spawns Business development companies (BDCs) are unique entities aiming to fill the financing gap for businesses struggling to acquire bank or public financing. Therefore, BDCs typically concentrate on the smaller and middle-market companies (often lower middle-market). The business model is pretty simple to understand - gather financing sources (mainly equity) and deploy the capital to generate favourable investment spreads. Most BDCs are externally managed. There aren't many internally managed ones; t ...

tadamichi In this article, we catch up on the latest quarterly results of the Golub Capital BDC (NASDAQ:GBDC). The company delivered a strong quarterly result with a 4.8% total NAV return. It trades at an 11.3% total dividend yield and a 3 discount to book. Its net income yield is 12.5% - in line with the sector median but, arguably, overstated due to the one-off incentive fee waiver. We have maintained a Hold rating on the stock - our previous review is linked here. The valuation of the stock has impro ...

Hinterhaus Productions SLRC is an owner, originator and manager of corporate loans to smaller companies. As of June 30, the SLRC total portfolio size is $2.1 billion and is diversified amongst 800 unique issuers and is 98% senior secured investments. The company is a business development corporation, or BDC. This designation allows for profits to be distributed to shareholders, similar to a REIT. The company is similar to a bank, which only makes loans and pays most of the profits to shareholders. Accor ...

Market Action - BDCs experienced a decline of approximately 1% during the week, with lower valuation BDCs like MRCC, PSEC, and WHF outperforming [3] - The average valuation of BDCs in coverage ended the week at 103%, significantly below the recent peak of 110% [3] Systematic Income - Analyzing net investment income (NII) is crucial for income investors, particularly in understanding the distribution between common and preferred shareholders [4] - Preferred dividends are not considered interest expenses under GAAP, which can lead to overestimation of common dividend coverage by investors [4] - Only CGBD and PSEC have utilized preferreds, with CGBD's preferred converted to common shares at NAV [4] PSEC Analysis - PSEC's NII of $0.25 per share, with $0.06 allocated to preferred dividends, results in $0.19 for common shareholders, leading to a coverage ratio of approximately 105.5% [5] - PSEC reported that NII less preferred dividends exceeded cash common distributions by 124% for the last twelve months ending June 2024, although this may overstate the current situation due to rising preferred distributions [6] Market Commentary - Following the BDC earnings season, market activity has been dominated by routine events such as new portfolio investments and credit facility upsizes [7] - Main Street Capital invested $11.2 million in MoneyThumb, Trinity Capital committed $20 million to Kymeta, and PennantPark Investment Corp agreed to invest an additional $52.5 million in a joint venture [7] Stance And Takeaways - The average BDC valuation remains above 100%, with a median of 96%, indicating a slightly expensive market relative to fair value [8] - The company has added several BDCs to its Income Portfolios after the early August price drop but has since held off on further investments [8] - A potential drop in short-term rates is not expected to significantly impact BDC prices or dividends, suggesting that market panic could present new investment opportunities [8]

AlKane For those unacquainted with Hercules Capital (NYSE:HTGC), the Company operates within a versatile BDC sector. BDCs (business development companies) help fill the financing gap for smaller or middle-market companies that often struggle with acquiring bank or public financing. They acquire capital (primarily equity) to deploy it and generate value through investment activities. HTGC is one of the highest-quality players in the sector with a solid track record, as we can read in its latest 10-Q stat ...

Hiroshi Watanabe Hercules Capital, Inc. (NYSE:HTGC) is my only VC-focused BDC for which I have assigned a buy rating currently. My first piece on HTGC - Hercules Capital: A Different Type Of VC-Focused BDC - was published in January 2024. As it could be understood from the title, the thesis was based on fundamentals that differ from those of other VC tilted BDCs. More specifically, it was about relatively conservative equity stakes, sound capital structure and disciplined credit underwriting strategy th ...

VANCOUVER, BC and CALGARY, AB, Sept. 12, 2024 /PRNewswire/ - Northstar Clean Technologies Inc. (TSXV: ROOF) (OTCQB: ROOOF) ("Northstar" or the "Company") is pleased to announce that it has completed its first draw of approximately C$1.6 million under its C$8.75 million non-revolving senior secured project loan facility (the "BDC Facility") with the Business Development Bank of Canada ("BDC"), previously announced by the Company on July 7, 2023, for the planned asphalt shingle reprocessing facility in Calgar ...

MicroStockHub Focus of Article: The focus of this two-part article is a very detailed analysis comparing Golub Capital BDC Inc.’s (NASDAQ:GBDC) to some of the company’s business development company (“BDC”) peers (all sector peers I currently fully cover). I am writing this two-part article due to the continued requests that such an analysis be specifically performed on GBDC and some of the company’s BDC peers at periodic intervals. For readers who just want the summarized conclusions/results, I would su ...

ryasickGolub Capital BDC (NASDAQ:GBDC) recently completed its merger with Golub Capital 3 BDC which has led to a much bigger market portfolio value for the BDC. Golub Capital’s net investment income outstripped its dividend by a good margin in the second quarter, leading to a safe 12% yield for income investors. Golub Capital also convinces in terms of non-accrual percentage which, despite edging up post-merger, the longer term trend is very much favorable. I also like that Golub Capital's shares have f ...

DNY59/E+ via Getty Images There is a lot of talk about how BDC earnings have peaked and that the next steps from here are directed towards higher volatility and uncertainty around future dividends. There are some, in my opinion, transitory dynamics that drive this, such as subdued M&A activity and increased corporate defaults. However, the structural forces behind all of this are spread compression and, importantly, the expected normalization in the interest rate levels (although what is normal depends ...