The price movements on this stock are always a bit baffling. Up big on some days, down big on others - no associated news to indicate why. I imagine the low volume is a part of the reason it acts in this manner.
I guess it might be smart to buy the dips and sell the rips.
Also, compared to other BDCs, is there any benefit to be associated with Blackrock? Could/would they have access to capital that other BDCs don't?
I have a position in the stock purchased at $15, and I'm considering an add-on to average down the stock cost. After reviewing the 10-K in some detail but without going through the portfolio in detail as I like to do, BKCC looks OK. The Company's Net Investment Income does cover the 43 cents a share dividend, which is good. At $1.72 pay-out and a stock price of $12.15, the yield is a respectable 14 %. The Company's debt financing lasts through 2010 so no liquidity risk at this stage.
The problem with BKCC in the short term is that the Company is almost fully levered, with only another $150mn or so to pump out on an existing portfolio of $1.15bn.That won't help future earnings much (11 cents a share by our calculation). Then you have to expect bad debts to increase in the months ahead. BKCC is primarily a second lien lender which (in our book) is just glorified and cheap subordinated debt. If 15% of the debt portfolio eventually goes into non-accrual, the Company's Net Investment Income could take a major hit. Our initial calculation had Net Investment Income Per Share at $1.40 a share in this worst case, which may account for the current price. (Still, that's an 11.6% yield on today's price which is not shabby). Don't expect any material equity gains (only 5% of the portfolio is in equity instruments) or revenues fom other lines of business to rescue you if the lending business goes awry, so everything depends on how BKCC weathers the coming two years of recession. This a medium risk investment at a good price (but still $2 above its 52 week low), with a short operating history (only went public last year) and high stock volatility.
Have a core long term position for dividends, but have had much more success trading it in the last 9 months, it is by far by biggest gainer due to significant volatility. At some point it will get back above 14, but for now, it is buy in low 11s and sell in upper 12s. Think management is solid and BKCC will be a good income investment and trading stock. Good luck.