BDC COMMON STOCKS

Week 11

Not Good

Don’t be fooled by the relatively mild red ink for the week where the major indices are concerned – a big bounce on Friday mitigated some of the damage.

Week Two of the downturn continued to be a fraught time, with investors unsure what to do as the headlines changed constantly.

The BDC sector was caught up in the turmoil and had its worst week in price terms in 2025 to date.

BIZD – the BDC exchange traded fund – fell (3.7%), even worse than the (2.5%) drop of the week before.

The S&P BDC Index on a price basis dropped (3.5%).

Most Everyone

If we look at the price changes amongst the 46 public BDCs we track, 40 were in the red.

That’s the second worst weekly performance by this particular metric.

23 of the BDCs in the red fell by (3.0%) or more, higher than the 20 the week before when the markets began to pull back in earnest.

Just 1 BDC managed to increase by more than 3.0% this week – OFS Capital (OFS).

Biggest Losers

Here are the ten BDCs with the largest percentage price losses on the week:

As you can see, the list includes BDC minnows and behemoths and everything in-between.

(We do notice, though, that there are no venture-debt BDCs on the list, but that may not mean anything).

Worst

CION leads the list. As we wrote in a Premium article for our subscribers, the BDC reported “mediocre” results for both the IVQ and the full year 2024 and paid the price – so to speak – with a (9.4%) decline in its price.

We were – and remain – a little frustrated that the BDC’s management team could not admit that performance was below par.

It’s a problem with most BDCs: There’s too much “spin” involved when results are weak and not enough frank discussion, leaving shareholders feeling either a little manipulated or unsure about the judgement of the managers.

Doing The Right Thing

So how are we really doing with 43 of 46 BDCs having reported IVQ 2024 results?

Let’s go with the hard data that we collect to evaluate the matter.

In terms of changes in Net Asset Value Per Share (NAVPS), the BDC NAV Change Table shows that 13 BDCs have managed to increase their book value per share in the most recent quarter and another 10 have recorded only a tiny loss (no more than -0.5% down), and 7 are off a still modest (0.5%) -(1.0%). That’s the sort of performance – we believe – investors should expect from their BDCs.

The Laggards

However, that leaves 13 BDCs with weaker numbers, including 12 whose NAVPS has dropped by more than (1.5%).

A glance at the BDC NAV Change Table – and our color coding system – will show you which BDCs – besides CION – recorded a weaker-than-we’d-like NAVPS number in the IVQ 2024.

The most egregious example is BlackRock TCP Capital (TCPC) whose NAVPS managed to drop by (8.7%) in the latest quarter and by (22.4%) in 2024 overall.

Variable

To be fair, when a BDC’s performance seriously and indisputably deteriorates, some BDC managers put on their hair shirt, admit to misstepping and – sometimes – offer shareholders compensatory actions and a promise of a revised approach.

That’s the case for the afore mentioned TCPC:

Likewise at Oaktree Specialty Lending (OCSL) whose NAVPS dropped (2.5%) in the IVQ 2024 and (7.9%) for the year:

Horizon Technology Finance (HRZN) , whose NAVPS is down (29%) over the past 5 years, has recently also gotten around to taking a shareholder-friendly action

TriplePoint Venture Growth (TPVG) – whose NAVPS has fallen by more than a third since 2019 – has not offered an explicit concession but can – at least – point to a “total return” provision in their compensation arrangement that has kept the BDC from paying its external manager an Incentive Fee for some time.

WhiteHorse Finance (WHF) – whose NAVPS has dropped by a tenth in 2024 – admitted to a “disappointing” quarter but continued to charge its Incentive Fee. If that fee had been waived , we calculate that the BDC’s recurring earnings would have been 25% higher in the year just passed.

Where We Are

Let’s get back to where the BDC sector stands after Week 11 of this already turbulent year.

At this point, BIZD is modestly in the red: (O.8%) behind in price terms.

The S&P BDC Index on a price basis is worse off: down (2.2%) and (1.2%) on a total return basis.

Only 13 BDCs are trading at or above book value.,

YTD, the stock price of 18 BDCs is up or even and 28 are in the red.

Only 5 BDCs – outside of the newly arrived MSC Income Fund (MSIF) – are up 3.0% or more in 2025.

However, 14 BDCs are down by (3.0%) or more but only 1 (CCAP) by more than (10%).

In just three weeks we’ve gone from top of the world – with BIZD at a multi-year high – to now being (8%) off the February 19, 2025 peak level.

We’re not in “Correction” territory but BIZD has only to drop by ($0.42) a share and we’ll be there.

With all that said, the BDC sector – so far – is holding up pretty well compared to the S&P 500 in 2025 , which is down by (4.1%) on a price basis and to NASDAQ, off (8.1%).

Where We’re Going

The uncertainty about tariffs, interest rates, government spending etc is not likely to return to normal levels for some time yet, although we’re beginning to get a sense of how this might play out.

As we saw on Friday, many investors are itching to “get back” into the market – including into BDC stocks.

We wouldn’t be surprised to see a further upward price move in the coming week.