Apollo Investment's (NASDAQ:AINV) fiscal first quarter had its ups and downs. The company reported earning $0.22 per share in net investment income, covering its $0.20 quarterly dividend, but capital losses resulted in $0.19 per share in book value erosion. The result was net income of $6.4 million, or $0.03 per share.
After writing off large investments in the fourth fiscal quarter, Apollo Investment put another investment on nonaccrual in the first fiscal quarter of 2016. Nonaccrual investments -- investments for which Apollo no longer accrues dividend or interest income -- now make up 2.5% of the portfolio at cost, or 0.4% of investments at fair value.
The difference between cost and fair value is significant, revealing that Apollo isn't expecting to make a big recovery on its losers. The new nonaccrual this quarter is a loan to metals and mining firm Magnetation.
The company's net asset value per share, or book value, fell to $8.01 per share, marking the fourth consecutive quarter in which NAV per share has declined. Since peaking in the third calendar quarter of 2014, commodity-related investments in oil and gas and mining firms have driven the bulk of NAV declines.
The company announced a small repurchase plan to help stem declines in the company's book value per share, approving repurchases of up to $50 million. At the current price of $6.84 per share, Apollo trades at a significant 14.6% discount to book value, and thus repurchases would be accretive to net asset value per share and earnings.
But this program is small at less than 1.5% of total assets, and it won't have a meaningful impact to net asset value unless it is used quickly and renewed. Still, a repurchase agreement is nice to see, as it creates value for the shareholders at the expense of management -- a truly rare move in the world of business development companies. Historically, Apollo Global Management, its external manager, has been willing to make concessions on fees and other items to improve shareholder returns.
After Apollo Investment took heat about its recent book value performance and fee structure on the conference call last quarter, these will undoubtedly remain topics of conversation this quarter. Investors will have to wait for the conference call for more detail surrounding Apollo's oil and gas investments, which made up 16% of the portfolio at fair value at the end of the quarter and represent one of the biggest risks to the portfolio, should oil prices remain low.