BDCL
UBS ETRACS 2X Leveraged Long Wells Fargo Business Development Company ETNNYSEARCA
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  • Mon, Nov. 21, 4:35 AM
    | Mon, Nov. 21, 4:35 AM | 12 Comments
  • Mon, Sep. 12, 10:04 AM
    • The sector has been a big beneficiary of the rates lower-for-longer thesis, the bounce in oil and the related major move higher in high-yield.
    • All three of those themes have been called into question since Labor Day. SA author BDC Buzz reminds not all BDCs are created equal, and says the higher risk ones will likely be underperformers in a correction ... Think Prospect Capital (PSEC -4%), TICC Capital (TICC -1%) and KCAP Financial (KCAP -2.7%). Fifth Street Finance (FSC -2%), Medley Capital (MCC -2.6%) and Full Circle Capital (FULL -0.4%) also fit the bill, and PennantPark (PNNT -1.5%), Gladstone (GLAD -3.4%), and Apollo Investment (AINV -1.2%) have the highest amount of oil exposure.
    • Those BDCs with "true" first-lien assets and stable NAV will be the outperformers: New Mountain Finance (NMFC -1.8%), Solar Senior (SUNS -0.1%), Goldman Sachs BDC (GSBD -0.7%), Golub Capital (GBDC -0.5%), FS Investment (FSIC -1.7%), Monroe Capital (MRCC -0.1%), TPG (TSLX -0.6%), Main Street (MAIN -0.1%), PennatPark Floating Rate (PFLT -0.1%), Hercules (HTGC -1.4%), Horizon (HRZN -1.8%), and TCP Capital (TCPC -0.7%) are worth a look.
    • ETFs: BDCL, BDCS, BIZD, FGB, LBDC
    | Mon, Sep. 12, 10:04 AM | 79 Comments
  • Wed, Aug. 24, 9:38 AM
    • "“We’re trying to clean up the [BDC] neighborhood," says Josh Easterly, who runs TPG Specialty Lending (NYSE:TSLX) for the the private-equity giant. "It would be a watershed moment.” Easterly notes the key challenge is that many BDCs don't have institutional ownership.
    • An owner of 3.2% of TICC Capital (NASDAQ:TICC), TPG is trying to fire the company's manager for subpar performance and put one of its people on the board. A shareholder vote is set for Sept. 2.
    • TICC has returned 62% since its 2003 IPO versus comparable BDCs returning 254%, the S&P 500 at 172%, the U.S. Treasurys at 70%. For its part, TICC says this is misleading. Since a 2009 strategy change in which the company went from lending only to tech companies to instead a wider swath of firms, and also began investing in CLOs, TICC's total return has topped 300%.
    • Agreeing with TPG are proxy advisory firms Glass Lewis, Egan-Jones, and ISS, which all have recommended shareholders vote in favor of the company's proposals.
      Easterly: "The industry has a very good chance of being a solution for the broader economy by providing credit, but only if it can garner institutional support ... If you can’t fire a management team that’s under-performing, the wheels of capitalism stop turning."
    • ETFs: BDCL, BDCS, BIZD, FGB, LBDC
    | Wed, Aug. 24, 9:38 AM | 33 Comments
  • Wed, May 18, 2:37 PM
    • Encouraged by narrowing credit spreads, and an oil price about to crack $50 (on the way up, not down), business development companies are nevertheless giving up session gains, with most turning negative following the FOMC's hawkish shocker.
    • Prospect Capital (PSEC -1.3%), Ares Capital (ARCC -0.8%), Main Street (MAIN -1.9%), Apollo Investment (AINV -1.7%), Triangle (TCAP -1.1%), PennantPark Investment (PNNT -1.5%), KCAP Financial (KCAP -1.2%), FS Investment (FSIC -0.3%)
    • ETFs: BDCL, BDCS, BIZD, FGB, LBDC
    | Wed, May 18, 2:37 PM | 25 Comments
  • Tue, May 17, 4:31 PM
    • Moody's stress-tested the energy portfolios of four of the six largest BDCs - Ares Capital (NASDAQ:ARCC), Apollo Investment (NASDAQ:AINV), FS Investment (NYSE:FSIC), and Prospect Capital (NASDAQ:PSEC).
    • In moderate and severe scenarios, Moody's found lower values for the group's energy investments than what the BDCs are disclosing, suggesting the potential for further write-downs which would cause the companies to breach their asset coverage ratio requirements.
    • Of the four tested, FSIC and AINV have the most exposure to the oil & gas sector, and are thus at greater risk of ACR breach.
    • An observer might wonder whether this is old news. After all, oil has already crashed and then nearly doubled. Where were these tests when oil was $80 and rising?
    • ETFs: BDCL, BDCS, BIZD, FGB, LBDC
    | Tue, May 17, 4:31 PM | 32 Comments
  • Mon, May 2, 9:42 AM
    • The team of Bryce Rowe and Dan Nicholas is still constructive on the sector, but the recent rally has left risk/reward more balanced, with the average BDC trading at 87% of NAV.
    • Particularly interesting is that the previously firmly shut equity capital window is opening: Nine BDCs are now trading at or above NAV, with another two within shouting distance. Three months ago, only four BDCs were at or above NAV.
    • A less turbulent Q1 earnings season could be the catalyst for another move higher, and their longer-term view - that lower-for-longer rates is a boon for the sector - remains unchanged. Primary beneficiaries: High-quality BDCs sufficiently earning their dividends and preserving NAV.
    • They downgrade PennantPark Investment (PNNT -3.2%) and Triangle Capital (TCAP -2.5%) to Neutral from Outperform, as both price targets ($6 and $20, respectively) have been breached.
    • Bryce Rowe ranks 1,192 out of 3,908 analysts on TipRanks.
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Mon, May 2, 9:42 AM | 18 Comments
  • Mon, Apr. 25, 12:46 PM
    • With book values in decline, leverage naturally rises, says Fitch, but some in the sector are borrowing to buy back stock, pushing leverage even more.
    • Fitch has had a negative outlook on the sector for two years, and earlier this year downgraded Apollo Investment (NASDAQ:AINV) and Fifth Street Finance (NASDAQ:FSC). This new report raises the concern that more downgrades are in the offing.
    • Along with the price of oil and the broader market, BDCs have enjoyed a sizable rally since mid-February, with at least some of the sector now sitting in the green for the year.
    • ETFs: BDCL, BDCS, BIZD, FGB
    • Now read: Prospect Capital: A Flat Q3 NAV Is All I Am Looking For (April 25)
    | Mon, Apr. 25, 12:46 PM | 14 Comments
  • Fri, Apr. 1, 12:42 PM
    • Engaged in its own battle with TICC Capital (TICC +0.8%), TPG Specialty Lending (TSLX +0.7%) takes note of the proxy fight between Ironsides Partners and Fifth Street Floating Rate (FSFR -0.9%). TSLX welcomes ISS's recommendation in support of Ironsides and for the termination of FSFR's management agreement with Fifth Street Asset Management (FSAM +0.3%).
    • TSLX calls ISS's support "another step forward" in the fight against BDCs who consistently fail to deliver shareholder returns.
    • ETFs: BDCL, BDCS, BIZD, FGB
    • Now read: Which BDCs Will Outperform In 2016? (April 1)
    | Fri, Apr. 1, 12:42 PM | 3 Comments
  • Wed, Mar. 30, 4:02 PM
    • The bounce since 2016's brutal start has business development companies - as measured by BDCS - marginally positive for the year.
    • Baird's Bryce Rowe reminds that the average BDC still trades at just 85% of NAV (up from 72% at the February bottom), meaning they're still worth buying on the dip.
    • "The lower-for-longer rate environment will provide support for the sector, and we believe the primary beneficiaries will be high-quality BDCs that are sufficiently earning their dividend distributions and preserving NAV/share on a long term basis," says Rowe.
    • His favorites are the sector's highest quality names, wtih Alcentra Capital (NASDAQ:ABDC) the top pick. Also worth a look are Fidus Investment (NASDAQ:FDUS), Monroe Capital (NASDAQ:MRCC), Main Street Capital (NYSE:MAIN), New Mountain Finance (NYSE:NMFC), and Triangle Capital (NYSE:TCAP).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Wed, Mar. 30, 4:02 PM | 48 Comments
  • Thu, Mar. 17, 10:58 AM
    • It's a big session for commodities following the Fed's dovish meeting results yesterday, particularly for oil - up 2.7% today to $41.08 per barrel, and now nicely into the green for the year.
    • Sold hard alongside the crash in energy prices, BDCs are catching a bid today.
    • Prospect Capital (PSEC +3.4%), Ares Capital (ARCC +1.7%), Apollo Investment (AINV +3%), Triangle Capital (TCAP +1.9%), THL Credit (TCRD +3%), OHA Investment (OHAI +2.6%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Thu, Mar. 17, 10:58 AM | 38 Comments
  • Wed, Jan. 20, 11:05 AM
    • The S&P 500 is lower by 3%, oil is nearing a $26 handle, and high-yield is selling off, with HYG -1.4% and JNK -1.3%. Those two ETFs are lower by about 5% YTD and in the area of 15% Y/Y.
    • Leveraged to all the above data, BDC sector losses are eve worse. Prospect Capital (PSEC -3.6%), Fifth Street (FSC -7.4%), Ares Capital (ARCC -5.3%), FS Investment (FSIC -10.8%), Main Street (MAIN -6.4%), Blackrock Capital (BKCC -5.3%), Apollo Investment (AINV -7%), Triangle Capital (TCAP -7.9%), TICC Capital (TICC -3.1%), Pennant Park Investment (PNNT -6.5%), KCAP Financial (KCAP -7.7%), THL Credit (TCRD -8%), TCP Capital (TCPC -7.4%), Gladstone Capital (GLAD -5.6%), WhiteHorse Finance (WHF -9.3%), Garrison Capital (GARS -6.8%)
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Wed, Jan. 20, 11:05 AM | 51 Comments
  • Thu, Jan. 14, 12:04 PM
    • A rally in the major averages and in the price of oil is failing to translate into a bounce for the roughed-up BDC sector.
    • Leading the way lower today is Gladstone Capital (GLAD -16.3%) which is notable (as are others in the sector) for its exposure to energy. Popular names like Prospect Capital (PSEC -1.8%), Fifth Street FInance (FSC -3.1%), Ares Capital (ARES -2.3%), KCAP Financial (KCAP -6%), and Main Street Capital (MAIN -3.1%) also can't catch a bid.
    • As BDC Buzz points out on Seeking Alpha, the BDC sector hasn't done a whole lot worse than the broader averages this year (though that gap is surely widening today), and a large handful of names are in the green for 2016. Among them (along with how they're doing in today's session) are Goldman Sachs BDC (GSBD -1.3%), Golub Capital (GBDC -0.4%), PennantPark Floating Rate (PFLT -1.5%), TCP Capital (TCPC -1.2%), and TPG Specialty Lending (TSLX +2.3%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Thu, Jan. 14, 12:04 PM | 51 Comments
  • Tue, Jan. 12, 11:28 AM
    • Up to one-third of American oil and gas producers could near bankruptcy and restructuring by the middle of next year, according to Wolfe Research, which suggests a rebound in crude to at least $50 per barrel would be necessary for survival.
    • Oil today is threatening a $29 handle, down 2.9% to $30.58.
    • A new report from Morgan Stanley says the environment is worse than the major 1986 oil patch bust which last for five years.
    • Plenty of P-E money is standing on the sidelines, but managers see no need to rush in - instead preferring to wait for bankruptcies and the wiping out of the debt.
    • “There’s no reason to be anybody’s savior,” says FBR's Chad Mabry. “If you can just get the assets out of bankruptcy, then you don’t have to save anyone.”
    • Prospect Capital (PSEC -3.8%), Fifth Street Finance (FSC -2.6%), TICC Capital (TICC -4%), PennantPark (PNNT -4.5%), KCAP Financial (KCAP -1.7%), OHA Investment (OHAI -2.4%), Gladstone Capital (GLAD -2.7%)
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Tue, Jan. 12, 11:28 AM | 60 Comments
  • Dec. 14, 2015, 11:20 AM
    • The price of oil has stabilized, but the major averages are moving lower, Treasury yields are moving higher in front of this week's expected Fed rate hike, and high-yield continues to sell off (with more funds gating withdrawals/selling holdings).
    • It all adds up to continued panicky liquidation in the business development complex. Prospect Capital (PSEC -4.8%), Fifth Street Finance (FSC -4.1%), Ares Capital (ARCC -4.9%), FS Investment (FSIC -3.4%), Triangle Capital (TCAP -4.8%), TICC Capital (TICC -9.1%), PennantPark Investment (PNNT -4.3%), New Mountain Finance (NMFC -5.8%), Monroe Capital (MRCC -4.5%), Oxford Lane (OXLC -10.4%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Dec. 14, 2015, 11:20 AM | 65 Comments
  • Dec. 11, 2015, 3:40 PM
    • Treasury yields are plunging, but high-yield is headed the other way again as investors mull a big selloff in the major averages and oil's plunge to below $36 per barrel.
    • The pain is widespread, but a panic in credit is particularly painful for BDCs. Hitting the tape a few minutes ago, Jeff Gundlach says "there's never just one cockroach" when credit melts down.
    • Prospect Capital (PSEC -5.5%), Ares Capital (ARCC -5.7%), FS Investment (FSIC -3.6%), BlackRock Capital (BKCC -3.8%), Apollo Investment (AINV -3.8%), PennantPark (PNNT -4.1%), Medley Capital (MCC -4.1%), TCP Capital (TCPC -2.5%), Gladstone Capital (GLAD -6.4%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Dec. 11, 2015, 3:40 PM | 57 Comments
  • Dec. 8, 2015, 12:41 PM
    • The market has more than adequately priced in expectations for further credit issues, says the team of Troy Ward and Greg Mason, noting consensus estimates have already been adjusted to reflect limited fees and slower portfolio churn. WIth an average yield of 10% and very low valuations, a 15% return in 2016 could be just a chip shot away.
    • As for rising interest rates, perceptions that this is bad for yield investments has also been fully priced in. And once rates rise and investors see earnings not being materially affected, there could be a push to buy.
    • Another possible catalyst: The activist push for lower fees.
    • Among stocks on their buy list: Hercules Technology (NYSE:HTGC), Alcentra Capital (NASDAQ:ABDC) for improving fundamentals, and American Capital (NASDAQ:ACAS), Fifth Street Finance (NASDAQ:FSC), and Medley Capital (NYSE:MCC) thanks to activist involvement.
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Dec. 8, 2015, 12:41 PM | 10 Comments
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