As Conservative Investors We Have Sold Our MVC Capital 7.25% Senior Notes

We had held the 7.25% senior notes (ticker:MVCB) of business development company (BDC) MVC Capital in all of our Model Portfolios since inception of each of the portfolios and being conservative folks we have now sold all positions in MVCB.

For those that haven’t followed MVC Capital (ticker:MVC) they have not filed their 10-K for 2014 as of yet and subsequently have not filed 10-q’s for any quarter this year.  MVC has a portfolio company in Europe which has been unable to close their books for almost 2 years now because of ‘financial irregularities’, which may include fraud.  This company accounts for over 7% of MVC assets.

Because of the above MVC is having difficulties borrowing money to pay off debt that is maturing, although thus far they have been able to borrow short term money to get by on.  As these things go it is likely that they will successfully resolve their issues, but we are not hanging around to find out.  Simply put we can replace this 7.25% yield with another security within a couple of weeks and if they were not to get the issue resolved successfully soon there is a chance of a scare which would cause capital losses—and we hate capital losses.

Please note that as of last night we had not planned to sell this issue, but in further research today it became obvious that we needed to act.