Thursday, August 1, 2013: We reviewed a mix of earnings news, refinancing activity and an interesting article in the early morning before time ran away with us. More details on each of these items on our website at www.bdcreporter.com.
1. Senior loan specialist BDC Solar Senior Capital reported earnings for the IIQ of 2013. Earnings were down over the last year, Net Asset Value was down over year-end and the stock price has followed. The earnings release blames lower income on lower yields as higher earning assets said goodbye and were replaced with more modest yields. The lower Net Asset Value is due to 2 under-performing loans. (We are still determining if any loans are non-accrual. No mention in the Earnings Release).
Liquidity is very plentiful, with enough availability to increase total investment assets by more than 40%. Will lower portfolio yields offset higher investment balances or can Solar Senior look forward to higher earnings ahead ? The Analyst Consensus is already high relative to annualized current earnings per shares ($1.46 versus $1.16), so the answer seems to be yes, but the growth may already be reflected in the price. SUNS trades at a high multiple by BDC standards and is less than $1 off it's 52 week high. Still, stock down on news. More when we read the 10-Q.
2. American Capital, just coming off a mediocre second quarter earnings release, announced it's intention to refinance the only material debt financing the Company owns: a $600mn secured loan.
3. We also read with great interest a balanced (albeit bullish) assessment of American Capital on Seeking Alpha by Jaded Consumer (a repeat offender where ACAS is concerned).
4. Perennially under-performing Gladstone Capital (GLAD) reported earnings. Net Investment Income Per Share was flat, but the Company recorded Realized Losses and Unrealized Depreciation. NAV was down from $8.91 to $8.60 in the three months since fiscal year-end. The stock price is down ever-so slightly.
Disclosure: I am long ACAS.