Good morning, ladies and gentlemen, thank you for standing by. Welcome to Saratoga Investment Corporations Fiscal First Quarter 2016 Financial Results Conference Call. Please note that today's call is being recorded. During today's presentation all parties will be in a listen-only mode. Following Management's prepared remarks, we will open the line for questions. At this time, I would like to turn the call over to Saratoga Investment Corp's Chief Financial Officer, Mr. Henri Steenkamp. Sir, please go ahead.

Thank you. I would like to welcome everyone to Saratoga Investment Corp's fiscal first quarter 2016 earnings conference call. Today's conference call includes forward-looking statements and projections. We ask you to refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. We do not undertake to update our forward-looking statements unless required to do so by law. Today, we will be referencing a presentation during our call. You can find our fiscal first quarter 2016 shareholder presentation in the Events & Presentation Section of our Investor Relations website. A link to our IR page is in the earnings press release distributed last night. A replay of this conference call will also be available from 1:00 p.m. today through July 22. Please refer to our earnings press release for further detail. I would now like to turn the call over to our Chief Executive Officer, Christian Oberbeck, who will be making a few introductory remarks.

Thank you, Henri and welcome everyone. Since we acquired Saratoga Investment Corp, we've been singularly focused on our long-term objective of increasing the quality and size of our asset base with the ultimate purpose of building Saratoga Investment Corp into a best-in-class BDC. As highlighted on Slide 2, during the first quarter of 2016 we continued the momentum gained during the first -- during the fiscal year 2015 towards realizing our long-term objectives. To briefly recap, first we've continued to steadily build and improve our asset base, yield and return on equity. Each metric saw an important increase on a quarter-over-quarter basis that we'll discuss in further detail shortly. Second, the overall strengthening of our financial foundation has enabled our regular quarterly cash dividends policy. We will pay a quarterly dividend of $0.33 per share for the first fiscal quarter of 2016 payable on August 31, 2015, for all stockholders of record on August 3, 2015. This is the third quarterly increase of 22% to our regular quarterly cash dividend and shareholders continue to be able to participate in our dividend reinvestment plan if they prefer. During the quarter, we also paid a special dividend of $1 per share. Third, our base of liquidity remained strong and promises to improve. On April 2, 2015, we received a green light and go-forth letter from the SBA for a second SBI fee license, which if approved will allow us to grow our assets by an additional $112.5 million. And effective May 29, 2015, we entered into a debt distribution agreement with Ladenburg Thalmann through which we offer from sale from time to time up to $20 million in aggregate principal amount of our existing Baby Bonds issuance through an aftermarket offering. As of yesterday we sold bonds with a principal of $5.7…

Thank you, Chris. Before starting to go through our financial results, I would like to highlight again the importance of assessing our net investment I income metric on an adjusted basis. This quarter is a good example of where our significant unrealized capital gain impacts net investment income. As we will discuss later, we had a very strong capital gains quarter of more than $5 million, which is highly accretive to net asset value. However, these capital gains are not included in net investment income while the second incentive fee expense related to this gain does reduce net investment income. Therefore we provide adjusted NII metrics by adjusting for the incentive fee accrual to thereby eliminate the one sided impact of capital gains in assessing our NII financial results. Now moving on and looking at our quarterly key performance metrics on Slide 4, we see that for the quarter ended May 31, 2015, our net investment income was $1.8 million or $0.53 on a weighted average per share basis. Adjusted for the incentive fee accrual related to net unrealized capital gains in the second incentive fee calculation that I mentioned earlier, our net investment income was $2.9 million or $0.53 per share. This represented an increase of $0.7 million as compared to the same period last year and $0.2 million compared to the quarter ended February 28, 2015. In the first quarter of fiscal '16, we experienced a net gain on investments of $5.6 million or $1.03 on a weighted average per share basis, resulting in a total increase in net assets from operations of $7.4 million or $1.56 per share. The $5.6 million net gain on investments was largely comprised of $5.5 million net unrealized depreciation on investments including a significant unrealized gain of $4.2 million relating to one…

Thank you, Henry. I’d like to take a couple of minutes to update everyone on the current market as we see it. Then I’ll discuss our strategy and performances we operate in this environment. The market’s extremely competitive conditions persist as there remains an abundance of capital chasing a historically low volume of new investment opportunities. As you can see in the chart on Slide 10, middle market leverage has surpassed pre-crises levels and is still continuing its upper trajectory. Excess liquidity within the private equity community, as well as an increase in the number of middle market lenders relative to the quantity of new deal opportunities have helped drive debt and purchase multiple expansion. In addition several data sources and our own experience indicate that gross investment yields have remained tight and are accompanied by wider leverage levels and narrower equity cushions. Despite the NII pressure facing many BDCs, we have not seen a widening of yields. The general sentiment is that standard deals remain in high demand while more aggressive deals have seen investor scrutiny. As mentioned earlier, the lower middle market's increased leverage is very much being driven by fewer investment opportunities. Slide 11 is quite remarkable and demonstrates how the number of transactions per deal sizes in the U.S. below $25 million year-to-date in 2015 were down 49% from year-to-date 2014. Calendar year 2015 is off to a very slow start with 432 private equity deals closing to date compared to 843 for the same period last year. Despite this trend we remain optimistic of our own pipeline and originations. With regards to our own pipeline and originations, we have made great strides in expanding our relationships and are confident these relationships will create higher origination activity in the future. We're now dedicating additional resources to…

Thank you, Mike. This past year we met an important milestone that has been an important goal for us since our inception namely to commence the payment of regular, quarterly cash dividends. From the start, we set our expectation was that this dividend would continue to increase, which it has by 22% per quarter over the last three quarters. As outlined on Slide 15, over the past 12 months Saratoga has paid quarterly dividends of $0.18 per share for the quarter ended August 31, 2014, $0.22 per share for the quarter ended November 30, 2014 and $0.27 per share for the quarter ended February 28, 2015. Saratoga also paid a special dividend of $1 per share on June 5, 2015. July 8, 2015, Saratoga Investment announced that its Board of Directors has declared a dividend to shareholders of $0.33 per share for the quarter ended May 31, 2015, payable on August 31, 2015 to all stockholders of record at the close of business on August 3, 2015. Consistent with our new policy, shareholders will have the option to receive payment of the dividend in cash or receive shares of common stock pursuant to the company's dividend reinvestment plan or DRIP plan, which Saratoga adopted in conjunction with the new dividend policy and provides for the reinvestment of dividends on behalf of its stockholders. Our goal with this policy remains to allow stockholders who want cash to receive their dividends in cash; however also provides the opportunity from any stockholders we've spoken to who are interested in reinvesting their dividends to receive addition shares of common stock. Experience has shown that those stockholders who hold their shares with the broker mush have affirmative instructed their brokers prior to the record date if they prefer to receive this dividend and future dividends…

Thank you. [Operator Instructions] And our first question comes from the line of Casey Alexander from Gilford Securities. Your line is open.

Yes. Good morning. Mike, my first question is for you. Looking at Slide 11, normally elevated leverage levels are also associated with extremely elevated deal activity such as the pre-crises levels. What do you think it means that we were experiencing elevated deal leverage multiples at a point in time where we were having a decrease in deal activity?

I wish I had a crystal ball to give you a perfect answer on that, but the perspective I had shared with you is my experience is that elevated leverage levels are more correlated to a benign credit environment where people feel like they can do [on their own] [ph] by investing capital that often works in conjunction with a very robust deal environment. In this case, deal flow is down, but it is still a benign credit environment and there is a lot of capital out there. So when we see a transaction, it is often the case that many other people are competing for that deal and we're seeing that even more so at the lower end of the middle market. I think the competition there is less as we've referenced in the prepared remarks, but still very competitive simply because there is a lot of capital out there and fewer deals and what happens in that environment is the buyers of those companies can push leverage and create a sort of an auction environment at times as well and of course the private equity firms are also paying really hefty prices for companies in this environment as well. Some of that has to do with just a very low interest rate environment too. So there is a lot of factors that are at play here. I think what we try to do is just stick to our guns, do very thorough due diligence and make sure that we're populating our portfolio with deals that have a very good risk adjusted return and with the cost of capital that we have in the SBIC, we can do that and still make it very accretive for our shareholders and be aggressive in the right circumstances.

You've been doing this through multiple cycles and I am sure you remember how you felt when you were doing deals in 2007 and 2008 and 2006. How does your spider sense so to speak tell you about the environment now versus then and are you trying to gear yourself towards different types of deals to prepare the portfolio in any way for the future?

That's a good question. I think the thing that you should know is that when we underwrite a credit, we're always thinking about how it may perform in a downturn, but it would be really hard for us to say the sky is falling, let's prepare ourselves for six months from now when the market is going to turn, etcetera, etcetera. We're really -- we're not trying to time the market by any stretch. Instead we're really just looking at every credit with the mindset that -- to make sure that if it goes through a down cycle and economic down cycle that the company will perform well in our principal V shape and we've spend a lot of time doing analysis around for every credit that we invest in. Really hard to sort of compare market to market and how this one feels like versus prior ones. The one thing I do know is that we remain disciplined and continue to find the right credits will be fine even if there is a downturn.

And Casey to add to that, I think what we talked about in our presentation, what we've sought to do is increase the credit quality of what we're investing in and being much more senior loans, much more dollar type of loans and those type of credit positions on the balance sheet being at the top of the balance sheet are like a bull work against a potential future downturn. But I think as Mike said, we're not predicting any downturn. In fact, U.S. economy seems to be okay. It's not -- I think people are more complaining about it being not as robust it's like to be, but not necessarily thinking there is an eminent decline in it. So again we can't -- we're not economists. We're not trying to predict the future here, but we're trying to structure ourselves soundly in what we're doing now so that we can handle what may come or may not come.

Okay. Thank you for that. Look I have one more question. When Saratoga originally did the Baby Bond deal, you took a certain amount of the proceeds and put it into broadly syndicated loans that were lower yielding until you had a deal home for those assets. I can’t understand the calculus involved in selling more of the Baby Bonds as opposed to you still have not sold all of this syndicated loans you still have $16 million of syndicated loans on the books that can be used. You still have the lower cost SBIC facility substantial amount of SBIC’s subsidiary still at your disposal. I struggle to understand the calculus for why distributing more Baby Bonds versus those other alternatives, which would be more accretive to shareholders?

Well look, Casey I think a part of the answer is corporate financial management and it’s very important for any company and certainly a company like ourselves to have multiple sources of liquidity and the Baby Bonds and the appetite for that community to own Saratoga Investment Securities right now specifically in Baby Bonds and ultimately helping to increase the awareness and the presence of Saratoga in the capital markets is an important strategic element. We don’t want to rely on too narrow series of sources of capital. So part of it is diversification of our capital source. Secondly, the precise use of proceeds on the most recent issuance of these Baby Bond has been to repay our line of credit and our line of credit has a -- is a three-year revolver and the Baby Bond still have five plus years of term to them. So we’re getting a security that might be marginally a little more expensive today; however, it has a much longer duration and are much more stable source of capital and also frees up our SBIC -- our line of credit from Madison for other potential uses. And we have a lot of different types of deal opportunities, which have come to fruition where we need to be able to deploy the Madison Facility and we want to make sure we keep that as liquid as we can for whatever circumstances. With regards to the SBIC capital and availability, I think it’s fair to say that we are doing our best to add to that portfolio as rapidly while being as prudent as we can and so we continue to do that. We would be -- that is really a function of the deals that we approve to do in that portfolio there and the debt available at the SBIC is only available for SBIC type of investments. And so we are -- inside our firm we're maximizing what we're doing in that direction and we've been showing a lot of growth and we will continue to show growth there, but that’s where that capital is. And with regards to the remaining bonds I think the average yield on those is not terrible. What is that?

The yield to maturity is around 7% on that because we're issuing at other premium.

The deals on our existing $18 million syndicated market.

Oh! I am sorry. It’s about 6.4% on the syndicate.

So those are actually earning more than our Madison facility for example. So I think in a very short run like this month or something, yes, there are some marginal capital differences, but in terms of the capital structure and the corporate financial structure and our access to different sources of financing we believe we continue to create a foundation that’s very sound for Saratoga. And in the grand scheme of our total capital structure the amount of Baby Bonds we’re selling is actually quite small.

All right. Thank you for taking my questions.

Thank you. Our next question comes from the line of David Chiaverini from Cantor Fitzgerald. Your line is open

Thanks. Good morning and excellent quarter you guys. I have a follow-up question on the capital structure theme. Why issue and I am mostly interested in the drip program. Why issue share at a discount to book through the drip when it’s dilutive to shareholders and book value?

Well, historically I think there is a long line of companies that have issued a discount -- issued shares at a discount including AT&T even historically. So that is not our unusual feature necessarily for a DRIP program. With regards to the DRIP program in particular, clearly we're trading at a discount to NAV, but we do have a lot of growth and we do need to support the financing of our growth and we do have shareholders that are interested in acquiring more stock and we do have shareholders that have approached us and are having a difficulty acquiring more stock because of the flow in the overall stock of Saratoga. And so we're very interested in allowing our shareholders to invest further in the company. I think the structure of the DRIP is such that all shareholders are treated equally. In other words any shareholder that wants to participate in a DRIP can participate. So it’s really a voluntary exercise to either participate or not participate. So all shareholders have an equal opportunity there. The other thing I would add to the DRIP, I think again if we focus on precise delusion around the DRIP, that’s one thing, but I think on a broader picture if you look at our overall strategy I think as we said in our presentation, our stock appreciation and for someone who ones a share of our stock five years ago, three years ago, a year ago, we’re talking about 18% compound annual rates of return on our shares. And so the ownership of our stock all things considered, all strategies employed has been very rewarding, has been in the top four BDC stocks in every period. So we’re trying to take all of that into consideration as we pursue our strategy to grow and improve our stock price.

Okay. And a follow-up to that given the growth objectives and the opportunities is a buyback kind of off the table.

I am sorry is the buyback?

Is doing some share repurchases up the table.

No not at all. We authorized a share buyback program and we have it in place and we have a certain amount of authorization and yes we -- that is a facility that we have available to deploy. Yes.

And what valuation given that the stock is trading around 75% of book value, what would be a good value to start implementing that buyback?

We don’t have a specific metric in terms of specific price point that we have determined and it is something that we would evaluate sort of on a day-by-day, week-by-week, month-by-month basis. As I mentioned earlier, our stock has been appreciating. I think we had some recent gains right now in terms of our capital gain etcetera. So I think our NAV has probably the announcement last night of our earnings and this call, I don’t think a lot of market place was expecting the improvement in the NAV just because it wasn’t public now it is public. And we would want to let the market digest the fact that this new information of our improvement in NAV, despite paying out a lot of dividends our NAV actually increased. So we would like to see the market digest that and respond to that. Again we believe our stock is very attractive relative to the other BDC’s based on our performance. But again yes, we have the stock buyback program available and we're prepared to use it when we see a moment to use it. But no, we have not put specific stock price target on that.

Got it. And then a separate question on the SBIC and I see that you increased the outstandings, the loans outstandings by about $15 million in the quarter, but I noticed that the SBI debentures has been flat now for three quarters in a row at $79 million. I was just curious can you talk about the expected ramp of getting more SBI debentures and the timing of that and when you could actually kind of dip into that second license once its approved.

Two things on that front. Number one, part of that has to do with -- ultimately we're permitted to get to a two to one leverage point in the SBIC. However, we need to put the equity in first and then increase the debt subsequently to that. And so we have invested sufficient equity to create an allowance for certain amount of leverage and what we've been dealing with is redemptions. We had a fair number of redemptions and we've also had a fair number of redeployments and so that's part of the reason why that number has stayed at that level. With regards to the second license, once we hopefully successfully receive the full license, we are able to commence investing in that SBIC immediately and we would intend to do so.

And Mike actually made I think the comment in his remarks David that, so we have access to $85 million more through the SBIC currently for which we would only need to put in the $15 million as Chris said. So it's big availability there without even putting in more money as we speak at the moment.

And you wouldn't start investing in the second license until you've fully utilized leverage in the first place, that's right?

Not necessarily.

Not necessarily, but the idea would be to take full advantage of the first license as well, but there is not a restriction on our capacity to also invest through that second license, but we certainly would want to optimize the first license and try to get that to the fully two to one leverage level. And in terms of how fast we can deploy that, I think in the prepared remarks we talked about the difficulty in the marketplace that's a very competitive marketplace with not as much deal flow. The vast majority of our efforts are really concentrated on trying to deploy capital within that SBIC given the value proposition if offers to our shareholders and we're continuing to do that. I think the pace at which we've invested historically is a pace that feels good. Now it's probably a good indication of how we're feeling today. We're making -- putting a lot of effort into increasing that pace. For us fortunately despite the market being difficult and transaction volume being down we started when we took over management of this company and got our SBIC license, we really came out into the marketplace for the first time. So as much as overall deal flow is down, we're growing our relationships and seeing more and more opportunities to invest capital. So that gives us some confidence that we can accelerate our pace of investment over time. Can't tell you exactly what that pace is going to be, but we tend to look at it over not so much quarter to quarter, but really are we developing more good relationships that will lead to good opportunities to deploy capital and that's kind of how we evaluate ourselves in that respect.

And one further specific response to your question on SBIC fund versus SBIC fund two, I think as you can appreciate there is quite a lot of rules, regulations, procedures etcetera around these SBIC funds in terms of sequencing of funding etcetera. And so at the time at which we receive our, hopefully receive our second SBIC license, we will be required to make an equity investment in that fund and then that fund and that equity investment can then be levered two to one. So it will be in our interest to deploy capital to get that fund up to its two to one leverage even though we might have capacity in fund one. And so this is -- inside of the overall SBIC equation and licenses one and licenses two etcetera, there is a bunch of little procedures and step functions if you will that make it the sequencing, maybe not as smooth as the ultimate endpoint would be.

Got it. That's very helpful. Thank you.

Thank you. Our next question comes from the line of Mickey Schleien from Ladenburg. Your line is open.

Yes, good morning, everyone. Just wanted to make sure I understand Page 5 of the Investor Presentation, it would seem to imply and given that this is pre the ATM facility, it would seem to imply that you could use the collateral already existing in the credit facility and the advance rates project the addition equity in the SBIC to gain access to the full 150 of debentures. Is that correct or am I misinterpreting that?

Yes, that's correct.

Practically yes.

Okay. And now given that you have the ATM facility in place and are starting to raise some capital, that would also obviously be a way you could fully fund the SBIC correct?

That's correct.

Correct, yes.

All right. Thank you. I also wanted to make sure I understood Page 12, so this is the -- specifically in terms of leverage, the 4.5 that refers to deals you closed during the quarter, that's not the average for the portfolio. Is that right?

That's right. The whole portfolio didn't rise to 4.5. It's…

So what is the average? Can you tell us?

I think we've remarked. Do you have that number handy?

Yes it's under 4, it's probably like 3.7, 3.8 I believe yes.

And that must be up just a little bit then versus the previous quarter?

Yes I mean marginally the sort of the net amount of this quarter's increase is obviously from a weighting perspective is very marginal impact to the overall.

And on that chart the bar that shows deals closed that includes follow-on offerings correct? I only saw one new actual portfolio investment.

That does include follow-on investments to existing portfolio of companies and we do measure it that way because we think it's -- as we build our portfolio, it's indicative of or I guess it's a better way to say is that it gives us another avenue to deploy capital. We like nothing better than to find a business that we underwrite and is doing well and we can support that management team and that business model with more capital. It's a good way to enhance our growth, but yes it does include follow-on investments as well.

Okay. And switching gears to another topic. The reinvestment period for the CLO ends in a little bit over a year. I've seen a lot of noise in results once we go post reinvestment period, which tends to cause a lot of ingestion and doesn’t really help stock prices. I am just curious what you can tell us about the plans for that CLO post the reinvestment period?

Well I think it's -- I mean it's fair to say that we're quite a long ways from that period of time, but I guess what we would point out is that the last time we came into a reinvestment period, what we did was we refinanced the CLO and so that is certainly an option to be pursued at that point in time. I think when you look at the return on our investment in CLO, it's very favorable and it makes sense to at this point in time if it were now, we would certainly be pursuing a refinancing of it. Now exactly what we will do at that point in the future, we just don't know all the market dynamics that will be at work, but again the last time we were faced with this type of scenario, which was post investment period, what we did was refinance it to be able to continue the very high returns on that investment.

Right. I understand, but like you said who knows where the market dynamics will be a year from now. In what position are you in terms of an equity holder to call that deal? Can you do that by yourself or do you need to work with the other equity owners or can you…

We own a 100% of the equity and we can call it at any time.

You could call, okay. My last question is just sort of modeling question. It seems that a PIK interest income rose, it's not a large number in and of itself, but on a relative basis it increased to some extent. Is that idiosyncratic or was there something, what drove that?

Do you mean gross interest income of the income statement?

No PIK income, Payment In Kind income increased fairly meaningfully quarter-to-quarter. I just was wondering if that was idiosyncratic just some particular deal or are you looking to do more PIK deals or just what happened and if you don't have that in front of you, we can do that offline.

No, we actually -- there was a -- because of the network realization that we had and the redemption was with par and PIK, we had been reserving a portion of the PIK historically and so included in the PIK income is a reversal of some of the reserve that we had placed on it previously.

Okay. I understand. Those are all my questions for today. Thanks for your time.

Thank you.

Thanks.

Thank you. Our next question comes from the line of Andrew Kerai from BDC Income Fund. Your line is open.

Yes, hi. Good morning. Thank you for taking my questions and congrats on a very strong quarter again. The first is just a housekeeping item on network communication. So if I understood you correctly, you said that you had been realized that post quarter end. So if I am running the math correctly, it looks like there is about a $3.5 million gain combined on the equity and the PIK notes, which would be then required for distribution. Is your plan to basically distribute that out as another special dividend sometime as the fiscal year kind of moves along here?

Well look clearly that's an important and substantial gain for us. We haven't made a determination specifically of what to do at that particular gain at this particular moment in time. Again our distribution policy is driven very much by the regulations around the BDC and our tax returns and our taxable requirements to distribute income and we evaluate that periodically and very substantially at every yearend. And so the exact treatment of how that gain would fit into our overall gains and our overall regular dividend policy is part of an ongoing consideration, but it's not a -- we haven't concluded yet if we are going to do something specifically relative to that gain.

Great. No, certainly makes sense. And then I noticed on prepaid legal, it looks like you guys dropped out of about $2 million or I should say, sold about $2 million of the first lien debt went into increased your exposure to the second lien debt increased by about $5 million. Just maybe if you could give some comments on kind of this particular credit why you felt like moving down in the capital structure made sense given that the 25 basis points pick up in yield on what I'll call basically an increased overall exposure, but also obviously going down the capital structure for that particular name?

Yes like all of the deals in our portfolio, we're constantly monitoring the performance of the company. In this case, we were monitoring their portfolio performance and had an opportunity to upsize our position in the second lien and became quite comfortable with that. And as part of that in evaluating our overall exposure to the credit, we decided that it made sense and it would benefit their shareholders to downsize our position in the first lien given the rate of interest that it offered. So it's a good opportunity for us to enhance the yield and take more exposure in the credit that we have a lot of comfort with.

Great. No, certainly makes sense. And then just for HMN Holdco, notice you took off the PIK component on your first lien and you wrote up the equity if you look at the warrants by about $0.5 million. Just wondered one what was the logic of taking off the PIK piece and was the equity appreciation just reflective of sort of the decrease in the value of debt, was that basically the swap from the sort of the debt valuation to the equity side, given that there is not that 2% PIK component that's going to come due and accrued here in about four years?

That company is performing very well. So the write up in the equity and warrants is reflective of the performance of the company. I have to look at and get back to you precisely on the PIK component.

Okay.

That deal is structured so that as the performance of the business improves, there is a grid that we negotiated with the majority owner such that their interest rate comes down over time as the risk profile reduces. So that maybe what you're seeing in the numbers I would have to check.

Okay. Great. No, thank you. I appreciate that. And then a leery of foundry noticed the mark stayed the same this quarter, just given that it's a couple quarters out here on the restructuring, any update you can give on that business would certainly be helpful.

We continue to monitor that company carefully. I think it's fair to say that the business has still a lot of challenges ahead of it. Many of their customers are in end markets that are difficult. So the new ownership is focused on that and I think one of the offsets to the challenges that the company is currently is facing and working through is that they have practically no debt. The only debt they had on the balance sheet is the first lien. So the company is producing a lot more cash flow then its fixed charges are. So it's building up and accumulating cash as well, which is somewhat of an offset to some of the challenges they're facing and help improve the enterprise value from that standpoint. We continue to watch that one closely.

Great. No, certainly appreciate the color. Thank you for taking my questions and congrats on a great quarter again.

Thank you.

Thanks Andrew.

Thank you. Our next question comes from the line of Joshua Horowitz from Palm Global Small CA. Your line is open.

Hi. Thank you. What a tremendous job everyone has been doing. I just wanted to say congratulations and great job. Once again I feel like I am repeating myself every quarter, but everything the company says and the management says ends up getting done exactly as you describe it. So thanks for that. All of my questions have been answered. It's been a pretty thorough call and I am glad to see there is a lot of investor interest. So I guess at this point I would just say we hope that you continue to work to shrink the discount to net asset value and continue to execute as you have been.

Thank you for that.

Thanks Josh.

Thanks.

Thank you. Our next question comes from the line of Keith Dalrymple from Dalrymple Finance. Your line is open.

Great. Hi. Thank you. I have a question about the general environment, if you guys could comment a little more on that. If I take your comments thus far, they're basically that there is more lenders and more capital and cheaper capital but few transactions, when I look at that, I would say that that imply that companies didn't have a great need for capital which in turn would imply that it's a lower no growth environment. Does that jibe with what you're seeing out there or is there something I am missing here?

No, that's interesting. I think there are a lot of factors at play. Generally we're seeing solid performance from our portfolio of companies and just the deals with companies that we're looking at, but overall in the middle market, we're not seeing businesses growing at a really rapid rate. So that may corroborate with your statement as well. I think another factor at play is that the price -- the private equity firm, people that are buying these companies are facing some of the same dynamics that we are. In this low interest rate environment, prices are really high and there is a lot of capital out there and not as many assets that are changing hands and so that's making it difficult as we'll. I think a lot of the private equity firms are looking at the prices of the things that are coming for and having a challenge to pull the trigger on deals, the deal flow in general is down.

Great. Thank you.

Thank you. [Operator instructions] And that looks like all the questions that we have for today. So I would like to turn the call back over to management for closing remarks.

Okay, well again would like to thank everyone for joining us today. We appreciate your support and we look forward to speaking with you next quarter.

Ladies and gentlemen, thank you again for your participating in today’s conference. This now concludes the program and you may all disconnect your telephone lines. Everyone have a great day.