Fifth Street Finance

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  • Wed, Feb. 10, 10:09 AM
    • It's day two of post-earnings losses for Fifth Street Finance (FSC -7.8%) as JPMorgan throws in the towel on its Overweight rating, downgrading to Neutral.
    • Net asset value fell to $8.41 per share from $9.
    • Noted during the conference call (transcript) was the company's decision not to buy back any of this discounted stock in Q4 after repurchasing $20M worth in Q3. Things were busy and volatile, says management, which was instead focused on maintaining appropriate leverage levels. Repurchases are expected to resume this quarter and next.
    | Wed, Feb. 10, 10:09 AM | 11 Comments
  • Tue, Feb. 9, 9:56 AM
    • FQ1 net investment income of $26.6M or $0.18 per share in-line with prior quarter. Dividend quarterly run rate is $0.18.
    • Net asset value of $8.41 per share slips from $9.00. Last night's close was $5.63.
    • The board authorized to repurchase upto $100M of common stock through Nov’2016.
    • Investments of $338.3M were closed in six new and five existing portfolio companies, and funded $351.9 million across new and existing portfolio companies.
    • Effective January 1, 2016, the company made permanent reduction in base management fee from 2.00% to 1.75%. "We believe the permanent reduction in base management fees at FSC places our fee structure at the industry median and will increase FSC's return on equity" stated Todd G. Owens, CEO.
    • Conference call at 10 ET
    • Previously:
    • FSC -1.6%
    | Tue, Feb. 9, 9:56 AM | 5 Comments
  • Tue, Feb. 9, 6:38 AM
    • Fifth Street Finance (NASDAQ:FSC): FQ1 NII of $0.18 in-line.
    • Total investment income of $65.12M (-0.3% Y/Y) misses by $1.86M.
    • Press Release
    | Tue, Feb. 9, 6:38 AM | 4 Comments
  • Thu, Jan. 21, 2:56 PM
    • Fifth Street Finance (FSC +1.8%) last night announced a 25 basis point cut in the base management fee charged by Fifth Street Asset Management (FSAM +3.2%). The reaction by activist investor RiverNorth Capital - which has called for an end to the management agreement - is not yet known.
    • While pre-announced NII roughly met expectations, the dip in NAV was greater than had been expected, say KBW's Greg Mason and Troy Ward. And if 40% of the fall in NAV was due to spread widening, that means 60% was related to credit issues.
    • As for the fee cut, it amounts to about $0.03 of incremental EPS per year, says SunTrust's Douglas Mewhirter, a not insignificant amount. He reiterates his Buy rating, with the fee reduction adding to share buybacks as catalysts given the stock's low valuation - about 60% of book value.
    • While FSC is higher today, it's underperforming the broader BDC sector.
    | Thu, Jan. 21, 2:56 PM | 8 Comments
  • Wed, Jan. 20, 4:37 PM
    • Estimated Q4 NII of $0.18 per share is equal to the quarterly dividend run rate.
    • Net asset value is expected to come in at $8.35-$8.45 per share vs. $9 three months earlier. The company says more than 40% of the NAV slip is due broader market spread widening, with the rest due to worsening credit in a number of investments.
    • The stock closed at $4.92 today, about a 40% discount to NAV.
    • Full Q4 results are due on Feb. 9.
    • Source: Press Release
    • Previously: Fifth Street wins reduction in management fee (Jan. 20)
    • FSC +0.55% after hours.
    | Wed, Jan. 20, 4:37 PM | 16 Comments
  • Wed, Jan. 20, 4:33 PM
    • Fifth Street Asset Management (NASDAQ:FSAM) agrees to reduce its base management fee for Fifth Street Finance (NASDAQ:FSC) by 25 basis points to 1.75% of total gross assets
    • Len Tannenbaum takes note of the "changing market environment and continued pressure on fee structures."
    • Source: Press Release
    | Wed, Jan. 20, 4:33 PM | 12 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%)
    | 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%).
    | 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%)
    | Tue, Jan. 12, 11:28 AM | 59 Comments
  • Dec. 15, 2015, 11:17 AM
    • The iShares High Yield Bond ETF (HYG +1.5%) and the SPDR High Yield Bond ETF (JNK +1.1%) both continue to gain from lows hit at about midday yesterday.
    • The move has roughly matched that of crude oil, which is ahead 1.3% on the session to $36.78 after threatening a $33 handle at its worst levels on Monday.
    • Bouncing alongside are those thoroughly roughed-up income vehicles, the BDCs. Among the movers: Triangle Capital (TCAP +5.5%), Apollo Investment (AINV +5.6%) - which added to its buyback last night - Medley Capital (MCC +3.3%), FS Investment (FSIC +3.4%), Fifth Street Finance (FSC +2%), and Prospect Capital (PSEC +3.5%).
    | Dec. 15, 2015, 11:17 AM | 20 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%).
    | Dec. 14, 2015, 11:20 AM | 65 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.
    | Dec. 8, 2015, 12:41 PM | 10 Comments
  • Dec. 1, 2015, 8:32 AM
    • FQ4 net investment income of $28.2M or $0.18 per share vs. $0.21 a quarter earlier. Dividend quarterly run rate is $0.18. Full-year NII of $0.75 down from $1.00 a year earlier.
    • Net asset value of $9 per share slips from $9.13. Last night's close was $6.47.
    • Roughly $20M of stock bought back during quarter.
    • An error in recognition of fee revenue was discovered in the years 2012-2015. Over that period, the company prematurely recognized $12.9M in fee revenue and paid $2.6M too much in fees, resulting in a cumulative overstatement to NII of $10.3M, or 2.3% of the total NII over that time. Additionally, net assets were understated by $2.6M as of June 30. The fees will be fully refunded by the investment manager.
    • One investment was added to the non-accrual group during the quarter, bringing the total to four.
    • Conference call at 10 ET
    • Previously: Fifth Street Finance misses by $0.02, misses on total investment income (Dec. 1)
    • FSC flat premarket
    | Dec. 1, 2015, 8:32 AM | 15 Comments
  • Dec. 1, 2015, 6:33 AM
    • Fifth Street Finance (NASDAQ:FSC): FQ4 NII of $0.18 misses by $0.02.
    • Total investment income of $63.77M (-16.3% Y/Y) misses by $4.03M.
    • Press Release
    | Dec. 1, 2015, 6:33 AM | 8 Comments
  • Nov. 30, 2015, 5:30 PM
    | Nov. 30, 2015, 5:30 PM | 2 Comments
  • Nov. 17, 2015, 10:01 AM
    • An owner of 6% of Fifth Street Finance (FSC +1.7%), RiverNorth Capital takes aim at the relationship between FSC and Fifth Street Asset Management (FSAM -6.6%), noting the FSC board is too heavily stocked with FSAM employees.
    • Nominating its own slate to the FSC board, RiverNorth would cut the "absurd" 2/20 fee structure, and focus on buybacks rather than boosting investments.
    • "Why is the external manager boasting about their origination platform when the smart money would be buying back the company's stock," asks RiverNorth, noting at the current value of 0.66x book, share repurchases would provide an immediate return of 51.5%.
    • Previously: Fifth Street Finance becomes activist target (Nov. 17)
    | Nov. 17, 2015, 10:01 AM | 28 Comments
Company Description
Fifth Street Finance Corporation is a a speciality finance company. It invests in small and mid-sized companies in connection with investments by private equity sponsors.
Sector: Financial
Industry: Credit Services
Country: United States