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Owl Rock: 9% Yield In These Credit Markets

Mar. 01, 2021 6:15 PM ETBlue Owl Capital Corporation (OBDC)11 Comments


  • Owl Rock Capital Corporation finished its first full year on the market.
  • Until the beginning of the pandemic, the stock was trading at a 14% premium to NAV.
  • As anticipated, ORCC is performing and rallying back to its pre-pandemic levels with its peers and is approaching a 1.0x price/NAV trading level.
  • Given the stock’s rally, ORCC’s quality portfolio will produce an 8.9% yield for investors in 2021 plus equity returns as it closes the gap between its NAV and the market returns it to its premium valuation place in the BDC industry.

Owl Rock Capital Corporation (ORCC) beat expectations for the quarter and gave a glimpse in Q4 of 2020 that moving forward, waived management fees will not hamper its operations or investor's 9% dividend yield.

Since last discussing ORCC in December, the company has seen total returns of 10% and has already started closing the gap on its price/NAVPS discount. Now trading at a 5% discount to NAV, the return to NAV is tangible within this year, and climbing higher is just a point of sharing this premium young BDC's story with the rest of the market.

For those investors who understood the undervalued premium portfolio that Owl Rock Capital has been building in ORCC, they saw total returns of 35% from Q1 2020 to Q4 2020.

CEO Craig Packer, COO Alan Kirshenbaum, and Owl Rock's Team are driving ORCC toward a portfolio value of $11.5B that will generate a total investment income of $1B annually. This means long-term high cash dividends for investors as Owl Rock Capital, and ORCC seeks to continue to expand their reach in the alternative asset and BDC industry.

Company and Management Overview

Depiction created by the author using the company's images sourced from the last article

2020 was ORCC's first full year on the public markets after its July 2019 IPO. The company is currently a $5.5B market cap, $5.7B NAV BDC that is focused on investing in the upper end of middle-market companies with EBITDA of +$90M. ORCC is managed and advised by Owl Rock Capital LP (Owl Rock Capital) which is an alternative asset management firm based out of NYC that oversees $25B in AUM.

Owl Rock has been in the news lately as the company and Dyal Capital Partners announced they are merging to form Blue Owl Capital. Blue Owl will enter the

This article was written by

I am an avid researcher, financial analyst, and casual investor who enjoys going beyond the tape and studying, reading, and writing about the markets and world economic activities.

Analyst’s Disclosure: I am/we are long ORCC. 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.

The content of this post is not meant as investment advice as it is the expressed opinion of the author. The numbers and statistics were developed using public information from involved companies and may as all analyst work contain errors. Any decisions or actions made by readers or actors of this article are the sole responsibility of the readers or actors themselves and have no legal or financial responsibility or bearing on the author.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

blessed.are.the.brave profile picture
started a position under $14
How material is PIK income in these coverage stats?
I see insufficient discussion of PIK in BDC analyses and it is the primary worry I have about this sector...my personal preference is to see PIK as deferred income and recognised as realised...I know this isn’t GAAP but it is safe...would be highly useful to see a BDC spread sheet comparing reliance on PIK, which is not a reliable source of either dividends, nor should be of management fees until realised...
With respect,
Battle scarred and world weary campaigner.
exc, write-up on orcc this is one of the best BDC. well done TTP
What happens to ORCC stock in the SPAC process?
Well done - a very comprehensive BDC review. On my watch list.
Ticker Tape Research profile picture
@Glasshalffull Thank you for reading, I am glad you enjoyed the article. Have a wonderful rest of the week.
rickevantodd profile picture
Excellent article. Long ORCC.
Ticker Tape Research profile picture
@rickevantodd Thank you for reading, I am glad you enjoyed the article. Have a wonderful rest of the week.
Long ORCC and pleased with results since entry mid 2020. Management did a great job given pandemic disruptions which I believe will pay off in recovery from the Trump virus. Size and leverage to costs should be an advantage going forward.
Thank you, very informative and well understood by myself. I bought ORCC a day after the IPO.
Ticker Tape Research profile picture
@Mercouger Thank you for reading. I am glad you appreciated the article. Have a wonderful week.
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