Buy the dip in BDCs says Wells

Declines in the sector in response to Russell's decision to exclude BDCs from its indices are due to technical, not fundamental reasons, says analyst Jonathan Bock. "We believe select BDCs offer compelling return opportunities in this low rate, low credit loss environment. In our view, those risk/return elements are unaffected by whether or not the BDCs are included in Russell Indices."

Among Wells' highest rated names: American Capital (ACAS), Ares Capital (ARCC), Golub Capital (GBDC), Medley Capital (MCC), and TCP Capital (TCPC).


Comments (8)
  • RobOppen
    , contributor
    Comments (47) | Send Message
    Has Russell excluded BCDs? S&P did, but I can not find any other source saying that Russell has too.
    4 Mar 2014, 08:32 AM Reply Like
  • COBeeMan
    , contributor
    Comments (2978) | Send Message
    What dip? I'm still waiting for something significant to happen in the BDC area!
    4 Mar 2014, 09:53 AM Reply Like
  • bwmaki
    , contributor
    Comments (522) | Send Message
    Exactly COBee. I've actually been waiting for a decline in the sector to add to my BDC holdings. Its like Wells didn't even bother to check BDC share prices when writing this. I swear half the time I see something from a financial analyst on BDCs I question whether they even know what a BDC is.
    4 Mar 2014, 10:48 AM Reply Like
  • COBeeMan
    , contributor
    Comments (2978) | Send Message
    Jonathan Bock seems to think that is happening at Russell, although I haven't seen it anywhere else yet.
    4 Mar 2014, 12:01 PM Reply Like
  • joe.retail
    , contributor
    Comments (13) | Send Message
    Russell wil exclude BDC's from the Index family on 6/27 unless SEC changes some BDC reporting requirments by 5/15

    4 Mar 2014, 02:39 PM Reply Like
  • COBeeMan
    , contributor
    Comments (2978) | Send Message
    Thanks! So now we have the S&P selling BDCs throught 3/21, and Russell selling BDCs starting 6/27 (assuming no SEC changes). This could be a sustained dip! I wonder if S&P will add BDCs back in if the SEC changes the reporting rules? That could make for a nice pop around 5/15 or earlier!
    4 Mar 2014, 03:38 PM Reply Like
  • Darren McCammon
    , contributor
    Comments (4008) | Send Message
    The nice thing about BDC's is they pay decent dividends which can be re-invested. While it's certainly better to buy at the low, a BDC dropping in price can be a good thing for a long term BDC dividend re-investor.
    4 Mar 2014, 04:05 PM Reply Like
  • germain
    , contributor
    Comments (11) | Send Message
    Let's take a big step back. BDC's are a unique vehicle in that they provide an investing opportunity into the small cap and micro cap markets, reviewed by professionals with a lot at stake. In addition, they return the bulk of their profits to shareholders. I'm a believer and have been for three years. The indexing question will provide a bump, but sound business's will prevail.
    4 Mar 2014, 06:24 PM Reply Like
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