Phillip Goldstein (pictured), Andrew Dakos and Steven Samuel‘s Bulldog Investors has initiated an activist stake in Full Circle Capital Corp (NASDAQ:FULL) consisting of 1.32 million shares according to a recent filing with the Securities and Exchange Commission. The fund also disclosed that it might get in touch with the company’s management to discuss ways to increase shareholder value. Bulldog’s current stake in Full Circle Capital Corp (NASDAQ:FULL) represents 5.69% of the $82.49 million management investment company’s outstanding common stock.
The activist hedge fund, based in Saddle Brook, New Jersey was named by Goldstein to signify tenacity. From the time of its inception in 1992 with about $700,000 in capital, the fund has run more than 40 proxy fights. The idea is to attack funds selling at deep discounts to their net asset value, and force their management to narrow the margin, while shareholders bag the returns. Thus, it is no surprise that 95% of the fund’s holdings belong to the finance sector. Based on Full Circle Capital Corp (NASDAQ:FULL)’s net asset value of $4.43 at the end of March, the company’s shares are trading at a discount of more than 20%. Bulldog jumped at the opportunity to narrow that gap. Currently, Bulldog has about $619 million worth of assets under management and the market value of its public equity portfolio stood at $261.93 million at the end of the first quarter.
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Shares were purchased between April and June in 14 separate transactions with price per share ranging from $3.49 to $3.53. Full Circle Capital Corp (NASDAQ:FULL) pays out a monthly dividend of $0.035, which amounts to a particularly high yield of 11.63%. The stock has been taking a considerable beating and has depreciated by more than 20% year-to-date and nearly 54% over the past year, which has contributed greatly to that growing dividend yield. In comparison, the asset management industry is up by 5.9% so far this year and a hefty 17.9% over the last 52 weeks. The short interest in the company is also at the high end with 171,600 shares as of mid-May, with average daily volume being 196,800 shares.
Full Circle primarily invests in asset-based senior secured loans, but also has allocated capital to mezzanine loans. The target companies are usually small and lower middle-market firms, and investments typically range from $3 million to $10 million. In its financial results for its fiscal third quarter of 2015, which ended on March 31, Full Circle Capital Corp (NASDAQ:FULL) reported net interest income of $0.17, which beat estimates by $0.02. However, total investment income of $4.3 million missed expectations by $0.32 million. The company completed a rights offering during the quarter, which provided it with about $38 million in net proceeds that is to be used by Full Circle Capital Corp (NASDAQ:FULL) to provide its shareholders with better and more stable returns. Following the offering, Full Circle’s investment capacity stands at $70 million, of which $13.7 million has already been deployed in new investments.
Among the hedge funds that we track, the interest in Full Circle Capital Corp (NASDAQ:FULL), though relatively low, increased over the quarter in terms of overall ownership as five firms reported a total investment of $1.17 million in the company at the end of March, compared to just three firms with positions at he end of 2014, though their aggregate investment totaled $2.0 million at that time. John Fichthorn‘s Dialectic Capital Management and Israel Englander‘s Millennium Management are two prominent stockholders of Full Circle Capital Corp (NASDAQ:FULL), with respective holdings of 127,300 shares and 28,000 shares.
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