The May 15 deadline for the SEC to change BDC's fee-reporting standards has come and gone with no action, meaning the sector's stocks will be removed from Russell's indices on June 27. A tick higher in the struggling sector since May 15 suggests maybe investors have discounted the news.
Looking for what to buy now, the team at Wells has put together an Adjusted Cash Flow Coverage metric. From Wells: "It is important for investors to discern which BDCs are overly reliant on fee income as a percentage of total revenues, which BDCs are not covering their dividend and which BDCs book meaningful non-cash income such as PIK."
The sector adjusted cash flow coverage average is 81%. Among those coming in above: GLAD, HRZN, TCAP, TCPC, HTGC, GBDC, ARCC. Among those below: TPVG, BKCC, PNNT, MCC, FSC. Struggling the most of late, Prospect Capital is pretty close to the sector average at 79%.
TriplePoint Venture Growth BDC Corp is an externally managed, closed-end, non-diversified management investment company. It was formed to expand the venture growth stage business segment of its Sponsor's investment platform.