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  • TICC Capital: Dividend Stress Test
    Editors' Pick • Wed, Feb. 25 TICC 17 Comments

    Summary

    • There are a few BDCs that I believe will cut dividends this year and TICC Capital is one of them.
    • This article compares the actual operating results from the most recent quarter with Prospect Capital, Medley Capital and Fifth Street Finance.
    • This article also provides a comparison of operating expenses for each BDC.
  • Dividend Reductions For BDCs In 2015?
    Tue, Feb. 24 AINV, ARCC, FDUS 23 Comments

    Summary

    • This article includes a simple analysis of recent dividend coverage and leverage ratios to help identify upcoming coverage issues.
    • Using this analysis there are six BDCs that could have issues but three of them recently cut dividends.
    • BDCs in general seem to be adopting a more conservative dividend policy so investor should be ready for cuts in 2015.
  • BDC Expenses Vs. Portfolio Yield
    Mon, Feb. 23 ARCC, FSC, GBDC 8 Comments

    Summary

    • This article provides a comparison of operating expenses for each BDC as a percentage of portfolio investments.
    • Many of the BDCs that have recently cut dividends have much higher than average costs using this method.
    • It is also important to compare BDC cost structures with portfolio yield.
    • Investors pay higher multiples for companies that can deliver returns to shareholders more efficiently.
  • Medley Capital: Dividend Stress Test
    Thu, Feb. 19 MCC 22 Comments

    Summary

    • There are a few BDCs that I believe will cut dividends this year and Medley Capital was one of them.
    • This article compares the actual operating results from the most recent quarter with Prospect Capital and Fifth Street Finance.
    • This article also provides a comparison of operating expenses for each BDC.
  • Fifth Street Finance: Updated Dividend Stress Test
    Tue, Feb. 17 FSC 25 Comments

    Summary

    • There are a few BDCs that I believe will cut dividends this year and Fifth Street Finance was one of them.
    • This article compares the actual operating results from the most recent quarter with Prospect Capital.
    • This article also provides a comparison of operating expenses for each BDC.
  • Higher-Priced BDCs Continue To Deliver Higher Returns
    Mon, Feb. 16 ARCC, BKCC, FSC 39 Comments

    Summary

    • Many BDC investors base buying decisions on NAV multiples and dividend yield.
    • Historically investors have had higher returns with higher-priced BDCs.
    • BDC prices tend to be volatile, creating opportunities for patient investors.
  • High-Yield BDC Pricing: Q1 2015
    Wed, Feb. 11 AINV, ARCC, BKCC 13 Comments

    Summary

    • Many of the higher yield BDCs have reported results and three of them cut dividends paid to shareholders for Q1 2015.
    • Most BDC investors consider dividend yield and net asset values when pricing investments.
    • The average high-yield BDCs is currently trading at a 16% discount to book value with an average dividend yield of 12.6%.
  • BDC Performance Since 2013
    Sun, Feb. 8 AINV, ARCC, BKCC 49 Comments

    Summary

    • BDCs have started to rebound from multi-year lows.
    • This article discusses the relative stock performance for BDCs since 2013.
    • Some BDCs are down much more than others and could take up to 3 years of after-tax dividend returns to make up for the current performance.
  • Prospect Capital: Dividend Coverage Stress Test
    Fri, Feb. 6 PSEC 128 Comments

    Summary

    • Prospect Capital recently reduced its dividend and now has less need to reach for yield.
    • This article compares the actual results from the recent quarter with my previous dividend stress test.
    • There are a few BDCs that I believe will cut dividends this year and Prospect Capital is not one of them.
  • Prospect Capital: Oil, Energy And CLO Exposure
    Thu, Jan. 29 PSEC 107 Comments

    Summary

    • This article is in response to the flurry of comments from previous articles discussing oil/energy exposure for BDCs.
    • Prospect Capital has around 5.1% of its portfolio invested in companies with direct energy related exposure.
    • Additionally, the company has other portfolio companies that could be impacted by lower oil prices.
    • Prospect Capital also has exposure to oil/energy in its CLO investments that account for 18.5% of the portfolio.
  • Top 10 BDC Issues For 2015: Survey Results Part 2
    Tue, Jan. 27 AINV, ARCC, BKCC 26 Comments

    Summary

    • This article discusses some of the key issues that investors should be focused on for investing in BDCs.
    • There continues to be a gap between valuations with most BDCs trading at a discount to book value.
    • It is important for investors to understand the reasons for pricing differences as well as identifying trends.
  • Top 10 BDC Issues For 2015: Survey Results Part 1
    Thu, Jan. 22 FSC, FULL, GBDC 19 Comments

    Summary

    • This article discusses some of the key issues that investors should be focused on for investing in BDCs.
    • There continues to be a gap between valuations with 10 BDCs currently trading at a 20% or more discount to book value.
    • It is in the best interest of investors to understand the reasons for pricing differences as well as identifying trends.
  • Oil And Energy Exposure For BDCs
    Editors' Pick • Tue, Jan. 20 AINV, ARCC, BKCC 134 Comments

    Summary

    • This article discusses oil and energy related concerns for BDC investors.
    • In two weeks, BDCs will begin reporting updated results including NAV per share and impacts to portfolio investments.
    • Currently the average BDC has around 7% to 8% of the portfolio invested directly in oil and energy related companies.
  • Top 10 BDC Issues For 2015: Part 6
    Wed, Jan. 14 AINV, FDUS, FSC 27 Comments

    Summary

    • This series discusses some of the key issues that investors should be focused on for investing in BDCs.
    • This article covers some of the positive trends in the BDC industry including decreased competition from banks and widening credit spreads.
    • Portfolio yields have stabilized for most BDCs.
  • Top 10 BDC Issues For 2015: Part 5
    Mon, Jan. 12 AINV, ARCC, BKCC 55 Comments

    Summary

    • This series discusses some of the key issues that investors should be focused on for investing in BDCs.
    • This article covers insider and institutional ownership for BDCs.
    • Insider ownership helps to align interests between management and shareholders.
    • Institutional ownership by large financial organizations and pension funds can exert considerable influence on management.
  • Top 10 BDC Issues For 2015: Part 4
    Wed, Jan. 7 AINV, BKCC, FSC 75 Comments

    Summary

    • This series discusses some of the key issues that investors should be focused on for investing in BDCs.
    • This article will cover pricing and valuations for BDCs using historical multiples of NAV and dividend yields.
    • Investors pay different multiples and expect different yields based on perception of dividend coverage and capital preservation.
  • Top 10 BDC Issues For 2015: Part 3
    Mon, Jan. 5 AINV, ARCC, BDCL 17 Comments

    Summary

    • This series discusses some of the key issues that investors should be focused on for investing in BDCs.
    • Tax-minded BDC investors focus on share price appreciation as well as dividend yield.
    • BDCs with higher amounts of NAV per share growth offer higher returns to shareholders.
  • Prospect Capital Or Medley Capital?
    Fri, Jan. 2 PSEC, MCC 131 Comments

    Summary

    • The goal of this article is to clear up the confusion regarding my opinion of dividend coverage for Prospect Capital compared to Medley Capital.
    • I downgraded Medley Capital after it reported results on December 8, 2014.
    • I upgraded Prospect Capital after it cut its dividend on December 8, 2014.
  • Total Returns For BDCs In 2014
    Dec. 31, 2014 AINV, ARCC, BDCL 34 Comments

    Summary

    • Most BDCs are trading in negative territory for the year.
    • BDCs that I consider to be higher quality have outperformed the others.
    • I believe investors will continue to price BDCs based on dividend coverage and capital preservation.
  • Top 10 BDC Issues For 2015: Part 2
    Dec. 23, 2014 AINV, ARCC, FDUS 85 Comments

    Summary

    • This article discusses some of the key issues that investors should be focused on for investing in BDCs.
    • There continues to be a gap between valuations with many currently trading at a 15% or more discount to book value.
    • Investors should use discretion with upcoming purchases and consider the positive and negative impacts from rising interest rates.
  • Top 10 BDC Issues For 2015: Part 1
    Dec. 17, 2014 BKCC, FSC, FULL 53 Comments

    Summary

    • This article discusses some of the key issues that investors should be focused on for investing in BDCs.
    • There continues to be a gap between valuations with many currently trading at a 20% or more discount to book value.
    • Investors should take advantage of the current BDC pricing but use discretion with upcoming purchases.
  • High-Yield BDCs Hit New Lows
    Dec. 15, 2014 BDCL, BKCC, FSC 51 Comments

    Summary

    • Over the last two months investors have favored BDCs with ‘safer’ portfolios.
    • Higher yield BDCs have reached new lows and offer attractive yields averaging 14.4%.
    • I believe these companies have the most upside potential as well as downside risk.
  • Prospect Capital: What Comes Next? Part 7
    Dec. 11, 2014 PSEC 59 Comments

    Summary

    • Prospect Capital recently reduced its dividend and now has less need to reach for yield.
    • This article uses various dividend coverage measures to stress test the new dividend.
    • I have also used similar coverage measures to compare to Medley Capital.
  • Medley Capital Update For FQ4 2014
    Dec. 9, 2014 MCC 39 Comments

    Summary

    • Medley Capital recently reported a large decline in its portfolio yield.
    • The company covered dividends, mostly due to strong fee income.
    • Three investments were put on non-accrual status.
  • Tax-Loss Harvesting For BDCs
    Dec. 7, 2014 ARCC, BKCC, FDUS 123 Comments

    Summary

    • Tax-loss-related selling pressure will likely impact BDC pricing through year-end.
    • BDCs have underperformed the overall markets for the reasons discussed in this article.
    • Certain BDCs may experience more selling due to lower relative performance.
    • Investors should take advantage of potential upcoming volatility to purchase higher quality BDCs at lower prices.
  • Prospect Capital And Share Issuances Below NAV
    Editors' Pick • Dec. 5, 2014 PSEC 119 Comments

    Summary

    • Prospect Capital shareholders will be voting on a proposal to issue shares below NAV.
    • There is the potential for NAV declines if this proposal is approved for 2015.
    • The price of new shares issued and the yield of the invested proceeds will impact dividend coverage.
  • Institutional Ownership Changes For BDCs
    Nov. 26, 2014 AINV, ARCC, BKCC 21 Comments

    Summary

    • This article discusses changes in institutional ownership levels for BDCs.
    • Earlier this year BDCs were excluded from certain indices that resulted in lower amounts of institutionally held shares.
    • One of the advantages to having larger shareholders is the positive influence they can have on decisions made by management.
  • BDC Leverage And Interest Expense Coverage
    Nov. 24, 2014 ARCC, BKCC, FDUS 16 Comments

    Summary

    • This article discusses debt service coverage levels for each BDC.
    • Some BDCs are spending higher amounts on current borrowings for many reasons including fixed vs. variable rates.
    • BDCs with higher operating and capital costs have less NII to cover dividends.
  • Prospect Capital And Required Returns
    Nov. 21, 2014 PSEC 115 Comments

    Summary

    • This article provides information about dividend coverage for new shares issued by Prospect Capital.
    • Prospect Capital has been maintaining its current underwriting standards and is experiencing yield compression similar to other BDCs.
    • The price of new shares issued and the yield of the invested proceeds will impact dividend coverage.
  • Prospect Capital And BDC Expenses
    Nov. 18, 2014 PSEC 74 Comments

    Summary

    • Prospect Capital has not covered its dividend with net investment income over the last five quarters.
    • One of the reasons for its lack of dividend coverage is its higher operating cost structure.
    • Some BDCs have reduced or waived management fees to ensure dividend coverage.
  • Total Returns For BDC Portfolios: November 2014
    Nov. 17, 2014 ACAS, AINV, ARCC 42 Comments

    Summary

    • This article discusses year-to-date total returns for the 26 BDCs that I follow.
    • I have also included the returns for my suggested BDC portfolios.
    • In general 2014 has been a tough year for the industry but higher quality BDCs continue to outperform the others.
  • BDC Results For Q3 2014
    Nov. 16, 2014 AINV, BKCC, FSC 40 Comments

    Summary

    • This article discusses the recently reported results for 23 of the 26 BDCs that I follow.
    • The average amount of dividend coverage has improved considerably due to better than expected results.
    • Many BDCs are finally experiencing stable or even increasing portfolio yields.