TSLX: Following the year end 2017 results of TSLX, JMP Securities is maintaining its Outperform rating. The price target is $21.5. The BDC Reporter adds: As discussed in earlier posts, TSLX continued to do just about everything right but is trading flat at around $18.20, down a whopping (16%) from the 52 Week High of $21.74 in recent weeks. TSLX, though, trades at a premium to book and 9.6x the BDC Reporter's 2018 Net Investment Income Per Share estimate. If JMP Securities is right, investors have a potential 18% upside plus any dividends received to look forward to.
GAIN: The BDC signs agreement with investment bankers to sell up to $35mn of new stock. The BDC Reporter adds: Until recently, GAIN's stock was flying high, reaching $11.50 while NAV is at $10.37. Management seems to be seeking to take advantage of the huge upsurge in its stock - which for years languished at a massive discount - to raise a modest amount of new capital. Whether any sales will be made at a discount to book is unclear, but the stock price has dropped back to just over $10.0 and slumped - inexplicably nd briefly - to $9.25. This sales arrangement is unlikely to help the stock price but is an inexpensive way to grow the shareholder base.
MAIN: Key metrics such as Distributable Net Investment Income Per Share up hugely over prior year : 26%. For year achieved DNII of $2.56 versus $2.39 the year before. NAV jumped too from $23.53 from $22.10 at year end 2016 and 2.2$ over IIIQ 2017. As reported earlier, the IQ 2018 announced dividend was higher than the prior year and MAIN continues to pay semi-annual Supplemental Dividends. The BDC Reporter adds: Obviously a very good year for a BDC accustomed to annual achievements. Noted, though, that there were no virtually no net Realized Gains in MAIN's Control portfolio- which typically consists of Lower Middle Market deals where they often serve as lender and major investor. Last year MAIN booked $32mn in Realized Gains in this group. That's surprising in this hot house M&A environment. We will look at 10-K to see if the BDC booked numerous Realized Losses in year. At year end there were 5 borrowers on non accrual, which represented 2.3% of the portfolio at cost and just 0.2% at FMV. From the BDC Reporter's perspective, credit is the key issue to look out for. That's an issue which investors often forget about where MAIN is concerned.
HTGC: Adjusted (for debt repayment costs) Net Investment Income Per Share reaches $0.32 and IQ calendar 2018 dividend announced of $0.31. Net Investment Income Per Share down on year, but NAV and credit quality up. The BDC Reporter adds: Leaving out adjustments for both 2016 and 2017, HTGC's recurring earnings dropped from $1.34 to $1.16, hurt by spread compression, above average Realized Losses and dilution from new stock offerings. Most notably so-called Core Yields were down to 12.5% in IVQ 2017 versus 12.9% a year before. The small increase in NAV is entirely due to not distributing all income during the year. Still, the high flying BDC has improved credit quality and debt to equity - net of SBIC debt - is at a relatively modest 0.62x (real leverage 0.73x), in line with the prior year. The key question from the BDC Reporter for 2018 and beyond - as HTGC continues to grow its balance sheet (now over $1.5bn) and earnings ($100mn) in absolute terms - is whether the BDC will outgrow its specialty venture lending pond, and with what consequences ? More aggressive underwriting of venture deals ? Entering new "verticals" within the venture investing space ? Entering entirely new industry segments ? Apropos of nothing we can't help noting that HTGC does offer up the most comprehensive data set in any earnings release we've reviewed to date.
GSBD: IVQ 2017 Net Investment Income was $0.47 per share, as expected by analysts. NAV dropped to $18.09 from $18.23. The dividend remained unchanged at $0.45 for the 12th quarter in a row. The BDC Reporter adds: Difficult year for GSBD from a credit standpoint with Realized Losses of over ($66mn). The impact on earnings was offset by growing balance sheet, which boosted Investment Income. Still, Net Investment Income Per Share for 2017 dropped for second year in a row to $2.07 and $2.10 and $2.14 in the two prior years. On the plus side, non-accruals now only 0.1% of total investments at cost. Stock trades at premium to book and recent increase in Revolver suggests an equity raise in 2018 might be in cards.
SLRC: IVQ 2017 Net Investment Income came in above analyst expectations at $0.44 versus $0.42 projected. For year NIIPS was $1.62. NAV was up by 1 cent. The dividend - as previously announced - was increased to $0.41 for the IQ 2018. Results achieved without special fee waivers. BDC Reporter adds: Excellent earnings in the quarter, helped by originations exceeding repayments and portfolio yield unchanged on year despite spread compression. SLRC transforming itself very quickly into a diversified commercial finance company with 200+ borrowers in various portfolios. Outlook for 2018 helped by lower 0.25% management fee announced earlier. More details to follow on review of Conference Call and 10-K.
SUNS: Earnings and NAV for IVQ and full year 2017 came in as analysts expected. Quarter's earnings $0.35 and $1.41 for year. NAV up 3 cents to $16.84. Gross yield up due to new NorthMill acquisition. No loans on non-accrual. BDC Reporter adds: We've not yet reviewed the 10-K, but SUNS appears to be on track, maintaining results essentially unchanged from 2016. However, results achieved thanks to increased fee waivers by Investment Advisor. Without the boost earnings would be well below the distribution level - now unchanged for 23 quarters after declaration through March 2018.
TSLX: The BDC announced quarterly and annual results through December 31, 2017. Net Investment Income Per Share was in line with expectations; the dividend unchanged at $0.39 (with a supplementary $0.03 payout) and the NAV Per Share identical with the prior quarter. NAV was up on the year but mostly due to undistributed GAAP earnings. Credit quality remained almost perfect. The BDC Reporter adds: On a quarterly basis, the weakest of the year at the Net Investment Income Per Share level, but a good year overall, with considerable margin between GAAP income and distributions. Leverage actually declined by year's end. However, the most intriguing element to come out of the earnings release and 10-K - which we've reviewed in detail - is TSLX's apparent interest in investing in beleaguered Triangle Capital (TCAP). TSLX famously sought- and failed - to gain control of TICC Capital (TICC) a couple of years ago (and still owns a few shares in memoriam) and now appears to have a new target in mind. In this case, though, TCAP 's insiders are open to a transaction of some sort, but we have no idea who is on the short list. More might be revealed at the Conference Call.
MAIN: The monthly distributions for the IIQ 2018 were announced, and were identical to the first quarter at $0.19, or $0.57 a quarter. That was as expected. BDC Reporter adds: We have a Dividend Outlook of UNCHANGED for MAIN in 2018 and with 2 quarters of payouts announced are halfway there.
MCC: In early morning trading MCC hit a new 52 Week and All Time Low of $4.08, continuing a trend that began in March 2013 when the stock was above $16.00. BDC Reporter adds: Market appears to share concern of BDC Reporter that dividend is due for another decrease, despite unchanged IQ payout. See the BDC Reporter's Dividend Outlook article of February 7, 2018: https://bdcreporter.com/2018/02/medley-capital-dividend-outlook-updated/
MCC: The BDC filed an 8-K containing Amendment #4 to its Revolver, which includes the repayment in full of the accompanying Term Loan by drawing on the facility on February 12, 2018. The BDC Reporter adds: Where most BDCs are seeking to build up their balance sheets and their financing arrangements, MCC is reducing both and has been for several quarters. The goal is to minimize debt costs at a time when every penny of earnings is precious as recurring earnings per share continue to sit below the (reduced) distribution level.
MCC: As many BDCs are doing to appeal to non U.S. investors MCC announced that 100% of its March 2018 distribution of $0.16 consists of "non-qualified ordinary taxable income". This information is aimed at Israeli investors on the Tel Aviv stock exchange where MCC is now also listed. The BDC Reporter adds: Just a small instance of how U.S. BDC investments are becoming a global phenomenon.
MCC: Two routine annual resolutions: the re-election of two directors and the appointment of the independent accountant were overwhelmingly approved by shareholders. BDC Reporter adds: Not material.
SAR: ComForCare Health Care Holdings LLC, an in-home care provider has acquired CarePatrol, a senior placement franchise based in Gilbert, AZ, according to a statement by ComForCare.BDC Exposure: $10.4mn in First Lien debt.
ARCC: Files Proxy to request shareholder approval to issue shares below NAV if Investment Advisor Advisor and Board deem necessary. Vote to be held in May 2018 and authority lasts 12 months. BDC Reporter adds: ARCC asks for this approval every year but has not pulled the trigger below book in many years. Unlikely to break that streak if all goes as expected. However IF a crisis does occur AND markets worry that ARCC will use approval at below book price, there is a risk of increased price drop as shareholders seek to get out ahead of forced dilution. Frequent phenomenon in 2008-2009, almost forgotten by investors today.
FDUS: The distribution is unchanged - as expected - at $0.39 for the quarter. Ex-date is March 8, 2018. BDC Reporter adds: Dividend Outlook is UNCHANGED.
ARCC: Core Net Investment Income Per Share up to $0.38, in line with distribution. NAV up to $16.65. Met our expectations despite major Realized Loss.
TOFS: Announces $0.37 Special Dividend due to Realized Gains. Mentions monetization of Malabar International and smartTours, LLC. Ex-date March 22, 2018. BDC Reporter adds: These are major Realized Gains which OFS has not chosen to reflect as a "deemed distribution". Suggests two big equity gains in IVQ 2017.
CMFN: Raymond James downgrades CMFN to Market Perform from Outperform. BDC Reporter adds: CMFN had dropped sharply in price prior to the analyst call, from $8.6 to $7.750 on February 7, 2018. Has since increased. BDC Reporter adds: Dividend Outlook is DECREASE for 2018 but IVQ 2017 results were above our expectations. Reflected in volatile stock price as uncertainty increases.
HCAP: The BDC announced monthly distributions of $0.095 for first 3 months of 2018. Down from $0.1125 monthly previously, a -16% decrease.
2/8/2018: Net Investment Income Per Share down but after adjustments for one-time items as expected at $0.25.
SUNS: Dividend unchanged at $0.1175 as expected. BDC Reporter adds: We maintain our Dividend Outlook of UNCHANGED for 2018, with two dividends announced.
GLAD: Two analysts are more positive. National Securities goes from Sell to Neutral and Ladenburg to Buy. BDC Reporter adds: We maintain our Dividend Outlook of UNCHANGEd but have a NO BUY common stock rating. Too expensive.
AINV: Net Investment Income as expected at $0.16, equal to dividend level. NAV down. BDC Reporter adds: Notwithstanding improving credit metrics, AINV cannot sustain distribution if no change made to fee structure. Current waivers are keeping earnings artificially high. Moment of reckoning comes next quarter when waivers end. Our Dividend Outlook for 2018 maintained AT RISK. Stock rating is NO BUY
PSEC: IVQ 2017 results for PSEC were above analyst expectations at $0.20 per share and NAV increased. Also announced unchanged monthly distributions of $0.06 from February to March.
HTGC: Wedbush upgrades HTHC to Outperform from Neutral. BDc Reporter adds: Wedbush has stepped in with HTGC at 5 month low. We have a Dividend Outlook of UNCHANGEd and a stock rating of NO BUY, due to uncertainty about CEO intentions.
PFLT: Dividend unchanged at $0.095 as expected. BDC Reporter adds: We maintain our Dividend Outlook for 2018 of UNCHANGED.
WHF: JP Morgan downgrades to Underweight from Neutral. BDC Reporter adds: Seems a bit late given WHF has dropped from $15.05 to $12.550 on February 5, 2018 close. We maintain our Dividend Outlook of UNCHANGED for 2018 and internal BUY rating.
2/6/2018: BDC announces $25mn repurchase program for 2018. BDC Reporter adds: Probably more symbolic than anything but stock trading $2 a share off estimated IVQ 2017 estimated book value.
MCC: Net Investment Income Per Share below expectations - and below $0.16 distribution - at $0.13. NAV down. BDC Reporter adds: Affirm Dividend Outlook for 2018 at DECREASE, notwithstanding IQ 2018 dividend announced at $0.16.
GAIN: Net Investment Income and NAV above expectations.
CSCWC: Net Investment Income Per Share $0.27 as expected. NAV up.
.GLAD: Net Investment Income Per Share $0.21, as expected. NAV up.
MFIN: On January 31, 2018 Freshstart Venture Capital - a subsidiary of MFIN- agreed to amendments of its Loan Agreement with the SBA. This was one in series of changes made in recent months as MFIN struggles to repay debt obligations in its non-bank companies.
NMFC: The BDC issued $90mn in Unsecured Notes due 2023 at a rate of 4.87%. The Notes were privately placed and will initially be used to repay existing Revolver debt. The BDC Reporter adds: That will increase interest expense in the IQ 2018 results due to the issue costs and the higher cost of the Notes versus the existing Revolver.
HTGC: The annual distribution for 2017 was $1.24: 87% Ordinary Income taxed at highest personal level and 13% LT Capital Gain. 100% of income was considered "interest related" for Non U.S. taxpayers.
ACSF: Total dividend paid in 2017 : $1.1624. 100% treated as Ordinary Income and taxed at highest personal tax rate in taxable accounts. 65% of dividend considered "Interest Related Dividends" for Non U.S. investors tax purposes.
CSWC: In 2017 paid $1.16 in distributions and only 55% were Ordinary Income and taxed at highest rates. Rest LT Gain and Qualified Dividends, which reduces tax bill in a Taxable account.
FDUS: New Baby Bond priced at 5.875%, with 2023 maturity and 2020 Early Redemption option. $43mn raised. $48mn if underwriters exercise option. Cost under 1% than all-in cost of bank borrowing.
ARCC: Breakdowns $1.52 in distributions between Ordinary,Qualified and LT Gain. 93.3% of income is Ordinary and taxed at highest rate.
FDUS: To issue 2023 Unsecured Notes with ticker FDUSL. Provides IVQ 2017 earnings/NAV estimate. VIEW: Info in Note Prospectus suggests earnings down temporarily, portfolio growing.
TCRD: At $8.68, TCRD yield is 10.4% and trades at 24% discount to NAV. Hard to tell where stock bottom might be.
FDUS: A BDC Reporter exclusive article: Fidus Investment opens the door halfway in advance of its earnings release and we have a look. Is the BDC's stock price drop warranted ?
FDUS: Lowest level since March 2016 following long slide and IVQ 2017 earnings preview. After review, we remain convinced FDUS remains on track and dividend outlook remains UNCHANGED.
BKCC: Hits new lows in advance of earnings. Hard to tell where bottom is with stock trading at 25% discount to book.
PSEC: Announced the purchase of $70 million of first lien senior secured floating rate loans as part of the acquisition of Town & Country by H.I.G. Capital.
OFS: OFS drops intra-day to $11.36 on new no news. Market appears to anticipate poor IVQ 2017 results but no date yet set for earnings release.
WHF: This is good news for the Company and for its lenders. We learn from the article that some debt has been paid down and the infusion of new equity capital by the founders and a group of investors led by Goldman Sachs solidifies the Company's prospects. One of the remaining pieces of the puzzle is identifying a new CEO. A COO has been appointed. Both the founders get kicked upstairs.
CPTA: Yet another class action lawsuit against CPTA claiming false statements and seeking damages. Not material at this stage. [Press Release]
MCC: Notable partly because Notes were issued on Tel Aviv stock exchange. Likely to repay existing MCV Baby Bonds with over 1% higher coupon. Only second BDC to tap the Israeli market with institutionally focused debt offering. [Press Release]
PSEC: Very few details on pricing, terms or reason for recap (dividend ?). [Press Release]