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Fifth Street Finance Corp. Message Board

  • slcehamrick slcehamrick Apr 11, 2012 10:45 AM Flag

    Does It Bother Longs

    how weak the BDCs have been the past month or so relative to the market . . . they are often a good early indicator

    AND

    how weak FSC has been relative to the sector, now basically down to just off the panic lows of last August?

    I have a small long position but wonder whether their focus on the medical industry (which has rapidly changing dynamics) could hurt them.

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    • <...how weak the BDCs have been the past month or so relative to the market . . .>>>

      Sure it does, but possibly not for the same reasons as you.

      Going into 2012 I've felt most in this sector were fairly fully valued. No screaming bargains like in 2009/2010. From fully valued you either go to over-valued, stay flat, or decline a bit (I'm assuming the economy continues to muddle along).


      FSC has been disappointingly weak but I don't attribute it to their over-weighting in healthcare. I'm comfortable with their exposure to this industry. No matter which way the politics go, there is going to be increased demand in this sector and FSC is well diversified within this sector. Also worth noting is that FSC's problems haven't been with investments in healthcare.

      I think FSC has been weak because they've managed to disappoint several times over the last couple years.

      What is it, 3 dividend cuts now? Not to mention their dividend history since their inception has been all over the place. They haven't look liked they know what they're doing in this regard.

      I think they've finally got it right, aligning the divvy to NII, but they have damaged their credibility IMO.

      This, coupled with a big drop off in net portfolio growth in Q411 and guidance for the same in Q112 is not a short term positive.

      And lastly, the credit quality of their legacy portfolio continues to be a problem. The performance of their 2007-2008 investments is terrible. Granted, that percentage of those legacy investments in relation to their total investment portfolio is continuing to shrink, but it continues to depress their overall performance.

      I'm not being negative on FSC. I hold some shares, and think they are attractive at current levels, but admit they have managed to disappoint mostly over the last year and a half.

      Then just from a "What were they thinking" PR perspective, they ask shareholders to lower the hurdle rate on their incentive fee income formula. Really???? Certainly glad this proposal was defeated.

      I think they need a couple of quarters of solid performance to make investors take notice again.


      RC

    • If you folks would like a stock that you can buy and sell just about every day, check out GWAY. It jumps up a buck or so and then down a buck or so....almost every day. Just watch it and see how volitile it is intraday. And it doesn't matter what the market is doing, it was up nicely yesterday, (or day before) when the mkt was down over 200 pts.

    • I have six BDCs. Here is a list of those six in order of performance over the last five days. Best performer at the top, lowest at the bottom.

      HTGC This one is practically flat for the period.
      FSC
      AINV
      NRF
      MAIN
      PSEC

      Best bounce so far today in order of best first.
      HTGC, MAIN, NRF, AINV, FSC, PSEC

 
FSC
9.73-0.37(-3.66%)Jul 11 4:00 PMEDT

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