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BDC Common Stocks Market Recap: Week Ended March 9, 2018

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Just when everything was beginning to point to BDC investors packing their bags and heading for the door there was a change of heart.

Only a month ago, the Wells Fargo Index driven BDCS reached an intra-day low of $18.72 and closed out at $19.15.

As recently as March 1, BDCS was at $19.05.

From the highest point to the lowest ($18.72) BDCS was off by (22%).

Hitting The Buy Button

Suddenly, though, cooler (greedier ? ) heads prevailed over the slow rising panic which had brought the BDC Sector to the edge of Bear Territory.

This week, the market was up strongly in many ways, as we will enumerate.

BDCS ended at $19.74, not far from its intra-week high of $19.80.

For the week BDCS was up 2.2%.

We are now 5.4% above the 52 Week nadir.

Everybody Get On The Bus

This was reflected in the number of BDCS whose stock price was up for the week period: 40 out of 45.

No less than 17 were up 3.0% or more in just 5 business days.

Most notably two names were up more than 10%: WHF and CPTA.

Safe And Sorry

The three Biggest Losers in the period were all BDCs that have not yet reported results in the latest earnings season.

That confirms a phenomenon – not unusual in down markets – of prices dropping in advance of results as investors seek to avoid being caught in a falling elevator.

This might explain how TCRD managed to report a big drop in NAV and continuing credit problems but only dropped 0.7% on the week.

Another favorite metric of the BDC Reporter: the number of BDCs trading within 5% and 10% of their 52 Week Low improved.

Last week there were 23 within 0-5% of the bottom. This week: 16.

This week 10 were within 5-10% of their 52 Week Lows and last week 10.

Getting High

Also intriguing was that 8 names traded within 10% of their 52 Week High versus 3 a week ago.

There are now 18 funds trading above their 50 Day Moving Average and 7 above the 200 Day Moving Average.

Why ? Oh Why ?

Have investors suddenly seen the error of their ways and rushed back into BDC investing now that earnings season is almost over ?

Have the mostly good results posted by mostly everyone (not including TCRD and a few others) caused a re-assessment ?

Were investors just being careful and are now buying back in for the duration ?  (Or at least till the next earnings season ?).

We cannot say, but we couldn’t help noticing that the BDC Sector’s upward trend was matched by all three indices this week, as this chart shows:

We Have Questions And Few Answers

Is it a matter of “where goes the market, the BDC Sector will follow ?”.

We don’t know but we’d be surprised if the pressures to the downside which have been the main story for months had suddenly dissipated.

Nonetheless, a continuing bounce upwards is not inconceivable even if we’re not expecting much in way of results from GECC,HCAP and OHAI.

Back To The Starting Point 

The BDC Sector is overdue some Good News. Here’s the 2 year chart for BDCS below:

As one can see, twenty four months on and the price of a bundle of BDC stocks is unchanged.

For what it’s worth, the first and last quarterly distribution in that period are basically the same as well.


We’re perplexed.

Is the BDC Sector just the tail of the proverbial market dog ?

Or is the mini-rally underway a reflection of better-than-expected fundamentals and reflective of a sigh of relief ?

We’ll know next time the general markets take a step down.

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