2 Top Tier Internally Managed BDCs Vs. Ares The Giant

Summary

• Main Street Capital Corp is the quintessential BDC and a "darling" of the Seeking Alpha community.
• Justifiably so; Main Street has increased its NAV 88% since inception while many BDCs struggle to break even. This growth is despite MAIN consistently paying significant special distributions.
• NewTek is an established yet rising star with a unique business model, and despite its size, has garnered increasing positive attention from investors.
• These two top tier internally managed BDCs are set against Ares Capital Corp, our top rated externally managed BDC and a literal and figurative giant in the space.

This piece was developed for Institutional Income Plus Marketplace Subscribers in a similar vein to our article David And Goliath: Capital Southwest Vs. Main Street Capital.

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Staying Focused On Our Reader's Needs

We continuously perform due diligence on less followed but high performing BDCs. Our work is always focused toward the maximum benefit for subscribers which means more than profitable price alerts or our comprehensive model portfolio.

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Our value includes those but they have limited effectiveness without education. If someone cannot teach the methodology resulting in a high conviction trade, how can one judge the merit of their rationale? In our opinion, you can't.

Although requiring a substantial investment on William Equity Research's end in time and energy, we try our best to carefully select peers to compare less known companies against for improved context. Let's use a non-BDC example.

If we said an oil and gas company has 3.0 billion barrels of oil equivalent reserves in the Eagle Ford and Permian Basin, that might not mean much unless you are a geologist, petroleum engineer, or experienced oil and gas investor. If we said an oil and gas company had twice the reserves in North America compared to Exxon Mobile (XOM), that means something. You know Exxon and you know North America.

We'll answer two related but different questions to assist in determining the real value of less covered BDCs such as Newtek Business Services (NASDAQ:NEWT). 1) How does Newtek stack up against its internally managed rival Main Street Capital for highest premium to NAV?2) How do Newtek and Main Street Capital compare to our top rated externally managed BDC?

We'll test the assumptions of many BDC analysts and investors in the process.

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This article begins with an educational component before proceeding to an in-depth analysis of

Analyst’s Disclosure: I am/we are long GSBD, MAIN, GSBD, GAIN. 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.

We may enter into long or short positions in any of the stocks mentioned in this article at any time.