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11.5% Yielder Selling At 21% Discount; Opportunity With Growth For This BDC


  • AINV is a BDC which is trading at a yield of 11.5%. It is also trading at 21% discount to NAV.
  • AINV is managed by a top-notch organization and has access to numerous attractive deals.
  • AINV is in the process of a transition to a core strategy of senior secured loans at floating rates to solid clients.
  • This BDC Company provides hedge against rising interest rates.
  • AINV is a Strong Buy at the current price with a 15% upside potential.

This research report was jointly produced with High Dividend Opportunities co-author Philip Mause & Seeking Alpha Author Long Player.

Apollo Investment Corporation (AINV) traded recently at $5.24 and pays a dividend of 60 cents per year for a yield of 11.5%. AINV's latest financials indicate a net asset value ("NAV") of $6.60 a share, resulting in a discount of 21% at its current price per share.


The Business & Re-positioning of the Portfolio - AINV is a "business development company" (or BDC) that is in the business of lending to small and medium businesses which are often referred to as the "middle market." Management has committed itself to transitioning in the direction of its core business and migrating the asset mix in that direction. The core strategy is to acquire senior secured loans with interest at floating rates from credit-worthy borrowers in the middle market space. AINV also intends to reduce exposure to the energy area. AINV has been aggressively and successfully implementing this strategy:

  1. In the past year, the percentage of core assets in the portfolio increased from 66% to 74%.
  2. In addition, the percentage of floating rate loans to total loans increased from 84% to 92%.
  3. Secured debt now constitutes 81% of the total asset portfolio.


AINV is managed by Apollo Global Management (APO). We have written about APO and its success as an asset manager. AINV has access to the deals generated by this management and a high percentage of its loans are joint investments. The relationship with Apollo Global Management ensures that AINV will have access to a large number of potential deals and have the expertise available to make intelligent selections.

Recent Earnings Report - AINV recently reported its Q4 2017 earnings, and had a relatively good quarter.

  • Net investment income of 16 cents

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This article was written by

Rida Morwa profile picture
The #1 Service for Income Investors and Retirees, +9% dividend yield.

I am a former Investment and Commercial Banker with over 35 years of experience in the field. I have been advising both individuals and institutional clients on high-yield investment strategies since 1991. I am the lead analyst at High Dividend Opportunities, the #1 service on Seeking Alpha for 6 years running.

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Analyst’s Disclosure: I am/we are long AINV, APO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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