Main Street Capital Corporation (NYSE:MAIN) Q4 2022 Earnings Call Transcript

Dwayne Hyzak: Yeah. Erik, I would say that when you look at changes there, I wouldn’t say that we’ve seen a huge change. I think when we look at underperformance at a specific portfolio company level or more broad-based, I think it continues to be very company-specific and not something that is driven by the broader economy. And David, Nick, Jesse, you guys jump in here, but we’re not seeing a systematic or thematic kind of issue across the portfolio. Just like any environment, some companies perform better, some companies underperform, but I would say that the relative over performance, underperformance has not changed dramatically here in the most recent months. But you guys add on if you have a different view or a different opinion on it.

David Magdol: The only thing I’d add is that if you look at our diversification, we’re very purposefully and intentionally diverse across a lot of different industry segments, some of which are countercyclical. So we do feel like, we’re well positioned, as well positioned as we can be. Obviously, if you have a major change in the overall economy, we’ll feel that impact. But right now, we’re pretty comfortable with where we sit.

Eric Zwick: Thanks. I appreciate the commentary there. Just one more for me, just with regard to the strategy to deemphasize the middle market portfolio, I think you mentioned it’s about 8% at fair value of the total portfolio now. Is the goal to bring that down to zero, or do you still occasionally see attractive opportunities to invest within that portion of the portfolio?

Dwayne Hyzak: Sure, Erik. We’ve been trying to emphasize, we’re not trying. We have been deemphasizing the middle market strategy for a number of years. So five, six years ago, we said publicly that we were going to be working to deemphasize that and pivot to the private loan strategy. And I think we’ve been highly successful in doing that. And I think it’s been a significant contributor to our success over the last couple of years, and you’ll see us continue to do that. We don’t expect it to go to zero. We do want to maintain that capability because there could be stuff that comes up from time-to-time where it makes sense to continue to be active there. But I think you’ll see us continue to minimize those activities going forward.

Eric Zwick: Got it. Thanks for taking my questions today.

Dwayne Hyzak: Thank you, Eric. We appreciate it.

Operator: We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Dwayne Hyzak, for closing comments.

Dwayne Hyzak: Thank you, Maria. Thank you again to everybody for joining us this morning for our call. We really appreciate your interest in and support of Main Street. And we look forward to talking to you again in early May.

Operator: This concludes today’s conference. Thank you for your participation. You may now disconnect your lines.