Triangle Accused of Overstating Investment Portfolio
According to a recently filed class action complaint, Triangle has been overstating its investment portfolio. For years, Triangle issued public statements touting positive financial results and an optimistic investment portfolio for the company. In February 2016, the company’s Chief Executive Officer, Ashton Poole, stated that “We are pleased to report a strong finish to 2015…As we move into 2016, we believe our investing platform is well positioned to continue capitalizing on the attractive opportunities the lower middle market provides.” However, the complaint alleges that Triangle officials knew as early as 2013, but failed to disclose, that the company should move away from mezzanine loan deals due to changes in the market that no longer made these investments attractive risk-reward opportunities. As a result of the poor quality investments and deficient underwriting practices, the company’s entire vintage for 2014 and 2015 investments were at substantial risk of non-accrual.
When Triangle announced its financials for the quarter ended September 30, 2017, the company revealed that its investment portfolio had declined 7%, and suffered $8.9 million in net realized losses and $65.8 million in net unrealized depreciation. Triangle also revealed that due to low earnings it would be slashing its quarterly dividend by 33% per share from the previous quarter. On this news, Triangle stock fell $2.57 per share, or nearly 21%, to close at $9.68 per share.