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Three BDC Stocks Down: Reasons

Writing here on Wednesday May 10th, there are a number of BDC stock prices down by above average percentages, including some market favorites:

Main Street Capital (MAIN) is down over (5%). Hurting the stock price is the Raymond James downgrade to “Underperform”. We don’t know what that really means, but some investors are listening and have sold off, bringing the price down to $37.71 from a recent all-time high of  $40.39, a (6.7%) decrease in a few days. The bold investor who bought at the high has now seen the stock price drop a year’s worth of distributions, give or take.

Prospect Capital (PSEC) is down just under (5%) too. The BDC Reporter has just written an up-to-the-minute analysis of the $6bn BDC’s dividend outlook. However, the price drop has more to do with the lower GAAP Net Investment Income in the quarter, down by 20% from $0.25 per share last year to $0.20 from $0.25 a year ago, and $0.24 in the IVQ 2016. Click here for the earnings release. If PSEC announces, or even suggests, a dividend cut might be coming a much bigger price drop is likely.

Garrison Capital (GARS) is down (3.70%). As with PSEC, a poor quarterly earnings report is the root cause. Net Investment Income is now below the current distribution. The BDC has been trending downward since September 2016.