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BlackRock Capital Investment Corporation Message Board

  • ronkelbel ronkelbel May 18, 2010 6:37 PM Flag

    Determining NAV

    I have read where the NAV valuations of some failed BDC's were figments of someone's imagination. Can anyone on this board address how BKCC's NAV is determined? If BKCC has loaned $x dollars to a company who has just lost its biggest customer, is BKCC's NAV then lowered somehow to reflect this new reality? There have been several valiant efforts by members of this board to "rank" and compare various BDC's. Seems to me the quality of a BDS's loan portfolio has to be taken into account in any such comaprison. Also high on the list are the fees management pays itself and also the "advisory" fees it pays to "Blackrock Kelso Capital Advisors, LLC". Do we know if fees are performance based, or are they paid regardless of how well BKCC performs. The various fee structures and performance incentives used by different BDC's would seem to be another important yardstick when doing relative comparisons. So, sharpen those pencils and get back to the drawing board!

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    • BDC's use outside firms to assist in valuation of their investments. Marks are taken regularly accounting for the delta of carry value to cost.

      But there is room for some judgment which can get a firm into trouble. I think that is what is happening on KCAP (in which I currently have no position).

      zip

      • 1 Reply to zip_jet
      • Business Development companies are closed-end funds that raise a substantial amount of money in an initial share offering. At that point the funds are closed and many are listed on the open stock market.
        They are required to place at least 70% of their monies in thinly traded companies or private companies.
        Many BDC's have web sites that publish their NAV usually once per quarter. The art of investing in a BDC is to purchase the shares at a discount or at least at par to the NAV.
        Blackrock Kelso's last NAV was stated as 9.77 per share.There have been many opportunities the last few days to purchase shares at a discount. Then, the dividends are simply gravy. Part of the NAV is figured on the future value of the notes, value of any shares held in companies and cash equivalents, and other financial instruments.
        I hope that this helps you with your inquiry.
        The best to all!

 
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