Investment Strategy - The analyst specializes in identifying high-quality dividend stocks and other assets with long-term growth potential, focusing on a hybrid system that balances growth and income [1] - The strategy includes a mix of classic dividend growth stocks, Business Development Companies (BDCs), Real Estate Investment Trusts (REITs), and Closed End Funds to enhance investment income while maintaining total returns comparable to the S&P 500 [1] Analyst's Background - The analyst has over 10 years of experience in investing and financial analysis, with a focus on uncovering lucrative market opportunities [1] - The analyst emphasizes the importance of a diversified portfolio that includes both income-generating and growth-oriented assets [1]

Group 1 - The stock of CION Investment Corporation (CION) is experiencing significant attention due to high implied volatility in the options market, particularly the March 21, 2025 $7.50 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in CION's stock price, potentially due to an upcoming event [2] - CION Investment currently holds a Zacks Rank 2 (Buy) in the Financial - SBIC & Commercial Industry, ranking in the top 34% of the Zacks Industry Rank, although earnings estimates have slightly decreased from 36 cents to 34 cents per share [3] Group 2 - The high implied volatility surrounding CION Investment may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay, hoping the stock does not move as much as expected by expiration [4]

Group 1 - The current environment of rate cuts by the Fed is leading income-focused investors to seek higher yields, particularly in ultra-safe Treasury Bills, money market accounts, and CDs [1] - There is a growing interest in high-quality and reliable dividend growth investments, which are aimed at building a stable and growing income for investors [2] - The focus is on investments that are leaders within their industry to ensure stability and long-term wealth creation, along with strategies for writing options to enhance income [2]

Financial Reporting - CĪON Investment Corporation will report its financial results for Q3 2024 on November 7, 2024, before market opening[3] - An earnings conference call to discuss the financial results is scheduled for 11 a.m. Eastern Time on the same day[3] - The press release regarding the financial results is attached as Exhibit 99.1[5]

Core Insights - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates shape financial strategies and execute large-scale financings [1] - Significant efforts have been made to institutionalize the REIT framework in Latvia, aimed at boosting the liquidity of pan-Baltic capital markets [1] - Contributions include the development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock [1] - Berzins holds a CFA Charter and an ESG investing certificate, and has experience from an internship at the Chicago Board of Trade [1] - Actively involved in thought-leadership activities to support the development of pan-Baltic capital markets [1]

Financial Data and Key Metrics Changes - CION reported quarterly net investment income of $0.40 per share, down from $0.43 per share in the previous quarter, reflecting a decrease of $1.3 million [36] - Total investment income for Q3 was $59.6 million, compared to $61.4 million in Q2, a decrease of $1.8 million primarily due to lower dividend income [37] - Net asset value (NAV) per share decreased to $15.73 from $16.08, a decline of 2.2% attributed to mark-to-market price declines in the portfolio [41] Business Line Data and Key Metrics Changes - The weighted average yield on debt and other income-producing investments at amortized costs was 12.2%, down from 12.8% in the previous quarter [40] - The company made $97 million in investment commitments during Q3, with $78 million funded, indicating a focus on both new and existing portfolio companies [26] - Total repayments for the quarter amounted to $154 million, with nearly 40% occurring on the last day of the quarter [27] Market Data and Key Metrics Changes - The market environment remained highly competitive, with trends affecting deal volumes, pricing, and lender protections continuing from previous quarters [13] - The company noted a rebuilding of its deal pipeline following a typical late summer slowdown, indicating a thaw in the M&A market [13] Company Strategy and Development Direction - CION is focused on maintaining a conservative outlook while managing its balance sheet to withstand potential market volatility [6][7] - The company aims to remain selective in deploying new transactions, emphasizing first-line investing at the top of the capital structure [18] - A successful public baby bond offering was completed, which was more than three times oversubscribed, marking a significant step in the company's evolution as a public entity [8] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious but optimistic view on navigating a competitive credit environment and potential market volatility [5][6] - The company anticipates continued volatility in the marks of its equity investments, particularly related to David's Bridal, due to its size and seasonal operations [30] - Management highlighted the importance of educating investors on the company's differentiated platform to generate attractive risk-adjusted returns [51] Other Important Information - The company repurchased approximately 166,000 shares at an average price of $12.09 during Q3, renewing its share repurchase authorization through 2025 [12] - The current debt mix is approximately 51% in senior-secured bank debt and 49% in unsecured loans, with about 90% in floating rate [43] Q&A Session Summary Question: What is the outlook for the company's investment strategy in the current market? - Management indicated a focus on being highly selective with new investments due to competitive market conditions and emphasized the importance of maintaining a flexible balance sheet to capitalize on opportunities [14][18] Question: How does the company plan to address the volatility in its equity investments? - Management acknowledged the expected volatility in the marks of David's Bridal and other equity investments, stating that they will continue to monitor these closely [30][33] Question: What are the expectations for future distributions to shareholders? - The company declared a fourth-quarter base distribution of $0.36 per share, consistent with the previous quarter, indicating a stable distribution policy [48]

| --- | --- | --- | --- | |------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | CION Investment Corporation | | | | | Third Quarter 2024 | | | | | Earnings Presentation | | | | Disclosures and Forward-Looking Statements The information contained in this earnings presentation should be viewed in conjunction with the earnings conference call of CION Investment Corporation (NYSE: CION) ("CION" or the "Company") held on Thursday, November 7, 2024 as well as ...

Financial Performance - For Q4 2024, the company declared a quarterly base distribution of $0.36 per share, payable on December 16, 2024[313]. - The company reported net portfolio activity of $(61,111) for the three months ended September 30, 2024, compared to $6,670 in 2023[319]. - Investment income for the three months ended September 30, 2024, was $59,627, a decrease of 11.3% from $67,540 in 2023[332]. - Net investment income after taxes for the three months ended September 30, 2024, was $21,618, down 28.0% from $29,990 in 2023[337]. - Net increase in net assets resulting from operations for the nine months ended September 30, 2024, was $28,444, down from $44,322 in 2023[350]. - For the nine months ended September 30, 2024, investment income was $194,538, an increase of 1.3% from $191,011 in 2023[343]. - Total operating expenses and income taxes for the three months ended September 30, 2024, increased to $38,009, compared to $37,550 in 2023[335]. - Total operating expenses and income taxes for the nine months ended September 30, 2024, were $117,364, up from $107,747 in 2023[344]. Investment Activity - Net investment activity for the three months ended September 30, 2024, included $91,286 in senior secured first lien debt purchases, down from $102,666 in 2023[319]. - Total purchases and drawdowns for the nine months ended September 30, 2024, included $330,952 in senior secured first lien debt, compared to $186,493 in 2023[319]. - The company experienced sales and principal repayments of $(153,580) for the three months ended September 30, 2024, compared to $(96,373) in 2023[319]. - The company has entered into multiple term loans and note purchase agreements, including the 2024 Term Loan and the 2027 Note Purchase Agreement, which may impact future financing costs[394][395]. Portfolio Composition - The company’s portfolio primarily consists of senior secured debt, with a focus on private and thinly-traded U.S. middle-market companies[302]. - As of September 30, 2024, total investments amounted to $1,850,244, with a fair value of $1,806,229, representing a decrease from $1,975,630 and $1,954,270 as of December 31, 2023[320][322]. - The average annual EBITDA of portfolio companies increased to $61.7 million, up from $51.8 million[322]. - The investment portfolio's fair value allocation by industry shows that the Business Services sector accounts for 15.5% and Healthcare & Pharmaceuticals for 12.6% as of September 30, 2024[325]. - The total number of portfolio companies increased to 111 as of December 31, 2023, from 103[322]. Risk and Exposure - The investment rating system indicates that 85.7% of the portfolio is rated 2, reflecting stable performance, while 11.8% is rated 3, indicating increased risk[329]. - The company’s investment portfolio quality shows that only 0.6% is rated 1, indicating low risk, down from 5.3% at the end of 2023[329]. - The percentage of floating interest rate investments in the portfolio increased to 81.2% as of September 30, 2024, compared to 80.1% at the end of 2023[323]. - Approximately 6.0% of the company's investments paid fixed interest rates as of September 30, 2024, which may lead to fair value declines in a rising interest rate environment[401]. - The company is subject to financial market risks, including changes in interest rates, which could materially affect its business and financial condition[399]. Commitments and Borrowings - The company reported unfunded commitments of $71,113 as of September 30, 2024, up from $47,349 at the end of 2023[325]. - As of September 30, 2024, outstanding borrowings under the JPM Credit Facility were $450,000, with an unfunded principal amount of $112,500[367]. - The company fully repaid all obligations under the 2021 Term Loan as of September 24, 2024[371]. - As of September 30, 2024, the aggregate principal amount of 2026 Notes outstanding was $125,000, with no unfunded principal[370]. Shareholder Returns - The board approved a share repurchase policy allowing up to $60 million in common stock repurchases, with the discretion to determine timing and method[358]. - As of September 30, 2024, a total of 3,672,497 shares were repurchased under the 10b5-1 trading plan for an aggregate purchase price of $37,187, averaging $10.13 per share[361]. - Total distributions for the year ended December 31, 2023, amounted to $87,867, with a per-share distribution of $1.61[365]. - For the nine months ended September 30, 2024, total distributions were $59,473, averaging $1.11 per share[365]. Economic Environment - Persistent inflationary pressures are expected to affect the profit margins of the company's portfolio companies, particularly in the U.S.[403]. - A sensitivity analysis shows that a 300 basis point increase in interest rates could increase interest income by 15.6%[401]. - The company currently has no off-balance sheet arrangements, which may provide a clearer view of its financial commitments[398]. - The company has not experienced claims or losses related to indemnifications in its contracts, suggesting a low risk of loss[396].

Nowadays it seems very hard to find quality dividend stocks at a bargain. Especially those in the BDC sector ( BIZD ) since many have seen their share prices balloon the past 2 years, thanks in part to Contributing analyst to the iREIT+Hoya Capital investment group. The Dividend Collectuh is not a registered investment professional nor financial advisor and these articles should not be taken as financial advice. This is for educational purposes only and I encourage everyone to do their own due diligence. I' ...

As many of my followers have noticed, when it comes to BDCs, I tend to prefer high quality and am even willing to pay a premium over NAV just to keep the potential downside risk limited. Roberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policyleve ...