About SARATOGA INVESTMENT CORP.
Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million.
The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. is based in New York, New York with an additional office in Florham Park, New Jersey.
SAR operates in the Financial | Financial Services | headquartered in Baltimore, New York | approximately 3,211 employees | led by CEO Chris L. Oberbeck.
The $362.3M question: What happens when a company this good becomes this expensive?
On Wall Street, there are companies that move money, and then there are companies that are the money. SARATOGA INVESTMENT CORP. falls squarely into the latter category — a financial infrastructure so embedded in the global economy that to bet against it feels almost like betting against commerce itself.
At $362.3M in market capitalization, SARATOGA INVESTMENT CORP. (SAR) currently ranks #16 in our quantitative model, with a composite score of 79.8/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives SAR the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 100/100 | 30% | Exceptional |
| Value | 47/100 | 15% | Premium |
| Momentum | 84/100 | 25% | Accelerating |
| Investment | 99/100 | 10% | Growing |
| Stability | 28/100 | 10% | Volatile |
| Short Interest | 100/100 | 10% | Low shorts |
The quality score of 100/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: 43.6%
- Net Margin: 1.8%
- Gross Margin: N/A
These aren't just good numbers. They're the kind of numbers that make SAR a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like SAR."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. SAR is quality defined.
- Momentum is real. With a momentum score of 84/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 1.4x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
SARATOGA INVESTMENT CORP. is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, SAR is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 79.8/100 | Rank: #16 of 3,571 stocks
Sector: Financials
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.