Gladstone Investment: A Higher Risk BDC With Upside
I'm overweighting Gladstone Investment for its equity-driven returns, benefiting from a strong stock market and potential $1B+ investment portfolio milestone. GAIN's unique equity orientation and first lien focus position it for outperformance versus peers, especially as market conditions remain favorable. High non-accrual ratio is a risk, but resolving these could boost net investment income, improve dividend coverage, and enhance margin of safety.
Crescent Capital BDC: Unfairly Discounted With Income
Crescent Capital BDC trades at a 26% discount to NAV, which I believe is exaggerated and presents a re-rating opportunity. Despite a rising non-accrual ratio and higher payout, the dividend appears safe in the near term, supported by strong floating-rate First Lien assets. The company's net investment income has declined, due to increased non-accruals, but steady interest rates should support income, unless credit quality worsens.
BDC Shuffle: The Stock To Drop And The Stock To Shop
BDCs have performed unexpectedly well this year. Despite the growing uncertainty in the system and high probabilities for incremental base rate cuts, the BDC index is up on a YTD basis. This is not the right setup for being aggressive here.
Goldman Sachs BDC: Huge Discount Doesn't Justify A Buy Rating
Goldman Sachs BDC's recent quarters have disappointed, with declining earnings and NAV, justifying my continued Hold rating despite attractive yield and discount. Dividend cuts, rising non-accruals, and realized losses highlight ongoing portfolio and credit quality issues, outweighing any positives from special dividends. Improvements in non-accruals and leverage are minor, while upcoming debt refinancing and potential rate cuts threaten further earnings and dividend coverage.
Kayne Anderson BDC: Potential, But Nothing Special Yet
Kayne Anderson BDC, Inc.'s fundamentals are solid, with high first-lien loan exposure, low leverage, and ongoing share repurchases supporting a defensive profile. Despite portfolio growth and strong activity, declining net investment income and rising non-accruals raise concerns about dividend sustainability, especially as rates fall. KBDC stock trades at a slight discount to NAV, but limited upside and economic uncertainty keep me cautious and maintain my Hold rating.
BDC Weekly Review: Early BDC Earnings Look Fine
We take a look at the action in business development companies through the second week of July and highlight some of the key themes we are watching. BDCs had another strong week, pushing month-to-date gains to 4% on average. SAR results were pretty good, a positive sign for the broader earnings season.
A BDC Pair Trade Opportunity By Hecrules Capital And Ares Capital
HTGC and ARCC, both top BDCs, show a current mispricing, with HTGC now undervalued relative to ARCC after a sharp premium correction. HTGC maintains superior long-term and recent NAV total returns compared to ARCC, and credit assessments show no portfolio concern. Pair trade opportunities exist: long HTGC/short ARCC if you expect HTGC's premium to recover, or long BIZD/short ARCC for sector mean reversion.
Goldman Sachs BDC: Does Its Dividend Yield Make It A Buy?
GSBD offers a 10.85% base dividend yield. This yield is being expanded with special and supplemental dividends. Fiscal 2025 first quarter earnings saw dual misses and a decline in NAV per share, with net investment income unable to fully cover the aggregate dividend payouts. The portfolio remains defensive with low non-accruals, but negative net funded investment activity and falling rates threaten future total investment income.
Ares Capital Is My Largest BDC Holding For A Reason
ARCC remains my largest BDC holding due to its resilience in uncertain times and diversified, high-quality portfolio of sizeable businesses. The company's lower exposure to floating-rate debt and meaningful equity investments help stabilize income despite falling interest rates. Non-accruals remain low and portfolio concentration is modest, supporting sustainable dividends and reduced risk of defaults.
BDC Weekly Review: Should We Trust BDC NAVs?
We take a look at the action in business development companies through the first week of July and highlight some of the key themes we are watching. BDCs delivered a strong 3% total return this week, with underperformers rebounding and sector valuations nearing historical averages. NAVs in volatile markets are best guesses and not precise; historical price behavior and resilience matter more for allocation decisions.
Chicago Atlantic BDC: Remains Resilient But Limited Growth Potential (Rating Downgrade)
LIEN offers a high 12.6% yield and unique cannabis industry focus, but faces growth and regulatory risks in the current environment. Dividend coverage has weakened, with net investment income barely covering distributions, raising concerns about sustainability and potential for a cut. Portfolio quality remains solid with no non-accruals and reduced PIK income, but limited growth and high rates constrain NAV expansion.
BDC Weekly Review: State Street Reboots Its Private Credit Effort
We take a look at the action in business development companies through the fourth week of June and highlight some of the key themes we are watching. BDCs remain attractively valued, with sector valuations still below historical averages. State Street's new private credit ETF aims to address prior flaws, but investors should remain cautious about liquidity and fee structures in these products.
