Leonard Tannenbaum, controversial owner of Fifth Street Asset Management (OTCPK:FSAM) which serves as the Investment Adviser to publicly traded BDC Fifth Street Senior Floating Rate (FSFR) acquired nearly 90,000 new shares on February 3 and February 4th, according to a Form 4 filing on 2-4-2016. The price paid ranged between $7.52 and $7.68.
That brought Mr Tannenbaum's total holdings in FSFR (which are mostly held directly by him) to just over 3mn shares, and the aggregate market value using the closing price on February 4 of $7.66 at $23,000,000. The Company had 29,466, 768 shares outstanding at 9-30-15 , which suggests Mr Tannenbaum owns just over 10% of the stock.
FSFR has seen its stock price drop by 30% in the past 1 year, and 44% over 2 years , and 51% from its IPO in July 2013. If Mr Tannenbaum had owned 3mn shares from the outset (we have not had time to check), the Unrealized Loss on the drop in the value of the stock since the IPO is over $21mn. However, that's partly offset for Mr Tannenbaum, and for any other Buy-And-Hold investor, by dividends received, which we tote up to $2.55 a share, or roughly equal to a third of the drop in the stock price. At the pace of the current $0.075 a month distribution, and assuming no further change in the stock price, 64 months will have to pass before Mr Tannenbaum gets back to break-even on a Total Return basis.
FSFR reached its all-time low of $6.81 a share back on January 21th, 2016. Since then, the stock price is in a mini-rally, up 10%. Mr Tannenbaum bought some other shares at the end of January, but paid prices similar to yesterday's $7.4-$7.7 a share).
Also worth noting is that FSAM, which Mr Tannenbaum still controls and owns the largest economic interest in despite going public, received $11.6mn in Management and Incentive Fees from FSFR last year.
Either for marketing reasons (to show confidence in FSFR) or as a stand alone buying opportunity, or both, Mr Tannenbaum has been actively buying additional shares to add to an already huge position in Fifth Street Senior Floating Rate, and at prices 50% off what shareholders paid in 2013 at the time of the IPO. At the current distribution level and price the yield is 12.0%.
Disclosure: I am/we are long FSFR.
Additional disclosure: A client that we manage has a position in FSFR. Our own Fund has no position.