of GSC Investment Corp.’s outstanding shares prior to the dividend.

2)       The amount of cash elected to be received was greater than the cash limit of 13.7% of the aggregate dividend amount allowed. The number of shares of common stock comprising the stock portion was calculated based on a price of $1.5099 per share, which equaled the volume weighted average trading price per share of the common stock on December 24 and 28, 29 of 2009.

3)       Shareholders who elected to receive the dividend solely in shares of common stock received 1.209 shares of common stock for each share of common stock they owned on the record date. Holders of approximately 39% of the Company’s common stock elected to receive only stock or did not make an election so this was the default option.

4)       Shareholders who elected to receive the dividend in all cash, received cash in the amount of $0.411 per share or 22.5% of the $1.825 dividend and 0.936 shares of common stock or 77.5% of the total dividend for each share of common stock they owned on the record date.

GSC Investment has not reported the new NAV value yet on cefconnect which still shows 6.91. Most likely the new value after the offering will drop to around 3.40. The stock closed at 1.75 on Friday, so the new discount to NAV should be around 50%. While this may look attractive, the expense ratio for GNV is reported on cefconnect is very high at 5.08% before interest expense. I almost never buy closed-end funds with expense ratios over 2% a year.

Full Disclosure: No position in GNV

Advertisements

2 responses to “Follow-up on GSC Investment Corp.

  1. juststarted looking at your site and like the cef connect site.what was the cause for the massive decline in price vs nav on gnv? also do you know of any sites that would alert me to new mutual funds coming to market?

    • The reason for the price decline was the dilution caused by the stock offering. Shareholders who owned GNV before the ex-div data received new shares of stock at $1.50 a share. The NAV is only updated by the company quarterly., so the 6.91 is way out of date. The new NAV should be reported in the next few weeks and will propbably be around 3.40. New mutual funds are often reported on fundalarm.com and morningstar.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s