Gladstone Capital's Q3 2025: Navigating Contradictions in Tariffs, Leverage, and Economic Uncertainty

Impact of tariffs on portfolio companies, leverage and portfolio management strategy, investment strategy and portfolio composition, capital allocation and investment strategy, economic uncertainty and portfolio health are the key contradictions discussed in Gladstone Capital's latest 2025Q3 earnings call.



Investment Activity and Portfolio Growth:
- Gladstone Capital funded net originations of $89 million in July and early August, after reporting negative net originations of $9 million in Q2.
- The increase in investment activity was driven by closing on 4 new platform investments and an add-on, reflecting the company's conservative leverage position and healthy deal pipeline.

Portfolio Performance and Yield:
- The weighted average portfolio yield rose by 20 basis points to 12.8% in Q2, while the interest income fell slightly to $20.9 million.
- The increase in yield was attributed to onetime items associated with prepayments, along with the company's focus on maintaining a conservative underwriting and leverage strategy.

Liquidity and Leverage:
- Total assets rose to $780 million, with cash and other assets at $29 million, and liabilities increased to $306 million by the end of Q2.
- The company's conservative leverage position was maintained with debt at 64% of NAV, supported by an upsized and renewed bank credit facility.

Distribution and Dividend Yield:
- The company declared a monthly distribution of $0.165 per common share for August and September, producing an annual run rate of $1.98 per share.
- At a common stock price of about $26.91 per share, the distribution run rate yields approximately 7.4%.