davidoosnk Posted June 10, 2015 Share Posted June 10, 2015 Some interesting articles on Seeking Alpha re. PSEC. Contentions that management is self-interested, and panic that they issued an ad. in Barron's to highlight the discount to NAV, which now appears on the order of 30%. Rebuttal that shorts are driving fear into the stock. I have been burned by BDC investments in the past, but a 30% discount to NAV-- that taking account of management exaggeration might very well be a true 20% discount-- seems too good to pass up. There are also rumors of high energy concentration in their portfolio of companies but management states it is under 5%. Yield upwards of 13%. Confusing potential "rights offerings"/spinoffs might have served to further marginalize small investors. I am watching like a hawk, did buy some a few minutes ago @ 7.255 . Hope I don't end up regretting it. Link to comment Share on other sites More sharing options...
davidoosnk Posted June 10, 2015 Author Share Posted June 10, 2015 Also another risk factor is CLO's. Might be mitigated if they spin them off. Link to comment Share on other sites More sharing options...
thepupil Posted June 10, 2015 Share Posted June 10, 2015 I prefer ACAS, slightly less scummy (although still scummy), have shifted balance sheet to level 2 assets (senior floating rate loans that they can't lie about marks on) from hairy scary equity portfolio (most of which they've liquidated without big writedowns) and it's internally managed but will be splitting up shortly. It trades for about the same multiple of 72% of diluted NAV and that NAV includes a deferred tax asset, the asset manager, and lots of senior floating rate loans where there is less potential for mismarking. I also like that it pays no dividend, so there is no downside to a divvy cut, only upside to when they split and start paying divvy. I understand the allure of a shitty yield pig BDC at a big discount, but Prospect and Fifth Street are just too sleazy for me. ACAS is slightly more buttoned up and you'll get to own the company that is charging rapacious fees once they split. Link to comment Share on other sites More sharing options...
davidoosnk Posted June 10, 2015 Author Share Posted June 10, 2015 Interesting re ACAS. I like the $90,000,000+ held by Orange Capital which seems to be pushing for buyback. Agreed BDC's are by and large scummy. Link to comment Share on other sites More sharing options...
watsa_is_a_randian_hero Posted June 10, 2015 Share Posted June 10, 2015 For what its worth, I have a friend who works BDC coverage at a bulge bracket ibank. I asked him which of the BDCs has a management with the highest level of integrity; he replied Golub. Link to comment Share on other sites More sharing options...
thepupil Posted June 10, 2015 Share Posted June 10, 2015 yep, Golub and Ares are generally the best regarded. Link to comment Share on other sites More sharing options...
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