BDC Weekly Review: Rule-Of-Thumb Analysis Isn't Working
We take a look at the action in business development companies through the fourth week of May and highlight some of the key themes we are watching. Rules of thumb about rising rates driving poor BDC performance has not panned out. We highlight the SAR dividend raise and GAIN valuation.
Barings BDC: Credit Quality Improvement Fully Priced In (Rating Downgrade)
Barings BDC has improved its credit quality and has a sustainable dividend payout ratio. The BDC's non-accrual ratio dropped significantly, leading to a higher stock price and lower discount to net asset value. The BDC's dividend is still covered by net investment income, but the payout ratio has increased and the trend is slightly negative.
Blue Owl Capital Corporation III: Adding A Starter Position In This 10.25%-Yielding BDC
We provide a Q1 update of Blue Owl Capital Corporation III and discuss our starter position in the stock. OBDE has a portfolio allocation typical of the sector, with a focus on Tech, Insurance, and Healthcare industries. Net investment income fell to $0.39, in part due to one-off expenses.
NCDL: Too Many Uncertainties To Go Long
Nuveen Churchill Direct Lending Corporation is a BDC that went public this year, but so far, has underperformed the BDC index. By looking at the underlying financials, we will recognize a sufficient basis of data points that explain the market's reaction. In this article, I assess NCDL's fundamentals and elaborate on the key risks that, in my opinion, are sufficient for assuming a conservative view against NCDL.
Belden (BDC) Is a Great Choice for 'Trend' Investors, Here's Why
If you are looking for stocks that are well positioned to maintain their recent uptrend, Belden (BDC) could be a great choice. It is one of the several stocks that passed through our "Recent Price Strength" screen.
PennantPark Floating Rate Capital: A Solid 10.8% Yielding BDC Trading At A Discount
PennantPark Floating Rate Capital is a BDC trading at a small discount to its NAV, making it an attractive investment in comparison to many of its peers. PFLT reported strong earnings with impressive revenue growth and low non-accruals in its portfolio, a testament to its portfolio quality. The company has a solid balance sheet and tight dividend coverage, but potential for dividend increases in the future with growth in their JV portfolio.
New Mountain Finance: Strong 10% Yielding BDC Value Proposition (Rating Upgrade)
New Mountain Finance Corporation offers attractive total return potential and has been able to grow its dividend payments. NMFC stock is priced below net asset value and has upside potential in its Equity portfolio in a strong U.S. economy. The company has a 10% yield, covered by net investment income, and has a compelling risk/reward relationship.
BDC Weekly Wrap: Net Income Mostly Falls In Q1
We take a look at the action in business development companies through the third week of May and highlight some of the key themes we are watching. BDCs were flat on the week, with a month-to-date gain of nearly 2% supported by decent earnings and a higher-for-longer Fed environment. BDC Q1 earnings reports mostly show a drop in net income, due to seasonality, a pivot to first-lien assets, deleveraging, and a shift to higher-coupon debt.
Barings BDC Is Outperforming With Solid Outlook
The BDC industry is growing rapidly, with assets under management hitting a record high, and publicly traded BDCs are well-positioned for growth opportunities. Barings BDC has compelling key metrics, including low non-accruals, strong portfolio credit quality, and a high net asset value, supporting a buy thesis. Its dividends are likely to increase in 2024 due to its potential to generate higher NII than dividends.
Goldman Sachs BDC: 12% Yield And Re-Rating Potential (Rating Upgrade)
Goldman Sachs BDC has seen a surge in new investment commitments in Q1, leading to higher net investment income. The company comfortably covered its dividend payout and maintained a strong portfolio performance. The low non-accrual ratio, excess dividend coverage, and moderate valuation make Goldman Sachs BDC an attractive option for passive income investors.
Barings BDC: Signs Of Improving Profile, But Still Risks Remain
Barings BDC (BBDC) reported decent Q1, 2024 earning results. Most of the main metrics improved relative to Q4, 2023 levels, and, importantly, the non-accrual base finally landed in an optimal territory. Yet, the increase in leverage, higher concentration of portfolio in weakly performing assets and a very thin dividend coverage still render the case suboptimal.
BDC Weekly Review: Fee Rate Cuts Continue
We take a look at the BDC sector through the second week in May. BDCs delivered a total return of 1.5% on the week, outperforming most income sectors. BlackRock TCP Capital Corp reduced its base management fee, following similar fee reductions from other struggling BDCs.
