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Fifth Street Finance Corp. Message Board

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  • wootangclanage wootangclanage Mar 22, 2012 3:33 PM Flag

    This stock is a turd. WTF.

    Hope you weren't holding this turd like I am.

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    • Hi, Woot:

      Hope you do not mind my 2 cents. If price drop of FSC bothers you, you really should sell them NOW because I believe before the end of this year, it will definitely drop more, probably closer to or even below $9. However, I believe it will not have any problem in covering its future dividend, at least this year. The main problem is it may not be able to increase its future earnings without making more new investments. Without being able to increaes its future profit, it may reduce its future dividend further and/or have another secondary offering (to raise more capital). If the current low interest rate stays low, it may actually bad for it.

      I consider FSC will become a fantastic buy if its price drops below its NAV and therefore I had already started buying it again and will buy MORE if it drops closer to $9.

      Therefore, you really need to ask yourself:

      Why you bought FSC?

      If you want a stock that will provide both good yields and stability, then you may want to buy something that will be more stable - such as preferred stocks or ETFs that contain PS but even these can go down in a BEAR market.

      I currently hold large quantities of FFC, FLC, PSF, BCS-PC...

      AGNC, PMT, CXS, RSO are some of the better REITs to hold on for LT. Esc AGNC seems to remain very stable in price. But again, they can go down. There are no crash-proof stocks. Even money market funds can lose values...

      I am looking forward to add CHI, KMM and WEA at the right price.

      Any time if you paid too much for a stock, no matter how high their yields would be, you have the risk of barely breaking even or lose your principal...

      BDCs would remain volatile during this market which was full of uncertainty....

      You want some safer dividend stocks, you should look into buying T, VZ, MO, MSFT, INTC but you still need to buy them at the right prices....


      • 1 Reply to thewisejman
      • waynesonnen Mar 22, 2012 7:09 PM Flag

        >> I believe before the end of this year, it will definitely drop more, probably closer to or even below $9. <<

        Do you have any data/facts to back that up? Right now, the market is dropping a little, but that's to be expected after the run-up we've had since December.

        Remember, this is an election year. Regardless of numbers being manipulated, those numbers will help U-know-who to get re-elected.

        Also note that the Fed will not let things drop too much. For example, if the GDP growth looks like it will be below say 2% and if inflation is not showing its ugly head, we may see EQ3.

        On the numbers side: We have some strong job growth and it looks like the housing market may pick up. These two things have a big impact on our economy.

        Bottom line for FSC: The earnings we are seeing now may be its bottom. The growth in earnings is not what analysts' initially though, but FSC should not have any trouble producing $1.15/year NII, and slightly more next year -- even in this low rate environment. The reason is that they will start to see some pickup in loan repayments, and hence new loan deals. (Remember, they get both a loan origination fee as fees for early repayments.)

    • The difference between a turd and a rose is the price you pay for it.

      • 1 Reply to jfnh1
      • Amen, bro, well said.

        That was why you and I got rid of all of our FSC and now started buying it back.

        You simply could not just buy any stocks because of its yield which could be changed and its price could drop because of secondary or downgraded...

        Buy stocks only if they are undervalued and have growth poetentials.

        It is easy said than done..and then why it is good to listen and talk to other wise investors... but luck is more important than anything in this market....esp SL J

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