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William Packer  

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  • Fifth Street Asset Management IPO: Looking Attractive [View article]
    This never happened at FSC. FSC issues when the stock is above book value. There was an offering by FSFR below book but that was so the company could actually diversify the portfolio and drive steady performance. They had no real scale before that @ FSFR. As of recent, neither company is allowed to sell shares below book value and has no intention to ask for permission from investors. They are also working on strategic changes at FSC to make the business better.
    May 2, 2015. 01:05 PM | Likes Like |Link to Comment
  • Rate Hikes Are Coming And 23% Below Net Asset Value - Is It Time To Start Buying FSC? [View article]
    FSAM, FSC, FSFR.. I have autocorrect feature that changed my typing.. It learns from what I write.
    May 1, 2015. 05:29 PM | Likes Like |Link to Comment
  • Rate Hikes Are Coming And 23% Below Net Asset Value - Is It Time To Start Buying FSC? [View article]
    Jonathan, interesting that you didn't look at the fees before writing an in depth article. If you are worried about fees, FSFR has a 1% fee vs fsc's 2%...and earnings are going to get a bigger benefit from rising rates than FSC. Both are managed by the same manager. a little different target investment classes though.. FSFR is higher up in capital structure... But the dividend is pretty good and it trades at a discount.
    May 1, 2015. 05:28 PM | Likes Like |Link to Comment
  • Rate Hikes Are Coming And 23% Below Net Asset Value - Is It Time To Start Buying FSC? [View article]
    FSAM, FSFR, FSAM are buys at today's prices. Spoke with management and my issues with them are resolved.
    May 1, 2015. 04:04 PM | Likes Like |Link to Comment
  • Rate Hikes Are Coming And 23% Below Net Asset Value - Is It Time To Start Buying FSC? [View article]
    Well they are working on stabilizing NAV using a approach that works by underpaying what you are earning and rolling income over to new investments.
    May 1, 2015. 04:03 PM | 1 Like Like |Link to Comment
  • Rate Hikes Are Coming And 23% Below Net Asset Value - Is It Time To Start Buying FSC? [View article]
    FSAM has to pay the employees, market the company of FSC, find and retain good talent, etc. Your costs are really close to fixed... so instead of getting all this weird up and down cost structure and wild swings to NII... you got a steady and predictable one thanks to FSAM. Are the fees high? well... they tend to be on the higher end of the BDC universe... but arguably FSC has done a good job with building out the portfolio in a way that optimizes shareholder value. Ok. So look at it this way... you have a NAV that fell from $9.85 as the author said to $9.17 today.. well.. Much of that was actually spread and mark to market not having anything to do with credit impairment. So the value is still there... much of it. People forget these things.. and spread could go back the other way and you get a write up in NAV.

    Note: FSCs NAV was in the 14s long ago.. but they were not even close to diversified enough because of size problems and they went through the 2008 mess. OK. so you cannot really go off that because of those two big issues.
    May 1, 2015. 03:38 PM | 1 Like Like |Link to Comment
  • Fifth Street Finance Has 50% Upside From These Prices [View article]
    I am moving to 100% of my capital invested in FSAM. Been selling off MDLY is small pieces... so will just be FSAM from now on... 100% conviction on the trade. I also believe $FSC, $FSFR are excellent buys.$7.20 (FSC), $10.80 (FSFR) $11 (FSAM). Prices associated with suggested entry prices. Although, I will just own FSAM because i am targeting more than 100% upside.

    I see FSC moving up after the earnings report... coming back to $8 at some point after it reports and then slowly moving back to book value as EPS increases. FSC and FSFR are deploying funds in a joint venture that is very accretive to earnings.. those loans are expected to have extremely low default risk. Remaining portfolio is pretty solid. Only 1 expected loan on books headed for a haircut @ FSC, but that is offset by aircraft business and 0.07 clawback NAV bump. So targeting a neutral to higher NAV for this quarter at FSC.

    I see MCC NAV dropping.. so warning that people should be concerned with even more non-accruals @ MCC and another hit to NAV.
    May 1, 2015. 01:39 PM | 1 Like Like |Link to Comment
  • It Is Finally Time To Buy Medley Capital Corp. [View article]
    I am throwing in the towel on MCC ... price is in the $9.30s... more non-accrual loans on horizon. Removing my price target and coverage for the stock... same goes for MDLY.

    Recommend investors consider $FSC, $FSFR, $ACSF instead for BDCs... Also, I like the manager FSAM @ $11
    May 1, 2015. 01:24 PM | Likes Like |Link to Comment
  • Fifth Street Finance Has 50% Upside From These Prices [View article]
    He is just lowering our expectations so he can beat them. Yes, Japan is speculative but they have been working on building relationships there for 9+ years. FSC run into some issues with non-accrual recently.. but I think they will recover from that... and FSFR is looking OK at 87-90 cents on the dollar.. so as interest rates rise... it should definitely be able to kick off enough income to increase the dividend... and drive a higher stock price. I think there will be AUM growth in 2015 and I think that FSC can turn itself around... I am expecting some buybacks at FSC and yes that reduces AUM temporarily... but I am not concerned longer term about this. They may not buyback shares either.. it's hard to say.. but even if they don't... NAV should stabilize at FSC and the drive for yield should push the stock back up above book at some point... allowing for more offerings. I think a key catalyst for both FSC and FSAM... is rising interest rates and better reinvestment spreads. So I see growth coming back to life in 2016+ and yes 2015 is going to be slower than prior years... but I still see some growth in 2015... with possible takeovers by FSAM using that 175m credit facility... and so we are looking at earnings growth still @ FSAM.
    Apr 25, 2015. 10:36 AM | Likes Like |Link to Comment
  • IPO Preview: Fifth Street Asset Management [View article]
    Below is an email from FSAM Investor Relations... So maybe some additional color for some of you folks looking at the company today.

    "William –

    Thank you very much for your questions relating to FSAM.

    In regards to the first question - Class B shares are not convertible into Class A shares, but in fact it is the LP interests that are convertible into Class A shares. Upon conversion of LP interests into a Class A share, the corresponding Class B share is cancelled. Since our EPS is based on fully converted 50mm shares, there is no effect to EPS upon LP-Class A conversion.

    In regards to your second question, FSAM is a C-Corp and dividends paid are qualified dividends.

    Please let me know if you have any additional questions.

    Best,
    Robyn"

    Original email:

    "Hello,

    I am looking at FSAM and I have a few questions. I read that the class B common stock is convertible into class A common shares after two years from the date of IPO. Would such a conversion impact the earnings power of the class A common shares? In other words, would the earnings of Class A holders be diluted by the conversion of class B into class A?

    My second question relates to the tax implications of FSAM. Is the dividend taxable as a qualified dividend for tax purposes, like a C-corp? Or are we talking about a ordinary income dividend at FSAM like how FSCs distributions are classified?


    Thanks,
    William Packer"
    Apr 24, 2015. 12:50 PM | Likes Like |Link to Comment
  • Fifth Street Finance Has 50% Upside From These Prices [View article]
    The better deal for everyone right now... is to buy FSAM... I like it better than even MCC now. Fee earning assets keep accelerating and they did again in Q4 2014 from Q3 2014. Fee income is on the rise from rising AUM. The stock is dirt cheap and is QUALIFIED vs ORDINARY income that BDCs pay. Also, I see the dividend at 0.20 to 0.30 range per quarter for 2015.. even at the low end.. it's a 7.25% dividend yield for a qualified divy assuming you get long at $11. Ok. So definitely a buying opportunity.. and if you go by other asset managers that don't have permanent capital vehicles that approximate over 90% of AUM... FSAM should be trading at $20.30 per share today or better. But i would argue a premium valuation because FSAM has the permanent capital vehicles... so maybe $22 to $24 range seems fair. So huge disconnect and the upside is fantastic. Silly not to own it.
    Apr 23, 2015. 11:37 AM | Likes Like |Link to Comment
  • It Is Finally Time To Buy Medley Capital Corp. [View article]
    My active trading has more than offset the unrealized losses but despite this... Yes, MCC is down 5% from the time this was written... But if you have a medium to longer term view... You can see how the positive carry and dividends can easily provide a solid return over the next year. I still think that your cost average up near $10.50 is reachable within 1 year plus dividends paid. Look, it's a huge discount to book value and book is generating a solid 10% plus yield right now and a historical 3 year ROE near 9.5%. (7.5% nonaccrual losses or 2.5% per year and dividends were paid near 12% ROe on book before the latest cut) So net came out near 9.5% per year after nonaccruals) ... MCC is providing an outsized return to investors and not much sense in the huge discount... But that's just the way it is for now.. They are buying back stock and working on the JV.... While paying a good dividend return. Book should stabilize soon and valuation should increase.
    Apr 16, 2015. 03:28 AM | 1 Like Like |Link to Comment
  • BDC Total Returns Q1 2015: Part 2 [View article]
    I don't blame you for being against FSC, PSEC, TICC.... But MCC is not on their level.. They made some underwriting mistakes because of how fast they grew but those are getting resolved and NAV will stabilize and return to a path of slow and steady growth from NII rollover and buybacks. So if you book mark this... MCC is $9.06 and MAIN is $31.33... We will see who outperforms from here 1-3 years from now based on dividends reinvested and total return.. And my bet is that MCC carries less valuation risk, much more upside, and much better total return from here. But even longer term... 10 years out... You will see the significance even more because we don't know when the economy will turn.. But when it does... Main will take a much bigger hit and you won't realize it fast enough to get out... But with MCC.. You will have more time to see it because nonaccruals related to economic slowdowns lag the economy everytime and the valuation risk won't be as excessive as MAINs.. So when I move to avoid the crash and push capital into preferreds.. i won't have to take as much of a valuation haircut. I have done this song and dance before and I model and prepare for it regularly. Thankfully, I don't have secondary offering risk like you do in MAIN as an extra risk as well.
    Apr 15, 2015. 01:41 PM | Likes Like |Link to Comment
  • BDC Total Returns Q1 2015: Part 2 [View article]
    Special dividends exist because of capital gains which won't always be there. You can't count on them.
    Apr 15, 2015. 01:37 PM | Likes Like |Link to Comment
  • BDC Total Returns Q1 2015: Part 2 [View article]
    Oh please, MCC only recently had a discount to book value... They traded at a near 30% premium for a while there. Valuation risk is huge in MAIN and you might not see it come back to bite you for a while... But it will eventually... Meanwhile you get paid very little money to take that risk among the other risks when you could just buy a decent preferred stock and get paid more money and have less risk.
    Apr 15, 2015. 01:35 PM | Likes Like |Link to Comment
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