So we think that’s a big positive today, and we think it will be — continue to be a big positive going forward. The reason we’ve always valued are kind of really favored our lower middle market investment strategy is our primary strategy is that we are directly aligned with the people that run that business day to day. The individuals that are the management teams that are typically the majority owners of these businesses, they’re living with that company day-to-day with the customers, vendors, employees’. So when we’ve seen them execute in times of stress, again, whether it’s COVID, great recession, whatever time period you want to pick, clearly, they’re dealing with challenges just like everybody else is. But in our opinion, and just our opinion, our experience long-term over the last 20 years, is that they will outperform the market just because they are making changes on a real-time basis.
These businesses are not large. So when they make a strategic decision to pivot to address what’s going on in the marketplace, it has an impact almost immediately. So that’s something that we’ve always viewed as a big positive, and they’re doing that one because it’s the right thing to do, but they’re also doing it because they’re the majority owner of the business in most situations. So those are the two biggest things I’d highlight, but I’ll let David add any additional color.
David Magdol: I think, Dwayne covered most, but just a couple of additional points. One is that for the most part, we’re backing existing managers that have been in the business for a lengthy period of time have seen cycles up and down in the past, and they know what to do. They’re proactively looking at their operating expenses, looking where they can cut. They’re very nimble as small businesses and look ahead very proactively. They also have leverage on the front end that we’d see in a normal private equity type of transaction, just total leverage, so their coverage is better. And the overall portfolio is very seasoned at this point. So if you look at the 75 companies we have, many of them have been in the portfolio for an extended period of time and have naturally deleveraged. So they’re really well-situated for a tougher economic climate if we happen to be there in their individual industry segment.
Mark Hughes: Appreciate that. Thank you.
Dwayne Hyzak: Thanks, Mark.
Operator: Our next question comes from Vilas Abraham with UBS. Please proceed with your question.
Vilas Abraham: Hi, everyone. Thanks for the question. Just a bit of finer point on some of the capital structure commentary. So leverage regulatory — leverage dropped down to $0.79 in I believe. So is the message here that you guys are comfortable running at the bottom or below the range? And how are you thinking about timing on when that could go up? And also, just how do you couple that with the equity issuance that you’re able to do here?
Dwayne Hyzak: Thanks for the question, and thanks for joining us this morning on the call. Yeah, I’d say we’re very comfortable being above or below the range. Obviously, we’re a little bit more on the conservative side today. I’d say that is very much intentional just given the current economic environment, kind of the overall backdrop that we’re dealing with. In terms of when will it move the other direction, it will all be driven primarily by the pace of opportunities in our lower middle market strategy and then secondarily, our private loan strategy. But we’re comfortable, and you can see it in our quarterly results. We’re comfortable that we can deliver best-in-class returns, not just from an industry standpoint, but compared to other public companies without running it at higher levels of leverage.
And we think that’s a huge part of the benefit that a shareholder or an investor gets from investing in Main Street. You’re getting a very, very good return, and we think you’re getting it on a very positive or favorable risk-adjusted basis.
