Out Fox The $treet

While Prospect Capital Corporation ( PSEC ) continues to report record originations, the company is failing to pull those numbers to the net investment income (NII) line. Not only did the last quarter show essentially flat NII, but also it occurred on a substantially higher share base. Prospect Capital is a leading provider of flexible private debt and equity capital to sponsor-owned and non-sponsor-owned middle market companies in the United States and Canada. It trades as a closed-end investment company that has elected to be treated as a business development company ( BDC ) under the Investment Company Act of 1940. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Strangely, the stock market continues to allow a company to repurchase stock at a substantial discount to net asset value (NAV). American Capital, Ltd ( ACAS ) has completed a 52M share repurchase program for nearly $500M over the last 6 quarters at an average discount to a continuously soaring NAV of nearly 40%. The stock though continues to trade at a substantial discount even after having the ability to spend that much cash. American Capital is a private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. American Capital manages $18.6 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $117 billion of total assets under management (including levered assets). The question remains why investors allo...

When last writing about Prospect Capital Corporation (PSEC) , the stock traded right above Net Asset Value (NAV) with fears of another capital raise. After reporting Q4 results last week, management calmed the fears of another capital raise due to strong liquidity. The dilemma remains on whether to invest now and collect the high monthly dividends or wait for a capital raise that might never happen. Prospect Capital is a leading provider of flexible private debt and equity capital to sponsor-owned and non-sponsor-owned middle market companies in the United States and Canada. It trades as a closed-end investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940. The stock continues to yield nearly 12% after possibly the smallest monthly dividend increases in the market. The company continues to raise the monthly distribution by a fraction of a cent. Read the full article at Seeking Alpha. Disclosure: Long AC...

The business development companies ((BDCs)) continue to garner more investor attention as the access to a different investment class and high yields become ever more attractive. After highlighting Prospect Capital Corporation (PSEC) a few weeks back, Fifth Street Finance Corp. (FSC) now garners our attention with a yield above 10%. Fifth Street Finance is a specialty finance company that lends to and invests in small and mid-sized companies in connection with investments by private equity sponsors. The company provides full debt structure financing solutions including: first lien, second lien, mezzanine, and one-stop. It trades as a closed-end investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940. Though the company that went public in 2008 has historically not grown Net Asset Value (NAV), Fifth Street recently reported record transaction volumes for the December quarter. Read the full article at Seeking ...

In a market that can't get enough yield, it's interesting that a dividend grower can yield nearly 12%. In fact, Prospect Capital Corporation (PSEC) has consistently increased the monthly dividend ever since the bottom of the financial crisis impact in 2010. Prospect Capital is a leading provider of flexible private debt and equity capital to sponsor-owned and non-sponsor-owned middle market companies in the United States and Canada. It trades as a closed-end investment company that has elected to be treated as a business development company ((BDC)) under the Investment Company Act of 1940. Read the full article at Seeking Alpha. Disclosure: Long ACAS. Please review the disclaimer page for more details. 

The market remains so uninterested in buybacks that a company can continuously buy its own stock at a substantial discount to net asset value [NAV]. American Capital, Ltd (ACAS) is a prime example, having recently completed an 8.8M share buyback in Q4 that will again help boost the NAV. The company bought the stock at an average price of $11.72, for a total cost of $103M. In the previous quarter, substantial purchases below book value added $0.23 to NAV. The NAV stood at $17.39 prior to the quarter's start, so it undoubtedly added to that value. American Capital is a private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. American Capital manages $17.2 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $1...

Just about every company paying a dividend yield has had extremely strong stock gains over the last year. Main Street Capital Corporation (MAIN) has been no exception to this rule. Though the company continues to raise the dividend, the current yield has dropped to 6%. The company is a principal investment firm that primarily provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Now that the company has gained 69% over the last year, the question remains whether investing in a BDC that only pays a 6% dividend is worth it. The company has a primary focus in the lower middle market that has a favorable investment opportunity as fewer lenders have competitive offerings for this sector after the financial crisis. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

With high yield in vogue these days, Ares Capital (ARCC) is worth a look even after a big gain this year. Back in August at the time of the Q2 earnings release, the company announced an increased dividend to $0.38 plus a bonus dividend of $0.05. Counting only the normal dividend, the stock currently yields 8.7%. The company is a business development company (BDC) that operates as a leading specialty finance company that provides one-stop financing solutions to U.S. middle market companies and private equity sponsors. The company originates and invests in senior secured loans, mezzanine debt and, to a lesser extent, equity investments through its national direct origination platform. Ares Capital competes against companies like American Capital, Ltd (ACAS) , KKR Financial Holdings LLC (KFN) , and Main Street Capital Corp. (MAIN) . All of these stocks have had huge gains in the last year, yet all but American Capital provide still compelling dividends. Read the full article at Seekin...

The market has become so obsessed with dividends that a company buying stock at a 40% discount to net asset value (NAV) is often questioned for not paying dividends instead. In fact, American Capital, Ltd. (ACAS) recently announced completing an 11.4M share buyback in Q3 that will undoubtedly be questioned on the next earnings call. The company bought the stock at an average price of $10.99, for a total cost of $125M. Considering the substantial purchases below book value, the transactions will add over $0.20 to NAV. A smaller buyback in Q2 at a slightly higher discount to NAV added $0.20. American Capital is a private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites, and manages investments in middle market private equity, leveraged finance, real estate and structured products. American Capital manages $17.2 billion of assets, including assets on its balance sheet and fee earning assets under mana...