Did anyone else notice how FSC President could not justify their high mgmt fees when asked directly by KBW analyst Greg Mason during conference call? Mgmt talked about lower income because of low interest environment and securing safer investments, but they still reaped the same high fees (2 and 20), especially after the dilutive stock offering in late Sept. FSC board MUST reallign its excessively high fees at January meeting to reflect lower yields and share in the same pain that has been inflicted on shareholders.
Mgmt can realign their own personal interests and compensation with that of the shareholders. When a strategic decision is made to float additional shares and it rewards management and penalizes shareholders, this alignment is WRONG! Management should be compensated for PERFORMANCE, not for making bad decisions. Its like having a broker who manages your portfolio and is only interested in maximizing his commission, not in maximizing your return. When I see this in a company, I bail out and find a better run company to invest in. Eventually this type of one-sided management approach will alienate enough shareholders and cause a mass exodus - no one in the future will trust them to manage their money again.
I agree... Fee's seem crazy!...however portfolio is excellent with almost zero delinquiency...down here in the mid nines I'm sticking around 10% yield.. See if these guys can build the net asset value.. They did close a bunch of deals at quarter end
My guess is that management will reduce fees on assets above $2 billion. The company is going to find it very difficult to raise new money because of the fiasco with the last stock offering. Certainly, if I had been one of the investors who participated in the stock offering, I would be complaining in the strongest possible terms to the underwriters!