Core Viewpoint - Investors are encouraged to allocate more to private markets, which are expected to yield higher returns compared to traditional public markets, with a projected 15% return for a typical 60/40 portfolio, double the average from 2005 to 2024 [1] Private Market Insights - The focus is on private equity, private credit, and private real estate, with middle market private equity trading at approximately 11 times EBITDA compared to the Russell 2000's 19 times, indicating better growth potential at a lower cost [2] - Middle market private equity offers growth at a reasonable price, with revenue growth of 1.5 to 2.5 times nominal GDP, purchased at a 60% to 80% discount to the Russell 2000 [3] Market Volatility and Diversification - Middle market private equity is expected to compete with the S&P and NASDAQ over time while exhibiting less volatility and drawdown risk, providing true diversification [4] - The middle market is identified as a significant growth engine in the U.S. economy, comprising approximately 200,000 companies [5] Economic Growth and Investment Opportunities - The asset class is projected to experience gross revenue growth of 1.5 to 2.5 times nominal GDP growth, presenting vast investment opportunities [6] - Investing in sectors like HVAC, paving, and specialty foods can yield attractive growth rates of 10% to 15% at reasonable prices, contrasting with the high stakes of broader market trends tied to AI [7] Nominal GDP and Revenue Impact - Strong nominal GDP growth is anticipated, driven by robust real GDP growth and significant business fixed investment, particularly related to AI [11] - Nominal GDP is crucial for driving revenue across both large-cap listed companies and middle market private equity, emphasizing the importance of maintaining strong nominal GDP growth without high inflation [12][13]

Core Insights - The company reported solid financial results for Q3, with net investment income per share at $0.45, an annualized yield on book value of 10.3%, and earnings per share at $0.29, reflecting a 6.6% annualized return on book value [1][22][24] - The net asset value (NAV) per share decreased to $17.40, down $0.16 from the previous quarter [1][24] - The company declared a fourth-quarter dividend of $0.42 per share, with total dividends for Q4 amounting to $0.45 per share, maintaining a 10.3% annualized rate on ending book value [5][12] Financial Performance - Total investment income for Q3 was $67.2 million, down from $71 million in the previous quarter, primarily due to lower activity levels [22] - Net investment income for the quarter was $29.2 million, or $0.45 per share, compared to $30.6 million, or $0.47 per share, in the prior quarter [22][24] - The company experienced net realized and unrealized losses of $10.5 million, mainly from one portfolio investment [24] Investment Activity - New investment fundings in Q3 totaled $340 million across 101 portfolio companies, with $124 million in 14 new companies and $210 million in 86 existing companies [15][18] - The majority of new investments (89%) were in first lien senior secured loans, with a weighted average spread of approximately 550 basis points [15][17] - The investment portfolio at fair value was approximately $2.5 billion, diversified across 195 companies in 31 industries [18][19] Credit Quality - Credit fundamentals remain healthy, with investments on non-accrual representing 1.5% at amortized cost and 0.7% at fair value as of September 30 [11][21] - Median net leverage across borrowers was 4.7 times, down from 4.9 times in the previous quarter, with median EBITDA stable at $46 million [20][21] Market Environment - New deal activity increased in the middle market due to clarity on tariffs and stable economic indicators, despite elevated inflation and unemployment [6] - The company maintains a disciplined approach to terms and structure, focusing on the core middle market, which is viewed as having attractive characteristics [7][8] Future Outlook - The company has several levers to potentially offset headwinds from a lower interest rate environment, including higher earnings from joint ventures and increased prepayment-related income [13][14] - The current stock price valuation offers a compelling relative value, with a dividend yield of 13% annualized, which is attractive for investors [14]