frigator, if you don't mind me asking, what got you into the private lending business? What advice would you give others who are considering doing the same? Any good resource materials to read to educate oneself on the particulars of the business?
ARCC is either the largest BDC or 2nd largest, depending on if you count ACAS as a true BDC. Solid reputation and deep pockets thanks to their size and relationship with GE Capital. They are known for being conservative in the types of loans they make, so the yield is lower than BDCs like FSC. Lately, thanks to yield compression, ARCC has been having issues with NII being able to keep up with the dividend. Remains to be seen how that will play out. They are externally managed, and their manager just went public 5 or so months ago, ticker of ARES. That was a red flag for me, as it puts into question how willing they are to make moves beneficial to ARCC and not just to artificially inflate AUM for ARES. FSC/FSFR will soon be facing the same question, and unlike ARES, their external manager seems more prone to greed.
Just a feeling, but I think it would behoove everybody to take a close look at all their BDC holdings and purge all but the higher quality ones. If they're having trouble paying the dividend, instant sell for me. If they're going deeper into the rabbit hole of risky tranches of loans, instant sell for me. I think we're getting close to a reckoning for junk debt, and we could see all BDCs correct a bit. The strongest ones will be a buy on weakness, but the weaker ones should struggle mightily just to stay relevant.
This is the ultimate cash out for external managers, so yes, I think this will become the norm for BDCs unless there is a share holder revolt. MLPs are also doing this left and right, although now the trend is reversing with numerous limited partners buying out the general partner.
So, according to a prior post your whole 'don't buy ARP' thesis was based on price movement, it is known that ARP is 'cooking the books'. Based on that hard hitting analysis, I think it is safe to put you on ignore. Bye.
I just don't see how shorting ARP here would be very enticing? Current distribution yield means shorties paying out 1% per *month* to unit holders, not to mention any borrow fees.
Good question, one I don't have the answer for since I don't follow NMM. I would have thought that rates for dry bulk would suffer even more than for tankers given the global economic morass we find ourselves in. Perhaps NMM locked in long term charters at a very timely rate. Might check to see when they start falling off, and what the current dry bulk rates are. Perhaps there might be a cut in their future? Current distribution seems very nice.
One other event that still could cause tumult is the Scottish independence referendum in a few days. It might end up having zero effect on Awilco, but for the short term people could be buying/selling as a knee jerk reaction to fear/relief.
Perhaps any margin selling (if in fact there was any) is finished now. Margin calls usually last up to a week from when they are first issued by the broker.
You could be right thechiefaz. However, when you state that other types of investors scoop in and steal shares, well, I wonder what types of investors are drawn to SeaDrill in the first place. Right now it is almost solely income investors. So you are expecting income investors to flee and then, what, value investors to step in and support a 7% dividend? I don't think that will happen. Stock will get pummeled all over again with a big dividend cut, then will soar once again if the dividend goes back to $4 (or higher).
Just my opinion, but I think you are seeing a conspiracy where there is none with BDC BUZZ. He's stated from the start that he is trying to do a side by side risk comparison of as many BDCs as he has the time to do.
As far as hack jobs go, I think the recent SA blog bashing MCC is a more obvious one to focus on. There is perfect example of someone with an agenda. Spends a ton of time going over every loan restructure with a fine tooth comb and voicing the worst possible outcomes in each case, while completely ignoring MCC manager's comments on those loans during the last earnings conference call.
main street media is told by their central bankster overlords that they are only to report the news when it reflects poorly on the barbarous relic.
I bought some NMFC today. In fact it was to replace the shares I sold a month or two back at around the same price. I was kicking myself for selling so am glad to get the chance to re-buy. If it goes back down towards $14 I'll buy more. I think this is one of the better BDCs out there. Depending on how much it sells off, MCC might be a decent BDC to accumulate. Same with TCPC.
Which part of BDC BUZZ's KCAP risk analysis do you disagree with? I don't follow KCAP myself, but he seems to have a solid grasp of what makes BDCs tick and which metrics to emphasize on to find value.
What's funny is rising rates would vary from mildly worse to actually a positive for a lot of BDCs, depending on the way they have structured their debt and loans. What would be bad is if the economy started getting a lot weaker all of a sudden. That's what I'm keeping my eye on. I'm not convinced things are anywhere near as rosy as the politicians and media pundits would proclaim.