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Triangle Capital Corporation Message Board

  • onigiroshi onigiroshi Jun 19, 2012 12:19 PM Flag

    BDC's

    This is just a comment. It seems that mainstream bank lending to small business has not markedly improved since the institution of TARP, etc., and we have seen a significant consolidation in the banking industry since 2008. In addition, it appears the shadow-banking system has all but disappeared. There are simply less bank lenders out there that are lending less. As a consequnce, it would appear that BDC's are filling a potentially significant demand left by the current state of the lending system. This should be an area of steady, profitable growth. What are the risks aand headwinds I am missing here? Comments?

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    • factoids....

      "I like and own TCAP - but it is one of the riskier BDCs based on [1] weighted average portfolio yield and [2] portfolio contents (73.7% of its portfolio [$408.480 million] is in Subordinated debt and 2nd Lien notes). But, TCAP at least has a very well covered dividend (or a good Div/NII ratio)."


      To my understanding the only time that subordinate debt is an issue is
      1: The company cannot pay its subordinate debt but can pay its senior.
      2: Company liquidates and has enough to pay off the senior but not the secondary.

      Apart from those two rather rare instances there is no difference between owning 1st lien and 2nd lien apart from having a lower yield. Unless I am missing something.

    • kidshelleen51@ymail.com kidshelleen51 Jul 4, 2012 9:33 AM Flag

      For a guy that's so critical, it's amusing you see you refuse to share what YOU are investing in. You write paragraphs of criticism but can't even type in a few symbols. Very interesting.

    • "As for me, I seek to own a portfolio of lower risk stocks in several sectors."

      Thanks for the post. Can you inform me what you consider these low-risk, dividend
      stocks in these sectors?

      Thanks in advance for your
      reply.

    • If you read all my posts you would notice that these high dividend stocks represent only 15% of my equity exposure which represents only a portion of total assets. Furthermore, these high dividend stocks only exist as a result of unprecedented FED behavior' which has told us that they intend to keep rates low for several years. Europe's problems further lead me to believe that rates will remain low until the house of cards come falling down. You should also note that the names of stocks I supplied were merely examples and not recomendations.



      The question I have for you is whether or not you believe that one should or should not take advantage of existing conditions, and if so, what high dividend choices would you make. I already have plenty of the typical stocks for growth and income starting alphabetically with ABT. I am interested in higher yielding instruments to make my very early retirement more profitable.

    • The new administration will slowly raise interest rates and the situation will change. Be prepared to dump BDC's. They are not too big to fail. Money will go to money.

      • 1 Reply to tobpirat
      • The situation always changes. As for interest rates, it is the FED with prodding from the administration that controls interest rates. My own feeling is that US rates will remain low for some time due to a lingering slowdown and a dysfunctional Europe. Long term, our interest rates are destined to be very high due to years of fiscal mismangement. I think this happens after a European calamity that forces European countries to live within their means. Then the US government becomes the target of world wide investors.

        Given the crazy world we live in, I think that all investors must spread their investments over very wide investment classes. I try to invest in a wide range of things - from speculative biotechs to physical gold, with the largest holdings in US based international companies that pay decent dividends.

    • I completely agree with your analysis which is why I bought TCAP and PSEC. I continue to look for other BDC's and am checking out a few as time permits.

 
TCAP
20.03+0.52(+2.67%)Aug 28 4:02 PMEDT