Fifth Street Finance
 (FSC)

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  • 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, 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
  • 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 | 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%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Dec. 14, 2015, 11:20 AM | 65 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
  • Nov. 17, 2015, 9:49 AM
    • Disclosing a 6% stake in Fifth Street Finance (FSC +2%) last night, RiverNorth Capital Management - noting "abysmal performance and abusive fee structure" - calls for immediate changes to the board and nominates its own slate of three for the 2016 annual meeting.
    • Full text of RiverNorth letter to the Fifth Street board.
    • RiverNorth's "FixFSC" website
    • Fifth Street responds, calling RiverNorth's PR "inflammatory and misleading."
    | Nov. 17, 2015, 9:49 AM | 14 Comments
  • Sep. 28, 2015, 11:16 AM
    • A weekend WSJ story highlighting growing spreads in the high-yield market and the solvency of commodity giant Glencore being called into question are possibly teaming to spook investors in BDCs today.
    • On Friday, Altice sold $4.8B of junk bonds to fund its purchase of Cablevision, well less than the $6.3B it hoped to sell. The 10-year paper on the deal priced to yield 10.875%, more than 100 bps higher than what had been initially expected. Olin on Friday sold $1.2B of paper to fund an acquisition. It had hoped to sell $1.5B. For the privilege, Olin is paying 10% for the 10-year notes, up from 7% expected earlier this month.
    • Prospect Capital (PSEC -4.2%), Fifth Street (FSC -3%), Ares (ARCC -3.2%), FS Investment (FSIC -2.3%), Main Street (MAIN -3.4%), Triangle (TCAP -5.6%), Medley (MCC -2.5%), KCAP (KCAP -3.7%), Gladstone (GLAD -3.9%), WhiteHorse (WHF -5.6%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Sep. 28, 2015, 11:16 AM | 60 Comments
  • Aug. 20, 2015, 3:42 PM
    • The rout in stocks today also includes the BDC sector, but not Fifth Street FInance (FSC +2.1%), which earlier today promised a substantially faster pace of share repurchases next month.
    • The team at KBW notes the move should please investors disappointed by the size of previous buyback intentions. "We believe this will send a strong signal to investors that management will listen to their concerns."
    • The next step, says KBW, is for the company should extend its fee waiver to all capital, and not just newly-raised equity.
    | Aug. 20, 2015, 3:42 PM | 13 Comments
  • Jun. 26, 2015, 3:43 PM
    • Continued strong economic data (June consumer confidence beat expectations) and apparently optimism over a Greek deal getting inked this weekend make for good excuses for today's selling in fixed income.
    • The U.S. 10-year yield is up seven basis points to 2.48%. Short-term rate futures continue to read more dovish than the Fed, predicting just one 25 basis point rate hike by year-end.
    • TLT -1.2%, TBT +2.4%.
    • Among the income favorites, utilities (XLU +0.6%) and equity REITs (IYR +0.2%) are being spared punishment today, leaving jittery investors to focus their selling in mortgage REITs.
    • Also in the red are BDCs, led by Prospect Capital (PSEC -2.5%) and Fifth Street Finance (FSC -1.5%). American Capital (ACAS -1.3%), Medley Capital (MDLY +0.1%), THL Credit (TCRD -1.2%), PennantPark (PNNT -1%).
    • ETFs: BDCL, BDCS, BIZD, FGB
    | Jun. 26, 2015, 3:43 PM | 36 Comments
  • Feb. 10, 2015, 10:12 AM
    • On the earnings call yesterday (transcript), Raymond James analyst Robert Dodd scratched his head over the whopping size of some of the non-accruals, noting of the four, two of them now look to be marked at about 50% of cost.
    • Responding, CIO Ivenlin Dimitrov notes one of them is Fifth Street's (FSC -2.2%) Canadian oil sands exposure. He feels there's enough asset coverage and business momentum to get better results, but as of Dec. 31, the company thought the mark was appropriate. The other big write-down, he says, is one of FSC's smaller EBITDA companies, and it's one of the reasons Fifth Street is shifting the portfolio towards larger issuers.
    • Raymond James cuts to Market Perform and Barclays cuts to Equalweight, with price target lowered to $8 from $11.
    • Previously: Fifth Street Finance now off 13.6% after big dividend cut (Feb. 9)
    • Previously: New Fifth Street management slashes the dividend (Feb. 9)
    | Feb. 10, 2015, 10:12 AM | 21 Comments
  • Feb. 9, 2015, 12:46 PM
    | Feb. 9, 2015, 12:46 PM | 3 Comments
  • Feb. 9, 2015, 9:12 AM
    | Feb. 9, 2015, 9:12 AM | 1 Comment
  • Feb. 9, 2015, 8:19 AM
    • Earlier, the company reported a weak Q4, and new management slashed the dividend from a quarterly run rate of about $0.28 per share to a more "sustainable" level of $0.18.
    • FSC -13.55% premarket
    • Previously: New Fifth Street management slashes the dividend (Feb. 9)
    | Feb. 9, 2015, 8:19 AM | 35 Comments
  • Feb. 3, 2015, 3:44 PM
    • Lower interest rates hadn't really helped one of income players' favorite sectors as they were accompanied by the plunge in oil prices, and worry about what blowups were lurking in BDC portfolios.
    • So even with the 10-year Treasury yield higher by 11 basis points to 1.78% today, oil's now more than 20% run higher in the past few sessions looks to be easing some of those credit concerns, and alongside the rally in BDCs is a nice move higher in junk bonds (HYG +0.6%), (JNK +0.6%).
    • BDC ETFs: BDCL, BDCS, BIZD
    • Individual names: Prospect Capital (PSEC +2.3%), Fifth Street Finance (FSC +3%), FS Investment (FSIC +1.6%), Main Street Capital (MAIN +2.4%), Apollo Investment (AINV +3%), Triangle Capital (TCAP +2.7%), TICC Capital (TICC +3%), PennantPark Investment (PNNT +3.8%), THL Credit (TCRD +3.5%), Golub Capital (GBDC +1.9%).
    | Feb. 3, 2015, 3:44 PM | 19 Comments
  • Jan. 6, 2015, 2:11 PM
    • These income producers might typically enjoy the big run lower in interest rates (the 10-year yield is all the way down to 1.94%), but it's coming alongside a continued plunge in oil (now all the way down to $47.61).
    • ETFs: BDCL, BDCS, BIZD
    • Individual names: Fifth Street Finance (FSC -2.1%), Ares Capital (ARCC -1%), FS Investment (FSIC -1.6%), Main Street Capital (MAIN -2.6%), PennantPark Investment (PNNT -3.2%), TCP Capital (TCPC -2.9%), KCAP Financial (KCAP -1.6%).
    • Notably higher for a 2nd straight day is OHA Investment (OHAI +1.9%) after SA Pro's Cahaba Research on Monday morning made the case for buying this busted BDC at a greater than 40% discount to book value.
    | Jan. 6, 2015, 2:11 PM | 22 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