NII dropped to $0.21/share in the 2nd Quarter. On an annualized basis, this means that they are only earning $0.84/share on a current basis versus a dividend of $1.50 - $1.65. This is not sustainable. Also, $0.84/share represents a paltry 6.28% NII/Price yield (given P = $13.43), which is by far the lowest of its peers. NAV dropped to $11.80/share so MAIN remains quite over-priced at 1.14 P/B.

As Brennus01 has pointed out, MAIN has an enormous amount of liquidity given their favorable SBIC funding arrangement. However, they have not taken advantage of this liquidity position by engaging in new investments with high prospective IRRs. Several investors/analysts asked management point-blank about the pace of new investments during the 2Q conference call. They continuously made excuses for their slow pace and did not provide any assurance that the pace would accelerate soon. I would encourage any investor in MAIN to listen to the call and judge for themselves:

http://ir.mainstcapital.com/eventdetail....

The bottom line is that this management team is slow moving and they aren't taking advantage of a golden opportunity to put money to work while their competitors are on the sidelines. As such, investors should anticipate the low rate of NII to continue well into 2010.

For those of you who are looking for long alternatives or long pairs, PSEC and FSC are useful counter-examples. They both remained conservatively leveraged during 2007-2008 but are now moving aggressively to out-maneuver/acquire their competitors. Just listen to their management teams on the archived conference calls and compare their energy levels with the lackluster team at MAIN. My recommendation stands but with one slight variation: investors ought to short MAIN and use the proceeds to buy PSEC, FSC, and TCAP (I took profits on TICC after their strong run-up -- I made 15% in less than two weeks on this long and an additional 7% on my offsetting short in MAIN for a 22% return within two weeks).