CION Investment: Price To Book Discount Provides Margin Of Safety

Atticus Analysis
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(10min)

Summary

  • CION offers a 15% yield and has outperformed both high-yield bonds and the average BDC over the past three years.
  • Despite concerns over declining book value and high Payment in Kind (PIK) income, CION trades at a steep 0.72 price-to-book discount.
  • Management uses share buybacks to offset book value declines, and the discount provides a margin of safety for riskier lending.
  • Given the risk/reward profile and substantial discount, I believe CION is a Buy for investors seeking high yield.

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Introduction

CION Investment Corporation (NYSE:CION) is a BDC company. For those unfamiliar with this industry, BDCs are effectively high-risk, high-yield lenders, and the closest analogues to them are high-yield bonds, secured loan funds, and lower-rated CLOs. While BDCs haven't done great in the short

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Like millions of other investors, I got Robinhood and started trading during the pandemic. Unlike most of those investors, I carefully studied hundreds of earnings reports for clues to future performance, and I was able to identify many future winners, such as OPRX, OTRK, FUBO, and PLUG. My style of investing is identifying key information from earnings transcripts and reports that signify growth.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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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