Wait To Invest In WhiteHorse Finance

Nov.19.13 | About: WhiteHorse Finance (WHF)

WhiteHorse Finance (NASDAQ:WHF) is a small and relatively new BDC (Business Development Company) that originates and invests in loans to privately held small-cap companies across a broad range of industries. WHF investment activities are managed by an affiliate of investment adviser H.I.G. Capital - which is a leading global alternative asset manager managing approximately $13 billion of capital as of September 30, 2013 across a number of funds focused on the small-cap market. WHF had its IPO on December 4, 2012, selling 6,666,667 shares at a public offering price of $15.00 per share. WHF began with a dividend of $0.355/share. The dividend paid in October was $0.335/share. WHF closed Friday 11-15-13 at $14.81.

Since reporting earnings on 11-12-13, WHF has been downgraded by Robert W. Baird from Outperform to Neutral and by BB&T Capital Markets from Buy to Hold. Calendar Q3-13 was the first quarter for WHF to report Net Investment Income (or NII) in excess of its dividend. On the surface, that is good news. So why the downgrade? And what should your reaction be?

This article will seek to answer those questions. I will start with a summary of the last earnings release; show my next quarter earnings or NII projection; and show current BDC sector stats.

WHF Reports NII of $0.4194/share compared to a Dividend of $0.3350/quarter

What They Earned: WhiteHorse Finance reported for Q3-13 Total Investment Income (TII) of $11.122 million ($0.7426/share). Fee income was an atypically high $1.9 million. Fee income for the last 9 months was $2.5 million - or $0.833 million/quarter. Net Investment Income was $6.282 million ($0.4194/share) compared to $4.850 million ($0.3241/share) last quarter. The NII/TII ratio was 54.48% compared to 51.06% last quarter. The Net Increase in Net Assets Resulting from Operations was $6.020 million ($0.4019/share). WHF's NAV (Net Asset Value) per share was $15.09 compared to $15.04 last quarter.

What They Own: WhiteHorse Finance had investments in 17 positions. Out of total investments of $214.669 million, WHF had $143.437 million in first lien secured loans and $71.232 million in second lien loans. The WHF portfolio had an average investment size of approximately $12.6 million, with investment sizes ranging from $1.0 million to $27.3 million and a weighted average cash yield of 12.2% compared to 14.0% last quarter. The weighted average remaining term of the debt investments was approximately 3.6 years. Approximately 83.7% of the loans were variable-rate. No loans are on non-accrual.

Originations: For the three months ended September 30, 2013, WhiteHorse Finance invested $31.0 million in new and existing portfolio companies at a weighted average yield of 10.4%, offset by net repayments of $54.4 million. Net repayments consisted of gross repayments of $98.3 million, less $43.9 million redeployed in new facilities in those same companies. The refinancing process reduced the average cash yield on these investments by approximately 100 bps. The portfolio turnover rate for the last 9 months was 57.22%. For the three months ended June 30, 2013, WHF invested $20.5 million across four companies while the proceeds from sales and repayments totaled $14.6 million.

What They Owe: WhiteHorse Finance had no outstanding borrowings on a credit facility of $150 million, which bears interest at the daily commercial paper rate plus 2.25% on outstanding borrowings. WHF had $55.000 million in an unsecured term loan agreement with Citibank, which bears interest at LIBOR plus 2.20%. WHF had $30.000 million of aggregate principal amount of 6.50% senior notes (WHFBL) due 2020. With total debt of $85.000 million and share outstanding of 14.977 million, debt/share was $5.6754 and the debt/NAV ratio was 37.61%.

Q3-13 Per Share Numbers

Total Investment Income $11.122 million (divided by 14.977 million average shares = $0.7426/share)
Base Management Fee = - $1.201 million (- $0.0802/share)
Incentive Fee = - $1.571 million (- $0.1049/share)
Interest expense = - $1.403 million (- $0.0937/share)
Total Investment Expenses = - $4.840 million (- $0.3232/share)
Net Investment Income = $6.282 million ($0.4194/share)
Realized Appreciation = $0.000 million ($0.0000/share)
Unrealized Appreciation = - $0.262 million (- $0.0175/share)
Net Increase in Net Assets Resulting from Operations = $6.020 million ($0.4019/share)
Investments at fair value = $214.669 million
Cash and cash equivalents = $62.254 million

WhiteHorse Finance had Q3-13 dividend coverage by having one time events that generated atypical fee income. I have not read the updates from Baird or BB&T. But I see two reasons for a downgrade. The pace of portfolio growth was a disappointment - and the weighted average portfolio yield fell substantially. The level of importance in those two numbers will be seen in my NII projections for Q4-13 - and in the one done for Q3-14. The consensus 2014 NII projection has fallen from $1.49 to $1.37 since the call. The reasons for that drop will show up in my projections.

My simplistic forward NII projection for calendar Q4-13:

TII Calculation
Metric Fee Income Interest Income Totals
Formula average for last 3 quarters portfolio times yield / 4 portfolio growth times yield / 8 Sum of components
Numbers 0.800 215 million times .122 / 4 40 million times .122 / 8 7.993

Click to enlarge
NII Calculation
Metric NII/TII Ratio NII NII/share Result
Formula TII times NII/TII NII/ share count
Numbers 55% .55 times 7.993 4.396 / 14.977 $0.2935/share

Click to enlarge

The analyst consensus TII projection for next quarter is $10.330 million with a low of $8.810 million and a high of $11.070 million. The consensus NII is $0.33/share with a low of $0.27 and a high of $0.38/share.

A potential for a bright future: WhiteHorse Finance has no borrowings on a credit facility of $150 million and $62 million in cash. The debt to NAV ratio for WHF is low - so WHF has room to grow its portfolio by deploying that potential for leverage. Let's do another hypothetical NII projection for this time next year, when WHF may have deployed $85 million more of that potential to grow its portfolio without issuing more shares. Since I am making an optimistic projection for this period, I will also project that the Fed is tapering - and the yields at which WHF can invest has climbed back towards 13%. As the leverage and the portfolio rises, interest expenses and management expenses rise. So I will project that the NII/TII ratio falls to a sector average 50%.

My simplistic forward NII projection for calendar Q3-14:

TII Calculation
Metric Fee Income Interest Income Totals
Formula average for next 4 quarters portfolio times yield / 4 portfolio growth times yield / 8 Sum of components
Numbers 1.200 300 million times .130 / 4 50 million times .130 / 8 11.762

Click to enlarge
NII Calculation
Metric NII/TII Ratio NII NII/share Result
Formula TII times NII/TII NII/ share count
Numbers 50% .50 times 11.762 5.881 / 15.300 $0.3844/share

Click to enlarge

Due to WHF having Q3-13 portfolio additions at a reduced yield - I did a second NII projection using an average 11% yield and no change in portfolio growth. If this were to happen, the NII projection falls to $0.3296/quarter - or a run rate of $1.32/year. The analyst consensus TII projection for 2014 is $42.670 million - or an average of $10.668 per quarter - with a low of $37.120 million or $9.280 million per quarter, and a high of $47.000 million or $11.750 million per quarter. The current analyst consensus 2014 NII is $1.37/share - with a low of $1.18 and a high of $1.55/share. That is a very wide range of projections.

A run rate of $0.38/share would have an annual rate of $1.52/share - which is in line with the pre-earnings release 2014 annual consensus analyst projection of $1.49. $85 million more in debt would raise the debt/share ratio to ($170 million divided by 15.1 million shares) $11.26/share -- and the debt to NAV ratio (assuming a flat NAV) to 74.61%. The legal limit is 100%. The sector average ratio is lower than 74% - but there are several BDCS with higher ratios. This scenario is still possible. With an average portfolio investment that is north of $10 million, this rate of growth implies growing the portfolio by only eight investments. That is only two per quarter.

An optimistic valuation assessment would compare WHF to Golub Capital BDC (NASDAQ:GBDC) - which has a portfolio that is low in subordinated debt, a weighted average yield on its investments of 9.9% - and currently sells at a yield of 7.21%. The share price of WHF has the upside potential to rise to the point where the yield is close to that neighborhood - if WHF can grow the portfolio to produce NII that covers the dividend while maintaining the current portfolio quality. GBDC uses a higher level of leverage - and also has a lower cost of debt capital by using SBA debentures. Those same strategies are available to WHF. I would want to see the current trends pointing towards a 2014 arrival into that kind of potential. BDCs have shown that it is easy to show growth potential in Q4s. I would need to see growth in the Q1-14 earnings release before I put any faith in the idea that WHF is headed for that kind of future.

My optimistic 2014 projection depends on a faster pace of portfolio growth - and higher interest rates on future investments. The portfolio size fell by $23 million in Q3-13. It grew by only $5 million in Q2-13. The current trend is not in line with a growth projection.

And there are other big problems. A portfolio with only 17 investments will generate a portfolio yield that widely oscillates. The Q3-13 oscillation was strongly in the wrong direction. If WHF is intentionally shifting towards a lower risk portfolio with lower yields, then it needs to have lower costing liabilities.

Senior secured loans can go on non-accrual. That has happened to other BDCs with relatively safe portfolios. Even Solar Senior Capital (NASDAQ:SUNS) - with a weighted average portfolio yield of 7.4% - and GBDC have had non-accruals. With only 17 investments, a non-accrual would be a major event for WHF. That is a risk that makes me uncomfortable. I like BDCs with a larger number of portfolio investments.
WhiteHorse Finance is selling at a 9.12% yield and a 2014 10.72 P/E ratio based on that less bullish $1.38/share NII projection. The sector average yield is 8.94% - and sector average stats have a covered dividend. The average 2014 P/E ratio is 10.97. On one hand, you can argue that WHF has a safer than average portfolio because it does not have any subordinated or unsecured debt. Based on that fact, WHF deserves to sell at a below average yield. On the other hand, you can argue that the WHF is less safe than average because its dividend is not currently covered by NII - and will not be covered in 2014 if the less optimistic projections come true. Based on that fact, WHF deserves to sell at an above average yield. I will be charitable and equal weight both of those arguments. Given WHF's current valuations, it appears the market is doing the same thing.

I will end this update with the current stats from my BDC coverage universe that does not include WHF - and spreadsheets for the newbies of 2013 that does include WHF.

BDCs 11-15-13

Yield in the spreadsheet below is based on the Q4-13 dividend. Spreadsheet header abbreviations: Div = dividend; EPS = earnings per share; LTM = last twelve months; YTD = year to date. The dividend to EPS ratio is a measure of dividend safety. Due to calendar and fiscal years failing to overlap, I also include a dividend to the sum of the last four quarters of NII - in the Div/NIIltm column. The dividend to NAV ratio is a measure of safety and efficiency. The last four columns measure the percentage change in the 2013 EPS projection and the change in the price target since the beginning of the year; the change in the Q4-13 dividend from the Q4-12 dividend. Special dividends are not included in this data. ARCC will pay a special dividend of $0.05/share payable on 12-31-13 and again on 3-28-14. FDUS will pay a special dividend of $0.38/share payable 12-20-13.


Share Price Div/ Div/ Div/ Div/ Q2-13 Price YTD Percent Change LTM LTM
Company 1-01 11-15 Yield EPS13 EPS14 NIIltm NAV NAV NAV Price Pr+Div EPS Target Div NAV

American Cap (NASDAQ:ACAS) 12.02 14.59 0.00 0.0 0.0 0.0 0.0 19.28 0.76 21.38 21.38 -19.05 22.32 na 21.20
Apollo Invest (NASDAQ:AINV) 8.36 8.82 9.07 92.0 90.9 92.1 9.8 8.16 1.08 5.50 15.07 -1.14 4.98 0.00 -1.69
Ares Capital (NASDAQ:ARCC) 17.50 17.93 8.48 92.7 91.6 100.4 9.4 16.21 1.11 2.46 8.97 -1.20 2.74 0.00 4.51
BlackRock (NASDAQ:BKCC) 10.06 9.51 10.94 130.0 110.6 115.6 11.1 9.37 1.01 -5.47 4.87 -20.79 0.81 0.00 -2.50
Fidus Invest (NASDAQ:FDUS) 16.45 20.73 7.33 110.9 85.4 107.9 9.5 16.06 1.29 26.02 33.64 -19.88 16.22 0.00 6.92
Fifth St (NYSE:FSC) 10.42 10.18 11.29 108.5 104.5 110.3 11.6 9.90 1.03 -2.30 6.80 -4.50 2.52 0.00 0.51
Full Circle (NASDAQ:FULL) 7.43 7.61 12.14 126.6 118.5 120.0 11.5 8.01 0.95 2.42 12.68 -9.88 10.00 0.00 -6.75
Gladstone Inv (NASDAQ:GAIN) 6.96 7.32 8.20 84.5 85.7 80.2 6.9 8.70 0.84 5.17 12.36 29.09 -11.11 0.00 -4.40
Golub Cap 15.98 17.75 7.21 97.7 92.1 99.3 8.5 15.12 1.17 11.08 17.08 2.34 5.88 0.00 3.70
Gladstone Cap (NASDAQ:GLAD) 8.16 9.23 9.10 97.7 98.8 103.3 9.8 8.60 1.07 13.11 21.69 0.00 -4.11 0.00 -3.48
Horizon (NASDAQ:HRZN) 14.92 13.80 10.00 99.3 93.2 102.2 9.3 14.89 0.93 -7.51 1.74 -8.55 -6.19 0.00 -11.00
Hercules (NASDAQ:HTGC) 11.13 16.83 6.65 91.8 86.2 106.4 11.1 10.09 1.67 51.21 58.76 11.93 35.92 16.67 5.77
Kayne Ander (NYSE:KED) 24.44 29.55 6.16 75.8 64.1 92.9 6.9 26.44 1.12 20.91 26.49 25.00 17.74 5.81 16.58
Kohlberg (NASDAQ:KCAP) 9.19 8.14 13.76 121.7 108.7 118.1 13.6 8.24 0.99 -11.43 -2.29 -9.80 -0.42 16.67 7.57
Main St. (NYSE:MAIN) 30.51 31.30 5.94 92.1 81.9 90.1 9.9 18.72 1.67 2.59 7.67 -0.98 25.38 3.33 10.83
Medley Cap (NYSE:MCC) 14.56 14.42 10.26 98.7 93.7 100.0 11.7 12.65 1.14 -0.96 6.66 3.45 5.18 2.78 0.40
MCG Capital (NASDAQ:MCGC) 4.60 4.74 10.55 113.6 102.0 137.4 9.7 5.18 0.92 3.04 11.20 -4.35 7.99 -10.71 -1.52
New Mountain (NYSE:NMFC) 14.90 14.56 9.34 89.5 98.6 104.8 9.5 14.32 1.02 -2.28 4.56 11.76 1.50 0.00 3.54
NGP Capital (NGPC) 7.22 7.62 8.40 100.0 103.2 96.7 7.0 9.13 0.83 5.54 12.19 -17.95 -16.67 0.00 -1.72
Prospect (NASDAQ:PSEC) 10.87 11.45 11.57 84.3 105.1 82.8 12.4 10.72 1.07 5.34 15.39 5.37 9.00 0.32 -1.02
Pennant Float (NASDAQ:PFLT) 12.70 13.47 8.02 96.4 99.1 94.3 7.7 13.98 0.96 6.06 13.08 1.82 6.29 5.88 0.29
Pennant Cap (NASDAQ:PNNT) 10.99 11.40 9.82 108.7 97.4 106.4 10.7 10.43 1.09 3.73 13.92 -8.85 0.51 0.00 2.66
Saratoga (NYSE:SAR) 15.40 15.76 0.00 0.0 0.0 0.0 0.0 23.78 0.66 2.34 2.34 -2.11 -32.09 na -8.52
Solar Cap (NASDAQ:SLRC) 23.91 22.27 7.18 84.7 90.4 71.6 7.1 22.40 0.99 -6.86 -0.17 -26.46 -4.84 -33.33 -0.49
Solar Senior 18.66 18.56 7.60 119.5 104.4 113.1 7.8 18.03 1.03 -0.54 5.70 -16.90 1.32 0.00 -2.75
Medallion (TAXI) 11.74 16.61 5.54 73.6 76.7 161.0 9.0 10.17 1.63 41.48 47.36 17.92 27.04 9.52 3.04
Triangle Cap (NYSE:TCAP) 25.49 29.08 7.43 96.0 93.9 93.6 13.8 15.62 1.86 14.08 20.44 -0.44 15.45 1.89 2.70
THL Credit (NASDAQ:TCRD) 14.79 16.32 8.33 94.4 94.4 89.8 10.0 13.58 1.20 10.34 17.24 0.70 9.11 3.03 3.11
TICC Cap (NASDAQ:TICC) 10.12 10.37 11.19 111.5 102.7 131.7 11.9 9.75 1.06 2.47 11.07 -14.75 -4.66 0.00 2.96

Sector Average 8.94 99.7 9.9 1.11 7.55 14.76 -2.70 5.10

With the 10 Treasury at 2.7% and sector average yield (on Q4 dividends) at 8.94% - the spread is 624 bps.
The cap weighted ETF BDCS is up 6.33% year to date - with dividends its total return is 13.80%.
Sector yield, Dividend/NAV and Dividend/EPS ratio filter out the zero payout ACAS and SAR.
Weeding out ACAS and SAR, the average share price gain is 7.23%.

Click to enlarge

BDC Earnings Growth & P/E Ratios 11-15

Fiscal and calendar years are not in sync. BDCs that began fiscal 2013 on or before calendar Q3-12 include AINV, FULL, GAIN, GBDC, GLAD, MCC, PSEC, PFLT, and PNNT. The range metric is the high estimate minus the low estimate, with that result divided by the consensus estimate - and serves as one of several measurements for assessing risk. That average is currently inflated by almost 300 bps due to atypical spreads in the projections for ACAS and GAIN. With the exception of KED, all EPS projections are from Yahoo Finance.


Earnings / Share Earn. Growth P/E Ratios 13 EPS Range
Co. 2008 2009 2010 2011 2012 2013 2014 11-12 12-13 13-14 2012 2013 2014 High Low Range

ACAS 242 61 62 126 116 85 1.08 -7.94% -26.72% 27.06% 12.58 17.16 13.51 110 84 30.59%
AINV 180 148 126 99 83 87 0.88 -16.16% 4.82% 1.15% 10.63 10.14 10.02 92 79 14.94%
ARCC 142 128 132 156 165 164 1.66 5.77% -0.61% 1.22% 10.87 10.93 10.80 162 154 4.88%
BKCC 176 139 101 100 100 80 0.94 0.00% -20.00% 17.50% 9.51 11.89 10.12 93 79 17.50%
FDUS 0 0 0 163 154 137 1.78 -5.52% -11.04% 29.93% 13.46 15.13 11.65 156 136 14.60%
FSC 130 127 95 101 107 106 1.10 5.94% -0.93% 3.77% 9.51 9.60 9.25 111 97 13.21%
FULL 0 0 0 84 78 73 0.78 -7.14% -6.41% 6.85% 9.76 10.42 9.76 84 70 19.18%
GAIN 79 62 48 73 62 71 0.70 -15.07% 14.52% -1.41% 11.81 10.31 10.46 66 60 8.45%
GBDC 0 0 0 116 115 131 1.39 -0.86% 13.91% 6.11% 15.43 13.55 12.77 133 129 3.05%
GLAD 135 100 84 88 91 86 0.85 3.41% -5.49% -1.16% 10.14 10.73 10.86 86 84 2.33%
HRZN 0 0 0 150 141 139 1.48 -6.00% -1.42% 6.47% 9.79 9.93 9.32 149 132 12.23%
HTGC 123 125 80 91 97 122 1.30 6.59% 25.77% 6.56% 17.35 13.80 12.95 117 112 4.10%
KED 135 127 125 136 189 240 2.84 38.97% 26.98% 18.33% 15.63 12.31 10.40 210 210 0.00%
KCAP 150 104 53 70 89 92 1.03 27.14% 3.37% 11.96% 9.15 8.85 7.90 93 92 1.09%
MAIN 115 90 100 169 201 202 2.27 18.93% 0.50% 12.38% 15.57 15.50 13.79 208 202 2.97%
MCC 0 0 0 56 131 150 1.58 133.93% 14.50% 5.33% 11.01 9.61 9.13 153 146 4.67%
MCGC 93 60 60 53 25 44 0.49 -52.83% 76.00% 11.36% 18.96 10.77 9.67 48 46 4.55%
NMFC 0 0 0 56 135 152 1.38 141.07% 12.59% -9.21% 10.79 9.58 10.55 154 150 2.63%
NGPC 79 57 54 73 55 64 0.62 -24.66% 16.36% -3.13% 13.85 11.91 12.29 69 63 9.37%
PSEC 191 187 109 109 163 157 1.26 49.54% -3.68% -19.75% 7.02 7.29 9.09 138 121 10.83%
PFLT 0 0 0 5 101 112 1.09 1920.00% 10.89% -2.68% 13.34 12.03 12.36 115 107 7.14%
PNNT 88 109 109 125 108 103 1.15 -13.60% -4.63% 11.65% 10.56 11.07 9.91 105 101 3.88%
SAR 1300 1640 457 215 186 186 1.90 -13.49% 0.00% 2.15% 8.47 8.47 8.29 186 186 0.00%
SLRC 0 200 208 225 220 189 1.77 -2.22% -14.09% -6.35% 10.12 11.78 12.58 192 182 5.29%
SUNS 0 0 0 63 131 118 1.35 107.94% -9.92% 14.41% 14.17 15.73 13.75 125 118 5.93%
TAXI 86 56 64 101 121 125 1.20 19.80% 3.31% -4.00% 13.73 13.29 13.84 135 112 18.40%
TCAP 154 161 158 206 216 225 2.30 4.85% 4.17% 2.22% 13.46 12.92 12.64 228 218 4.44%
TCRD 0 0 0 104 138 144 1.44 32.69% 4.35% 0.00% 11.83 11.33 11.33 148 139 6.25%
TICC 91 49 89 94 112 104 1.13 19.15% -7.14% 8.65% 9.26 9.97 9.18 107 101 5.77%

BDC Average 81.73 4.14 5.43 11.99 11.59 10.97 8.22

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Year To Date BDC Newbie Stats 11-15
The first Div/EPS uses the 2013 projection and the second ratio uses the 2014 projection


Share Price 2013 Div/ 2014 Div/ Q3-13 Price YTD Percent Change
Company 12-31 11-15 Yield EPS EPS EPS EPS NAV NAV Price Pr+Div

Garrison (NASDAQ:GARS) 15.00 14.25 9.82 1.28 109.38 1.39 100.72 15.11 0.94 -5.00 -0.33
Monroe Capital (NASDAQ:MRCC) 14.83 12.60 10.79 1.15 118.26 1.32 103.03 14.01 0.90 -15.04 -8.16
OFS Capital (NASDAQ:OFS) 13.69 11.97 11.36 0.64 212.50 1.05 129.52 14.46 0.83 -12.56 -4.37
Stellus Capital (NYSE:SCM) 16.38 14.93 9.11 1.36 100.00 1.42 95.77 14.57 1.02 -8.85 -2.63
TCP Capital (NASDAQ:TCPC) 14.74 17.29 8.33 1.64 87.80 1.66 86.75 15.06 1.15 17.30 24.63
White Horse 14.81 14.69 9.12 1.27 105.51 1.37 97.81 15.09 0.97 -0.81 8.78

Sector Average 9.76 122.24 102.27 0.97 -4.16 2.90
Click to enlarge

EPS Estimates and P/E Ratios 11-15-13


Earnings / Share Earn. Growth P/E Ratios 13 EPS Range
Co. 2011 2012 2013 2014 11-12 12-13 13-14 2012 2013 2014 High Low Spread

GARS 0 0 128 139 na na 8.59% na 11.13 10.25 142 131 8.59%
MRCC 0 20 115 132 na 475.00% 14.78% 63.00 10.96 9.55 142 125 14.78%
OFS 0 65 64 105 na -1.54% 64.06% 18.42 18.70 11.40 89 77 18.75%
SCM 0 30 136 142 na 353.33% 4.41% 49.77 10.98 10.51 142 135 5.15%
TCPC 0 181 164 166 na -9.39% 1.22% 9.55 10.54 10.42 185 160 15.24%
WHF 0 32 127 137 na 296.88% 7.87% 45.91 11.57 10.72 161 120 32.28%

Average 0.00 185.71 16.82 31.11 12.31 10.47

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Conclusion: In this environment of falling average portfolio yields for most BDCs, I would suggest erring on the side of safety and certainty when making your next BDC purchase. There is very little certainty when it comes to WHF because there is little certainty in any earnings projection. Buy a covered dividend. Buy a growth story that is in line with current trends. Buy a BDC that has some history. Buy a BDC with more portfolio diversification. I find a BDC with a long history, a diversified portfolio, and a covered dividend like Ares Capital Corporation at an 8.48% yield much more attractive than WHF at a 9.21% yield. Investors are not adequately paid for the increased level of uncertainty that I find in WHF.

Disclosure: I am long ARCC, MAIN, PNNT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.