We re-publish the BDC Reporter’s Weekly Newsletter this one time to illustrate to non-subscribers what you get by signing up: a reminder of articles written and issues tackled in the past week and varying amounts of commentary about “What’s Up” in the BDC Sector. If that’s of interest, please sign. Unsubscribing is as easy as subscribing.
The BDC Activist looks at the long term performance of Fifth Street Finance (FSC) through a shareholder’s lens, and finds that performance has been very poor. Unfortunately, the financial model the Company has negotiated with its External Manager is both root cause and the reason the BDC Activist expects more of the same going forward.
We review how Ares Capital (ARCC) is doing 6 months after breaking up with its GE Capital joint venture partner, and as credit conditions have deteriorated. The stock price has been at 6 year lows. Opportunity or just another way station to a previously unimaginable lower price point for this BDC aristocrat ?
The shareholders of Gladstone Capital (GLAD) have given them permission to raise equity below Net Asset Value. The BDC Reporter-wearing its actvisit hat-believes this will be good for the external manager, but not the shareholders and explains why. We end by discussing the BDC-wide implications of this story.
The BDC Reporter hones in on the Security and Exchange Commission’s frequently granted Exemptive Relief allowing asset management organizations that own one or more Business Development Companies to co-invest together. We point out the unfairness and potential risk to BDC shareholders from this seemingly anodyne consent.
We are updating surprising developments at Alcentra Capital (ABDC) from a review of its latest filings, which have provided additional details about the write-down of one of its portfolio investments in the IVQ of 2015, and included rosy expectations for write-ups elsewhere in 2016. We also provide details on how we are invested in this environment, and our approach going forward.
The second article of our putative BDC Activist turns to the struggle between Fifth Street Asset Management (FSAM) and its unhappy biggest shareholder about who should be in charge of Fifth Street Senior Floating Rate Corp (FSFR), the publicly traded BDC which the former manages. Brings out many of the themes the BDC Activist is focused on.
We are testing out the format of a new series or newsletter tentatively called The BDC Activist, which will examine and de-construct the conflicts of interest between Business Development Companies managers and their shareholders. We start very randomly with insights drawn from reading Apollo Investment’s (AINV) latest SEC filings.
We dig into Alcentra Capital’s (ABDC) recent SEC filings and find some new data. We use the opportunity to provide a fuller picture of how these developments affect both common stock and debt holders of the Company. SCM-the parent of the BDC Reporter-is Long both the shares and the Notes and we explain how and why.
Started writing this article during the BDC meltdown and finished as we rally. We review the huge drop in BDC Sector prices over the last 2 years-including 13 new lows reached- and the very good reasons why. However, we find us ourselves optimistic that a buyer at these levels might have the opportunity to make out-sized returns. We explain why, but hedge ourselves as always.
In a new feature, we bring to your attention select Business Development Company SEC filings, and analyze the impact and import of the disclosures tucked away in the Investor Relations section. We start with a number of items at American Capital (ACAS), where insider sales activity is high. However, a major new shareholder has arrived on the scene…
American Capital (ACAS) completes the first phase of an activist initiated “strategic review” and decides to put itself on the auction block. We describe two ways the BDC Reporter is surprised by what ACAS is doing, and how we’ve maneuvered as an investor in recent weeks and today.
Capitala Finance (CPTA) has just announced the waiver of a portion of its Incentive Fee on the expectation that non-performing energy credits might reduce recurring earnings. We hail the kind offer, but also take a deeper look at the Company’s under-performing assets. There is Good News and Bad News here.
First article of the New Year ! We start with TICC Capital’s repayment of its Citibank Revolver, and turn to estimating how the Company’s balance sheet might be evolving. We end by trying to reconcile TICC’s stated new business strategy and the need to meet BDC regulatory requirements. Will the Company double down on CLOs and change its format ?
The BDC Reporter ends the year with a quick review of how BDC common stocks have performed in a Bad Year for most every asset class out there. There’s no sugar coating here, and no rose-colored view of 2016. We close with a brief insight into how we are positioning our own investments in BDC-land.
Fifth Street Floating Rate (FSFR) has just been informed that one of its shareholders is not happy and wants to have two of its principals elected to the Board and get shareholders to fire the company’s existing investment adviser, a subsidiary of Fifth Street Asset Management (FSAM). Mr Market cheers, but the BDC Reporter is not yet convinced, and says why.
ISS-an independent proxy firm-flip flopped and recommended TICC Capital (TICC) shareholders vote FOR making Benefit Street Partners the new Investment Adviser. We provide details of the change of heart, and handicap the outcome of the Special Shareholder’s vote on December 22.
As you may have heard, the Federal Reserve raised short term rates on Wednesday. Here is a brief review of the impact on the Business Development Company sector, and similar companies, two days in. There are winners and losers early on. Longer term determining who will gain and who will lose is much more complex.
The BDC Reporter takes a snapshot of the BDC sector just before the Fed announcement, and two years into its price meltdown. We discuss both some long term trends and illustrate with a few individual case studies. We end with a few not very startling conclusions and a prediction. We also let readers know how we are deploying capital as an investor in BDC-land.
After sparring with a Federal judge and contender NexPoint Advisors, TICC Capital (TICC) is back and has re-scheduled the Special Shareholder’s meeting that will decide if Benefit Street Partners (BSP) will be handed the investment advisory keys, and the current manager a big-if still undisclosed- cheque. We bring the narrative at TICC up to date. First of a two parter.