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William Packer  

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  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    Buzz, while it's true that not all first lien is the same... And that has to do with how much cashflow coverage there is, ebita of the borrower, covenant packages, asset coverage via loan-to-value etc...... FSC and fsfr hold the exact same loan securities in their portfolio a lot of the time. This is how LT (CEO of FSAM) gets the big deals pushed through. He uses both funds to co-invest in the businesses. When you look at the securities, you can see the exact same yield on FSC balance sheet as fsfr when it comes to a lot of these deals. This is a trend that has been happening in more recent years.
    Aug 2, 2015. 08:10 AM | Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    Maybe you should gather up some major shareholders and stage this. Someone has to be the one to do it. Take initiative?

    Also, consider maybe approaching other asset managers like Medley Management to sign on as the manager. They have experience there, obviously. I was thinking maybe they would sign on for a much lower fee schedule and initiate buybacks with the run-off to maximize shareholder value. I am sure they would jump on this if given the opportunity and perhaps they would be willing to negotiate on core issues you guys may have.

    Just an idea.
    Aug 1, 2015. 12:31 PM | Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    MCC is only 1/3 of the Assets Under Management. so 2/3 of their AUM would still exist and be growing in the event of a take-over. Also, it's very difficult to take over a BDC. There are a lot of things that prevent such an action from happening. It has happened before under distress scenarios.. but with MCC's focus on senior secured floating rate loans, the risk to that happening is very low.

    Over time, the AUM of this manager should increase... increasing the cash rich earnings to shareholders of MDLY... This is different from investing in the BDC.. you get equity by investing in the BDC.. but overtime if you don't reinvest the BDC earnings.. you lose money from the charge offs ... and your NAV (equity) declines.. but in MDLY.. you don't need to do that.. your AUM grows over time as assets under management grow.. you don't face the same risks. It's a different risk profile, but the earnings of the business are pretty evenly diversified between MCC, Sierra, and privately managed accounts.

    More likely scenario is that MDLY would be taken over by a competing asset manager.... but it would not be able to be a hostile take over due to the major holders. Only a few guys hold the majority of the shares. Which means its in their (managements) best interest to drive shareholder value as well.
    Jul 31, 2015. 03:27 PM | Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    Rumba, MDLY pays out their earnings in the form of a dividend. Their income available for distribution increases as AUM increases and the company remains highly profitable. Book value is nothing, so you are paying for the future earnings of the business... which are growing. And technically, while book value is zero, you do have assets... because the assets you manage are what drives your income. As new funds are launched, you have more diversification from income sources. MDLY is a cash cow that is growing income available for distribution and that flows back in the form of dividends. Many companies trade well above their book values... but they are valued based on their earnings and forward earnings of the business. In the case of MDLY, they pay out those earnings as a dividend... so most of it is not retained in the business. The banks believe in them and see it differently.. they wouldn't provide these hundreds of millions in credit to these asset managers if they weren't worth it. Book value is simply a metric of estimated value to be had in liquidation of a business. That's a weird way to think about things.. base your value off of not growth or EBITA, but off what happens if you close everything down and liquidate. If we did that... what do you think the S&P 500 would trade at ? 300 points? lol.
    Jul 31, 2015. 02:53 PM | 1 Like Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    My favorite externally managed BDC is MCC, which is buying back shares. However, I think the better buying opportunity is MDLY shares. MDLY is still growing despite buying back shares at MCC... Because of Sierra and private accounts. In fact, Sierra is about to have more capital under management than MCC and it is non-traded. So, Sierra is 1/3 of AUM, MCC 1/3, private accounts 1/3. AUM has been growing overall., yet the stock is down huge over the last year. I stay in contact with the folks at MDLY and I feel that after a few more quarters of growth, we may see a dividend increase soon... This is a corporate dividend so it is qualified for tax purposes. When you look at comps, this thing should really be worth more like $21 today - not $9-10.

    The problem with bdcs is not the fee structures, that just become a more talked about issue more recently after bdcs started trading at excessive discounts. But the issue is the lack of buying liquidity due to the removal from the Indexes. Retail investors just cannot support these stocks alone. Their mentality to stampeed When prices enter a decline whether that be fear or fundamental reasons prevents a return to normalcy in stock valuations. They are not big enough to cause a meaningful uptrend in price, which is what they need to stop wanting to sell this. They see prices go down and keep selling while buying pressure is not strong enough to support it. Non-traded bdcs like Sierra have similar fee structures to public external bdcs... They are growing at a rapid pace. This is because investors don't have a stock price to look at and freak about. Instead, they see a very stable NAV of their investment and get paid bi-monthly dividends. The public externally managed BDC is suffering from a lack of institutional demand for the product, while non-traded bdcs continue to rack in the money.
    Jul 31, 2015. 11:51 AM | 2 Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    One last thing, fsfr yields more than FSC and fsfr trades closer to book than FSC. Take that into consideration, but still... Both are trading at steep discounts.
    Jul 31, 2015. 11:31 AM | Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    That's cute Drip, but if you'd like a copy of my profit return from 2009 to 2011 I would be glad to provide. I made hundreds of percent returns on my investments... buying bdcs when everyone else said they were going bankrupt and laughed at me.
    Jul 31, 2015. 11:08 AM | Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    BDC, then why is FSC trying to copy fsfr with first lien floating assets? Every quarter keeps turning more and more into fsfr assets.... Obviously comparing FSC to fsfr is becoming less apples and more bowling balls. Also, FSCs average yield has been coming down because of the addition of these assets. When I talked to LT (CEO) of FSAM he said that FSC and fsfr have similar assets and that is why the management fee waiver. So.... Obviously we are at odds here.
    Jul 31, 2015. 11:03 AM | 2 Likes Like |Link to Comment
  • Fifth Street Finance: Will New Management Do The Right Thing? [View article]
    Cutting fees won't fix this. Look at fsfr... They have 1% instead of 2% structure and still trade at huge discount.
    Jul 30, 2015. 11:13 PM | Likes Like |Link to Comment
  • American Capital Agency's Q2 2015 Book Value Projection [View article]
    Scott, good job. Really, nice work. Spot on.
    Jul 29, 2015. 12:43 AM | 1 Like Like |Link to Comment
  • Medley Capital improves borrowing terms [View news story]
    Excellent news!
    Jul 28, 2015. 04:38 PM | 2 Likes Like |Link to Comment
  • The Risks Of Medley Management And How To Correctly Time Your Purchase [View article]
    MDLY is growing AUM at Sierra. The business is a strong buy now at any price under $10.50. Silly to be trading so cheaply when AUM growth is going so well in Sierra and in private accounts. I see earnings increases over the next few quarters.. may translate into higher dividends soon.

    Just giving an update since this was written. Now is an excellent time to buy, in my opinion.

    Also, there is no lawsuit against MDLY currently. Nothing to worry about from that front. I called IR and confirmed.

    MDLY price is down because the stock lacks liquidity and has a tiny market cap for the class A shares. As an investment, it sure makes a lot of sense to own it for the long haul. It followed the BDC sector lower but just doesn't make any sense when AUM is growing this fast.
    Jul 28, 2015. 11:13 AM | Likes Like |Link to Comment
  • Medley Capital: Huge Insider Buying And Cheap Valuation [View article]
    Galicia, the best buy right now is the manager of MCC, MDLY. But I do like BDCs here. My favorite BDCs are MCC and PSEC.

    MDLY is still growing at a good pace... Look at AUM growth at Sierra income, a public non-traded BDC of MDLY. Growth still exists in the private accounts too. MCC is negative AUM growth to some degree but at least MDLY knows that it needs to keep its customers as #1 priority. (The investors in their funds who trust them with their hard earned money. )

    I love the management team. There is no bs with them. They tell it like it Is and are very straight forward with investors in their funds and at the corporate level.
    Jul 28, 2015. 07:58 AM | 1 Like Like |Link to Comment
  • Medley Capital: Huge Insider Buying And Cheap Valuation [View article]
    Yes, MCC is an excellent deal at todays prices.. in my opinion. Huge margin of safety there. This is the best buying opportunity since 2009 for BDCs.
    Jul 27, 2015. 01:33 PM | Likes Like |Link to Comment
  • Prospect Capital - A Takeover Candidate? [View article]
    North, you are correct.
    Jul 25, 2015. 04:35 PM | 1 Like Like |Link to Comment
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