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UBS ETRACS Wells Fargo Business Development Company ETN (BDCS)

  • Nov. 27, 2013, 2:15 PM
    • "It's been extremely frustrating," says Fifth Street Finance (FSC -1.4%) CEO Len Tannenbaum on the earnings call (transcript), as the company has struggled executing on its five-point plan and yesterday cut the dividend to be more in line with reduced earnings.
    • He blames this FQ4's particularly weak result on prepayments being front-loaded coupled with a "lousy" origination number of $120M as several deal closing slipped into FQ1. "The board looked at $0.24 (NII) versus our dividend level, and said, all right, we just have not earned our dividend for several quarters and we have to put it at least temporarily in line with the current earnings level."
    • Responding to a question about whether the board will consider cutting the fee structure in light of the company's move into first lien, safer, lower-yielding assets, President Bernard Berman dances around a bit, but does promise an improvement in general and administrative expenses next year.
    • One thing investors don't have to worry about in the short-term is a stock offering as Fifth Street - given the tough deal environment - is sitting on plenty of excess capital (there was a secondary in September).
    • Company specific? Thus far, the rest of the BDC sector is shrugging off FSC's weak results.
    | Nov. 27, 2013, 2:15 PM | 1 Comment
BDCS vs. ETF Alternatives
BDCS Description
The ETRACS Linked to the Wells Fargo Business Development Company Index due April 26, 2041 is designed to track an investment in the Wells Fargo Business Development Company Index ("Index"), and may pay a variable quarterly coupon linked to the cash distributions associated with the underlying BDC constituents, less investor fees. Note that if the BDCs do not make distributions or those distributions do not overcome the investor fees, then investors will not receive any coupons.
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Sector: Financial
Country: United States
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