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Prospect Capital Corporation Message Board

  • slicktop4 slicktop4 Nov 1, 2013 1:28 PM Flag

    BDCs Getting Hammered.........

    Today BDCs are getting hammered with the market not down as has happened several days recently. Looks like a shift change to me but am not sure about the cause. Any ideas?

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    • KFN had a horrible qtr...we'll see Monday if PSEC follows....

    • Thanks for the tip, by the way.

      Picked up a thousand FSC at 10.18 and added another 400 just now at 10.17 in the post-market.

      Idle cash, might as well buy something.................

    • The S&P Futures are down 20 points from the Wednesday high. I don't follow the Cash Market, I suppose it is down as well.

      Crude Oil is down over 4 dollars from Tuesday's Close, Gold is down over 30 dollars from Wednesday's Close......

      BDC's have it easy compared to those three markets........

      Sentiment: Buy

    • I'm beginning to wonder if you are short, Why does the daily price of this stock matter to you that much? If you simply swing trade the stock I could understand. Also, the company benefits from higher interest rates, so your comment below is incorrect.

      • 1 Reply to apdamic
      • My observation is about BDCs in general, and you know that I trade. Also, if you think that higher rates will benefit PSEC you are not thinking clearly. Higher rates will hurt the economy which will hurt all the businesses that PSEC loans to which will increase PSECs risk. More risk will cause the pps to drop to compensate. Forget about the libor rate stuff, that is just a smokescreen put out to prop up pps. If we go into recession because of higher rates a little rate arbitrage will not help. PSEC is increasing their debt and share count almost daily, thus it has doubled funds under management in one year and those funds are loaned out to businesses that can not get a normal rate loan making PSEC a junk bond fund in hiding. If higher rates cause a recession PSECs default rate and risk will soar and pps will drop.

    • 10 year is up today, maybe it is becoming realized that higher rates will hurt BDCs...........

      • 2 Replies to slicktop4
      • It has been disclosed in several SEC filings: A RISE IN INTEREST RATES WILL BENEFIT NII.(Prospect). Going up a cent is getting hammered?


        Sentiment: Strong Buy

      • That seems plausible, but not all BDCs have the same interest rate exposure.

        What discerning investors must do is what the broader market doesn't always do well: distinguish among BDCs. Some (like TCAP) have a lot of fixed rate assets that will suffer in a higher interest rate environment. Others (like PSEC) have fixed rate obligations but floating rate assets, meaning they benefit from higher interest rates. Assuming of course those higher rates don't cause defaults among the companies invested in. And PSEC hasn't had a single non-accrual in any investmest made in the last 6 years. Their underwriting standards are very high.

        So PSEC unded the day basically unchanged once the smart money saw PSEC was being unfairly drug down with other BDCs that have greater interest rate exposure. TCAP, down big.

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