Capital Southwest Finds Something To Do

Capital Southwest (CSWC) hasn't been doing too many deals the past few years. When reading their shareholder reports, they will list some investments, to mostly existing ones, where they add a few hundred thousand bucks. That stems from not that many attractive things to do. I like the company's attitude of walking away before throwing money at less-than-compelling deals.

That, of course, happens because management has their own money in Capital Southwest.

But today news broke that Capital Southwest pumped $6.2 million into Arizona-based iMemories, which hosts Web space for storing and sharing pictures and videos. This was iMemories' second round of financing, and the funds will used the fund to further penetrate the social entertainment market.

The deal includes Capital Southwest's Bill Ashbaugh join iMemories board of directors:

“IMemories has all the key factors we look for in a successful investment,” Ashbaugh said. “They are meeting a seemingly insatiable demand in the marketplace, led by a proven executive team that has put in place the technology innovation and distribution model that makes them truly without peer in the market.”

Capital Southwest trades below my entry price -- but I couldn't care less. I have thought about adding to my position, and think about it now. So far I haven't.

Capital Southwest is the only stock I own where my broker is instructed to reinvest the dividends. The dividend isn't huge, but I like adding shares with it trading at a big discount to NAV.

It will be interesting if Chairman and CEO Gary Martin and his team find more things to do going forward.