Gladstone Investment's Q4 2025: Navigating Contradictions in Tariff Risks, Non-Accruals, and Deal Activity

Tariff risk exposure, performance of Educators Resource, outlook for Hobbs and non-accrual status, deal activity and investment strategy, non-accrual status and company performance are the key contradictions discussed in Gladstone Investment's latest 2025Q4 earnings call.



Strong Financial Performance:
- Gladstone Investment reported adjusted NII of $0.97 per share for the fiscal year ended March 31, 2025, covering the annual dividend of $0.96 per share.
- The increase in adjusted NII was supported by a total fair value of the portfolio rising to $979 million, despite fluctuations due to new buyouts and exits.

Portfolio Expansion and Valuation:
- During the fiscal year, Gladstone Investment invested a total of $221 million, up from $184 million in the prior year.
- The increase in portfolio value was driven by new investments in four new portfolio companies and add-on investments, although the total fair value slightly decreased quarter-over-quarter due to a successful exit.

Impact of Tariffs on Business Operations:
- The company acknowledged that tariffs are impacting the M&A market and certain portfolio companies.
- While most companies are not overly concerned, Gladstone Investment is closely evaluating the risk and forecasting the tariff impact on costs, customer demand, and supply chain dynamics.

Shareholder Distribution and Returns:
- Throughout the year, Gladstone Investment maintained its monthly distribution of $0.08 per share, paid a supplemental distribution of $1.66 per share, and declared an additional $0.54 per share supplemental distribution.
- The supplemental distributions were a direct result of buyout strategy, rewarding shareholders with meaningful distributions from realized capital gains.