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BDC Daily News Wrap-Up: Wednesday December 6, 2017

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A thin BDC news day, but there are always  a few interesting items on the BDC Daily News Table worthy of expansion in the Wrap-Up.


The BDC announced an unchanged dividend for the IVQ of 2017. That’s the 20th quarter in a row that WHF has announced a $0.355 dividend. The BDC Reporter – which has a view on all 46 public BDCs we track – has an UNCHANGED Dividend Outlook for WHF for 2018. That’s our highest confidence the payout can be sustained for another year. Down the road we expect the higher risk profile of WHF to catch up with its NAV of $13.92 and its earnings and dividend. For the foreseeable future – and despite Net Investment Income Per Share for the most recent quarter which was beneath the distribution, WHF’s payout should remain unchanged. The market mostly appears to mostly agree. The stock trades at $13.99, over net book value and not far off the $15.05 12 month high. The yield is 10.2%.

We are Long WHF and its Baby Bond : WHFBL.


The BDC reached a new stock price high during the day, touching a new 52 Week and 8 Year High of $11.24. The stock closed at $11.13. GAIN has gone from $6.54 in February 2016, a 72% increase on slightly higher earnings per share and a series of portfolio Realized Gains. This has been one of the most astonishing turnarounds in BDC history. Usually when a BDC falls in both price and performance the trend continues inexorably downward. Thanks to its business model – with a good portion of the portfolio devoted to investing in equity stakes in smaller companies – GAIN has proven that there are second acts where troubled BDCs are concerned.  For the BDC Reporter, though, the price is just too high to even consider GAIN. This is still concentrated, higher risk investing which cuts both ways, and we are in Year X of a Golden Age for middle market equity stakes. The stock yields 6.9%.

We have no position in GAIN’s common stock but we are Long all 3 Term Preferred issues.


NEWT announced the closing of yet another SBA loan securitization. The most notable aspect is that despite the ongoing FBI/SBA investigation of a NEWT subsidiary, the relationship with the SBA appears to be undisturbed.

ARCC received another mash note from an analyst: a Buy recommendation and a $17.5 price. Not unreasonable given the now huge BDC’s footprint and earnings capacity.

We have no position in NEWT or ARCC. In both cases, we are currently staying away until unresolved issues – respectively the FBI investigation and a potential large non-accrual – are resolved. With both BDCs – for very different reasons – trading towards the higher end of their ranges and yielding 9.9% and 9.4%, there is minimal risk of “losing out”.

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