Saratoga Investment's Q4 2025: Key Contradictions in Pipeline Strength, Equity Sales, and Repayment Dynamics

Pipeline strength and deal sourcing, equity sales strategy, pipeline and deal sourcing, deployment and repayment dynamics, management of spillover and undistributed income are the key contradictions discussed in Saratoga Investment's latest 2025Q4 earnings call.



Portfolio Growth and repayments:
- Saratoga Investment Corp's total portfolio at fair value is now 2.2% below cost, with the core non-CLO portfolio at 1.6% above cost.
- Despite significant repayments, the company continued to see net positive originations, indicating a resilient investment strategy amidst macroeconomic challenges.

Financial Performance and Dividend Strategy:
- Adjusted NII per share was $0.56, down 37.2% from the previous year, reflecting lower interest rates and AUM levels.
- The company announced a transition to a monthly dividend structure, increasing its quarterly base dividend, driven by a long-term dividend growth strategy.

Investment Pipeline and Business Development:
- The company's deal pipeline showed signs of improvement due to increased business development efforts, driven by adding personnel and resources.
- The focus on existing portfolio companies and a robust business development strategy supports ongoing portfolio growth.

Credit Quality and Portfolio Health:
- The overall credit quality of the portfolio remained strong, with 99.7% of credits rated in the highest category.
- The company's proactive management and underwriting standards have led to a high-quality portfolio and successful resolution of credit challenges.