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  • Analysts Have The Recipe For BDC Investing Success [View article]
    I feel good about the substitution of ACSF for ACAS. Once I get HCAP and SCM added, I will (temporarily) feel good about about my coverage universe.

    GSBD will be added in Q2-16 -- after it has produced one full year of data. (FYI - an 8% yield on a BDC with a portfolio weighted average yield of 11% is a bad deal - while on the other hand, the dividend coverage is superior and partially justifies the out of alignment in BDC yield and portfolio yield. With a $2.00/share 2016 NII projection, the 2016 price/NII is 11.24. GSBD merits a price to NII that is slightly above ARCC's [GSBD has a higher yielding portfolio, but a better NII/TII ratio] - and ARCC's 2016 price/NII is 9.90. GSBD merits a price to NII that is below TSLX's [TSLX has a safer portfolio yield and the same kind of NII/TII] - and TSLX's price/NII is 10.51. Thus GSBD appears to be about 10% over valued - and my readers should not be harmed by my one year BDC quarantine.)

    Sorry for answering "why not GSBD?" instead of "why not ACAS?" - but I think I answered a better question.

    I sometimes wonder why I generate a much smaller readership than BDC Buzz. Then when I read responses like I made above about GSBD, and realized that the audience that can understand such statements would surely be smaller than his, I have my answer.
    Jun 21, 2015. 09:57 PM | 2 Likes Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    The "low cost attribute" is not a predictor of better total returns for MLPs.

    (1) Compared to other G&Ps since 2012, MWE has under performed ENLK and WES on both a total return and unit price basis. While MWE has beaten NGLS on unit price appreciation, it trails NGLS on a total return basis.
    (2) Compared to other large-cap MLPs, EPD has under performed SEP and SXL which has GPs and pay IDRs. PAA (which pays IDRs) has beaten BPL (which does not).
    (3) A GP that has assets that it drops down to the MLPs is a good thing.

    The "low cost attribute" - or internal compared to external management attribute - may not be such a good predictive quality for BDCs. MAIN belongs to the internal group - and being 25% of that group makes the whole grouping look good. If one remembers to put KCAP in the internal grouping - then this groupings average performance drops.

    There are internally managed BDCs that still have sub-par NII/TII ratios (KCAP and HTGC). The stats are telling me to avoid BDCs with poor NII/TII ratios. I have not done a recent correlation testing based on the NII/TII ratio - so you will have to wait for the evidence. (I'm putting that on my 'to do' list). I do have stats that show a strong positive correlation between the NII/TII ratio and the Price/Book ratio. And having a good Price/Book ratio is a good thing since it is (in effect) a license to print money with every secondary offering.

    Summation - You are correct in thinking that 'low cost' is a good thing - but it is not the most important thing. Thus a focus on low cost (specifically for MLPs, but also for BDCs) results in suboptimal portfolio selections.
    Jun 19, 2015. 08:00 PM | 3 Likes Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    "Follow-up loans" is an attribute that I do not track.
    Jun 19, 2015. 07:15 PM | Likes Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    9403281 - The analyst rating numbers are gathered from Yahoo Finance. Yahoo tells us that 'Strong Buy' is 1.0 - 5.0 is 'Sell'. So the lower the number, the better the rating. Go to the site and look up ARCC - and you will find the rating is currently 2.3. Yahoo credits the source of this rating assessment is Thomson/First Call. I update the rating numbers once per quarter at a time that is close to the end or beginning of the quarter.
    Jun 19, 2015. 08:30 AM | 2 Likes Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    Dividend Sleuth wrote "You're helping us hear and interpret the data in a particularly murky sector".

    First off - thanks for the complement. Second, while the perception that this sector is "murky" is probably a consensus opinion - it is probably an emotionally based assessment. When the mind sees a fair number of dividend cuts, the fear factor rises - and the result is the murky perception. The data supports the expectation that forward dividend cuts in a metrically justified portfolio of our choosing can at least be minimized.

    And that is an interesting theory - that dividend cuts in the sector leads to a perception that this sector is risky - and that higher level of perceived risk leads to the assessment that the sector is "murky" or uncertain. If that theory is correct - then that might lead to the expectation that lower risk BDCs might be under valued and higher risk BDCs might be over valued - because things look murky. That is a 'factoid' that one can use.

    But I have little expectation of finding that out - and sharing it with my readers. As you can see by today's poll, participation has been from 32 out of the (as of this writing) 895 readers. One can not have much confidence in the findings of a poll with a sample size of 32 (or a 3.5% participation rate). If the response trend was maintained over a sample size of . . . say 400 - then we would all have evidence that stocks 'loved' by the analysts have the potential of being under valued due to the low level of expectations that the analysts have the ability and the history of choosing the better performing stocks. Only 'we' can tell 'us' that analysts ratings are lightly regarded.
    Jun 18, 2015. 09:28 PM | 4 Likes Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    ejmail - most "EPS projections" are really G.A.A.P. Net Investment Income projections. The extra information provided by FinViz is not that relevant to BDCs. I like knowing the number of estimates that go into the consensus projection and the spreads between the high and low projections. Yahoo Finance provides that while FinViz does not. I also like the Nasdaq site for gathering earnings projections that go further into the future.
    Jun 18, 2015. 01:52 PM | 1 Like Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    This is the second of two poll questions. Respond with a "like" to indicate agreement. Please do not make a text response to this comment. The comment:

    "I would have expected the degree of out performance by the more liked by analyst BDCs."
    Jun 18, 2015. 11:35 AM | 18 Likes Like |Link to Comment
  • Analysts Have The Recipe For BDC Investing Success [View article]
    This is the fist of two poll questions. Respond with a "like" to indicate agreement. Please do not make a text response to this comment. The comment:

    "I would never have expected the degree of out performance by the more liked by analyst BDCs."
    Jun 18, 2015. 11:34 AM | 43 Likes Like |Link to Comment
  • Apollo Investment Corporation Has A Falling Earnings Projection [View article]
    AINV has too much exposure to energy related loans - compared to other BDCs - for it to have a good share price performance. It quickly went from a BDC with a rising NAV to one with a falling NAV. Some analysts questioned if AINV was taking enough write-downs on energy loans - so the thought 'is out there' that more NAV falls are in the future. AINV's NII projections are falling. So yes - AINV has spent the last nine months getting uglier.
    Jun 17, 2015. 12:10 PM | Likes Like |Link to Comment
  • The MLP Story That Few Appreciate, And How To Make Money From Their Mistake [View article]
    Refinery logistic MLPs: DKL, MPLX, PSXP, SHLX, TLLP, VLP and WNRL. Some analysts may also include SXL and DM.
    Jun 17, 2015. 12:01 PM | Likes Like |Link to Comment
  • Apollo Investment Corporation Has A Falling Earnings Projection [View article]
    I think it is a neutral time to buy BDCs. BDCs will benefit form an improving economy (better economy = more 'transactions') - and be slightly hurt by slowly rising interest rates. The 'floating rate' BDCs would be helped if rates rose a heck of a lot. I do not see that happening.

    If you are wanting to beat the market - then do not buy BDCs. I have a gut reaction that anyone asking about 'timing' issues will also be concerned about sub-optimal total returns in the mid term. BDCs are for prying loose some yield in the here and now from your portfolio. I would not expect market beating returns.
    Jun 17, 2015. 11:52 AM | Likes Like |Link to Comment
  • Apollo Investment Corporation Has A Falling Earnings Projection [View article]
    Speculative - I am saying that 'yield' along with 'Price/NAV' and 'Price to NII' (or the consensus EPS projection) are all three metrics used to assess valuations. It takes all three. And your valuation assessment needs to be 'context sensitive'. Put in different words - you need to compare apples to apples. There is more than one kind of fruit when it comes to BDCs.
    Jun 12, 2015. 08:41 AM | Likes Like |Link to Comment
  • Apollo Investment Corporation Has A Falling Earnings Projection [View article]
    The sector averages are at the bottom of the spreadsheets - which is where I believe that correct placement for averages should be located. The sector average yield on 5-19-15 was 10.15%, Dividend/2015 EPS projection was 99.1%, Price/NAV ratio was 0.97 (or 97%) and Price to 2015 Net Investment Income projection was 10.13.

    InvestRite - your questions give me the impression that you have 'spreadsheet dyslexia'. But this is coming from someone who reads investments spreads multiple hours each day. I also lack data on the percentage of folks who would also have problems harvesting information and lessons from the spreadsheets I provide - but the number could be one that surprises me.

    I have failed to inspired feedback on the polls I have provided in prior messages. I do not know when or where I am failing to communicate due to that lack of prior feedback. I have the impressions that I would be overly redundant if I echoed in 'text' the stats I already provided in the spreadsheets. That impression could be in error.

    I am sorry that I failed to provide the information you requested in your first question. I know that there is a large percentage of folks that fail to harvest information provided by the analysts - and spreadsheet dyslexia could be a leading cause for that due diligence deficiency. I know with MLPs, there are very few who can calculate a DCF/unit available to the limited partners - and that may also be caused by spreadsheet dyslexia - or just being lost in the accounting.
    Jun 12, 2015. 12:57 AM | Likes Like |Link to Comment
  • Apollo Investment Corporation Has A Falling Earnings Projection [View article]
    InvestRite#1 - the sector average valuations are shown in the spreadsheets. I have provided sector average yields, Dividend/EPS, Price/NAV ratios and Price to Net Investment Income projections (or P/E ratios).
    Jun 11, 2015. 02:02 PM | Likes Like |Link to Comment
  • 4 Reasons Why Midstream MLPs Have Underperformed In 2015 [View article]
    Alan Ruger wanted feedback on his feedback. You did not say anything with which I would disagree. I cited studies on the influence of rising rates on MLP valuations in my article "Learning to Dislike MLPs". Rising rates will hurt MLP valuations. I expect that it will hurt MLPs with slower growing distributions the most.

    I hate writing about tax issues because they have a huge potential to vary from investor to investor. I tracked UBTI numbers from a lot of investors for several years - and that data was freaky in its variation from unit holder to unit holder. I am guessing that if UBTI is freaky - then tax consequences outside an IRA will also be highly varied. I have had years where my sale of one or two MLPs did not move the needle. And I have had one year when it did - in a huge way. Thus I think you are low balling the potential tax impact of selling a MLP - while at the same time expressing an opinion that is 75% true.
    Jun 7, 2015. 05:46 PM | 1 Like Like |Link to Comment
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