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Prospect Capital Corporation Message Board

  • jmkdog jmkdog Feb 8, 2013 12:02 PM Flag

    Prospect Capital cc

    up
    up
    up

    Low leverage
    29% D to E

    Drive drive drive

    .27-.31

    NII exceeded distributions 11.05/per share since 2004.

    Solid and Prudent 4B assets and undrawn credit

    Scale, deep bench,

    Diversity, source high volume originations. Dicipline. flexibility
    Attractive risk adjusted yield

    14.7%

    772 Million 5x volume.

    349 M repayments

    106 Portfolio companies

    Larger positions , larger companies, many different industries no concentration.

    18% Financial services

    2012 EHSI Big Income
    2013 EHSI reduced.

    March 141 M originations
    Robust

    NON performing 1.1% wow down from 1.9

    400 M in pipe

    DEBT TO EQUITY only 29%

    2.9 BILLION UN ENCUMBERED ASSETS

    rest is pledged to lockup. Grown revolver.

    bbb unsecured debt no covenents.

    2015 first debt maturities.(counter party risk much reduced) 11.35-12.76 ranges in conversion.

    PRY
    Equity issued 6x each at a premium to NAV
    740 Million of new investment capacity.

    Questions?

    Mason: New reit strategy..How big, return potential.

    Manage risk, tax efficiency, 70% basket, no corporate tax, GSE support, yield compression

    Locking in low risk , low to mid teen returns. Only 50 M deployed. Every deal stands alone, robust pipeline many of which in 50 m plus range. Lock in return over a 10 year period.

    Choosy ,

    Multi family properties, GSE debt 3-4% fixed

    impact of recessions not as severe , cash yields, stable of bank lenders un levered yields
    Tower, Credit central.Nationwide 25 M. 18 months exploring auto finance, macro micro level risk. Other auto finance coming. Careful underwriting

    Good results to date, Tower is hundreds of thousands of loans. Attractive returns
    Richard Kudroy?

    Robert Dodd. Whats your edge over traditional reits?.GE " pay no taxes" so cost is efficient and equal to public reits.

    " Bottoms up" out hustle comp

    Bottoms up vs top down. Create edge with property managers. Cautiously optimistic.

    12-14 deals structured credit 10-15%
    Consumer finance 10% range

    losing deals over pricing, yield compression is here. How to fight this? Still getting upfront fees. Relationships matter. No fatal flaws, lots of repeat business. (not lowest cost to capital)

    Bock WF. CASH ON HAND( new atm) why new equity? (great questions)

    Issue above book? Advanced pipeline in excess of 400 M team is working on SIGNIFICANT TRANSACTIONS. January digestion month. 24 deals in December. January , February and March (rebuild in the pipe. ATM for equity issuance very efficient from COST standpoint.

    CLO/structured finance bucket. Return dynamics in post gas solutions world?have cushion built in, real estate,returns, leasing, . Buy outs , 4 closing buy outs in last few months. More deals like this. Even in risk on world there are dollars on the sidewalk. Upside in our deals.

    Will CLO value decline with spread compression? Deals last 18 months using reinvestment spreads. Modeled much lower spreads in our deals. After 2 years continued tightening , just call the deal. Protected.

    Looking at defaults up , spreads tighten, even in those cases positive returns, much less , but still positive.

    Structuring fees? Loans repay, we make new ones, key part in economic return. Agent restructuring fees. non agent is small,, Fees will continue Different fees for differing debts , early redemption mid teens iir

    HM: Cash Balance 430 Million? 3 week " error on the side of having MORE liquidity" Keeps relationships. Decent liquidity, nice uptick in biz. Longterm could go to .5-.7 but usually .3-.5 .

    Would like to be 50% this Q?

    Think about risk allot, cushions, protection in down turn. Move in swiftly. More liquidity for deals.

    Jerry Luther. Private investor.( price will not move more than a penny).Throwback a years worth of dividends, 4% to do this low rate of borrowing, insurance that we would never LOWER the dividend.

    Most liquid BDC. Plenty of liquidity on hand. Would take a HUGE surge in the pipeline. We do not need any capital. Need to put money to work.Great balance with ATM, slow originations in Jan nice uptick.

    Steel worker..Very cool invited Jerry to NYC!

    Closing comments! HAPPY YALL.

    Management impressed

    Sentiment: Strong Buy

 
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