Company Overview - Rubicon Associates is led by a Chartered Financial Analyst with over 20 years of experience in investment management, focusing on fixed income and preferred stock portfolios, as well as asset allocation and macro portfolios [1] - The principal has managed nearly $7 billion in credit investments and oversaw research and trading activities in the credit market, including a $20 billion short-duration fund [1] Investment Strategy - The firm has experience analyzing and investing in both public and private companies globally, advising institutional clients on fixed income strategies, manager selection, and asset allocation [1] - Rubicon Associates has contributed written content for platforms such as Seeking Alpha, Learn Bonds, and TheStreet.com, in addition to advising both institutional and private investors [1]

Core Insights - High Yield Investor is celebrating its fifth anniversary by offering a 30-day money-back guarantee, encouraging new memberships and promoting its Top Picks for 2026 [1] - The investment strategy focuses on building a diversified portfolio of high-yielding, high-quality businesses with strong balance sheets and sustainable yields, aimed at generating passive income for retirement [1] Company Background - Samuel Smith, the lead analyst and Vice President, has extensive experience in dividend stock research and holds advanced degrees in engineering and mathematics [1] - The High Yield Investor team includes Samuel Smith, Jussi Askola, and Paul R. Drake, who work together to balance safety, growth, yield, and value in their investment approach [1] Service Offerings - High Yield Investor provides various portfolios including core, retirement, and international options, along with regular trade alerts and educational content [1] - The service features an active chat room for investors to engage and share insights [1]

Core Insights - High Yield Investor is celebrating its fifth anniversary by offering a 30-day money-back guarantee, encouraging new memberships and the release of Top Picks for 2026 [1] - A common mistake among retirees is the false sense of security when investing in double-digit income yields, which may lead to unsustainable passive income beliefs [1] Company Overview - Samuel Smith, the lead analyst of High Yield Investor, has a diverse background in dividend stock research and holds degrees in Civil Engineering & Mathematics and a Master's in Engineering with a focus on applied mathematics and machine learning [1] - The High Yield Investor team, including Jussi Askola and Paul R. Drake, aims to balance safety, growth, yield, and value in their investment strategies [1] Service Features - High Yield Investor provides real-money core, retirement, and international portfolios, along with regular trade alerts, educational content, and an active chat room for investors [1]

Company Overview - Rubicon Associates is led by a Chartered Financial Analyst with over 20 years of experience in investment management, focusing on fixed income and preferred stock portfolios, as well as asset allocation and macro portfolios [1] - The principal has managed nearly $7 billion in credit investments and oversaw research and trading activities in the credit market [1] - The firm has also managed a short-duration fund worth $20 billion and served as Chief Strategist at a wealth management firm [1] Investment Strategy - Rubicon Associates has experience analyzing and investing in both public and private companies globally [1] - The firm provides advisory services to institutional clients on fixed income strategies, manager selection, and asset allocation [1] - Rubicon Associates has contributed articles to platforms such as Seeking Alpha, Learn Bonds, and TheStreet.com, in addition to advising both institutional and private investors [1]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Group 1 - The focus of the discussion is on the sale-leaseback model related to NewLake Capital Partners and its implications in the current macroeconomic context [1] - There is an anticipation for key dates such as January 31 and February 15, indicating potential upcoming developments or announcements [1] - The conversation aims to benchmark NewLake's performance against other sale-leaseback operators in the cannabis sector, particularly comparing it to IIPR and non-cannabis operators [2] Group 2 - The introduction of NewLake Capital Partners is intended for those unfamiliar with the company, highlighting its role in the cannabis industry [2] - The discussion will cover aspects of growth, profitability, and defaults in relation to NewLake and its competitors in the sale-leaseback market [2]

Core Viewpoint - Golub Capital BDC reported a challenging fiscal quarter with lower base rates, tighter spreads, and elevated credit stress impacting results, leading to a reset of the quarterly base dividend to $0.33 per share, which is about 9% of NAV per share [3][5]. Financial Performance - Adjusted net investment income (NII) was $0.38 per share, resulting in an adjusted return on equity (ROE) of 10.2%, while adjusted net income was $0.25 per share, translating to an adjusted ROE of 6.7% [2]. - The company paid a distribution of $0.39 per share during the quarter [2]. Portfolio and Credit Quality - The portfolio fair value declined to $8.6 billion, with non-accruals at 0.8% of the portfolio, which is below the BDC peer average [1][5]. - Adjusted net unrealized and realized losses increased to $0.13 per share, primarily due to markdowns on underperforming borrowers [6]. - The number of non-accrual investments rose to 14, with management noting a challenging outlook for 2026 amid lower rates and tighter spreads [5][6]. Dividend Policy - The board decided to reset the quarterly base dividend to $0.33 per share while maintaining a variable supplemental dividend policy aimed at distributing 50% of earnings above the base [1][5]. Portfolio Activity and Yields - GBDC's investment portfolio decreased by 1.5% sequentially, with a weighted average loan-to-value of approximately 43% [8]. - The investment income yield fell to about 10%, primarily due to lower base rates, while the net spread declined to 4.6% [10][11]. Liquidity and Leverage - Liquidity totaled approximately $1.3 billion, with net debt-to-equity standing at 1.23x, within the company's target range [4][13]. - The cost of debt decreased to 5.4%, and 81% of total debt funding is floating rate or swapped to floating rate [11]. Management Outlook - The company anticipates continued pressure on ROEs due to lower base rates, tighter spreads, and muted M&A activity, with public BDC net returns estimated to be about 4 percentage points lower year-over-year [14]. - Management emphasized the need for vigilance regarding software exposure and AI-related disruptions, noting a preference for enterprise-critical platforms [15].

Financial Data and Key Metrics Changes - Adjusted net investment income (NII) per share was $0.38, with an adjusted NII return on equity (ROE) of 10.2% [4] - Adjusted net income per share was $0.25, resulting in an adjusted ROE of 6.7% [4] - The company paid a distribution of $0.39 per share [4] - The net asset value (NAV) per share decreased to $14.84 [12] Business Line Data and Key Metrics Changes - GBDC's investment portfolio decreased by 1.5% quarter-over-quarter to $8.6 billion at fair value [9] - The investment income yield was 10%, down 40 basis points sequentially [9] - Non-accrual investments remained low at 0.8% of the total investment portfolio at fair value [8] Market Data and Key Metrics Changes - The company noted four industry headwinds: lower base rates, tighter spreads, muted M&A activity, and high levels of credit stress [4][5] - The investment portfolio remains highly diversified, with 92% consisting of first lien, senior secured floating rate loans [14] Company Strategy and Development Direction - The company plans to maintain a quarterly variable supplemental dividend policy and has reset the base dividend to $0.33 per share [5][6] - GBDC's strategy focuses on providing first lien, senior secured loans to middle-market companies backed by strong private equity sponsors [3] Management's Comments on Operating Environment and Future Outlook - Management expects the industry headwinds to continue, planning for a challenging 2026 [5] - The company believes that the current environment may provide opportunities for private credit specialists to outperform [21] Other Important Information - The company repurchased 5.5 million shares for a total of $76.5 million in 2025, resulting in $0.01 per share of NAV accretion [11] - The debt funding structure remains highly diversified, with 81% of total debt funding being floating rate or swapped to a floating rate [18] Q&A Session Summary Question: Concerns about AI developments affecting the software market - Management acknowledged the rapid advancement of AI and its potential to disrupt certain software companies, emphasizing the need for humility in assessing risks [25][26] Question: Outlook for 2026 and challenges in the leverage lending sector - Management indicated that the market environment is challenging, with spreads at five-year lows and muted M&A activity [38] Question: Risks of unknown unknowns in software investments - Management discussed various scenarios regarding AI risks, suggesting that while there are potential challenges, immediate collapse of good software companies is unlikely [46] Question: Deployment outlook and capital allocation - Management stated that they will balance share repurchases with finding attractive new loan opportunities [41] Question: Trends in software revenue growth and ARR loans - Management noted a slowdown in software bookings and a reduction in exposure to ARR loans due to tighter pricing [61][62]

Financial Data and Key Metrics Changes - Adjusted net investment income (NII) per share was $0.38, with an adjusted NII return on equity (ROE) of 10.2% [4] - Adjusted net income per share was $0.25, resulting in an adjusted ROE of 6.7% [4] - The company paid a distribution of $0.39 per share [4] - The net asset value (NAV) per share decreased to $14.84 [12] - The investment income yield was 10%, down 40 basis points sequentially [9] - The weighted average cost of debt decreased to 5.4%, reflecting a predominantly floating rate debt structure [15] Business Line Data and Key Metrics Changes - GBDC's investment portfolio decreased by 1.5% quarter-over-quarter to $8.6 billion at fair value [9] - The weighted average rate on new investments was 8.6%, a decline of 30 basis points from the prior quarter [13] - Approximately 89% of the investment portfolio remained in the highest performing internal rating categories [8] - Non-accrual investments were at 0.8% of the total investment portfolio at fair value, below the industry average [8] Market Data and Key Metrics Changes - The company noted four industry headwinds: lower base rates, tighter spreads, muted M&A activity, and high levels of credit stress [4][5] - The company expects these headwinds to persist, planning for a challenging 2026 [5] Company Strategy and Development Direction - GBDC's investment strategy focuses on providing first lien, senior secured loans to middle-market companies backed by strong private equity sponsors [3] - The company plans to maintain a variable supplemental dividend policy and has reset its quarterly base dividend to $0.33 per share [5][6] - The company aims to be selective in new loan origination, focusing on minimizing realized credit losses and being ready to capitalize on opportunities as they arise [21] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the current challenging market environment, indicating that producing desired ROEs is more difficult than in recent years [40] - The company is confident in its long-term prospects but acknowledges the need for candid communication regarding current headwinds [40] - Management highlighted the importance of being selective in loan origination and proactive in addressing borrower underperformance [21] Other Important Information - Total distributions paid in the quarter were $0.39 per share, with a plan to evaluate variable supplemental distributions quarterly [10] - The company repurchased 5.5 million shares for $76.5 million in aggregate value during the year, resulting in $0.01 per share of NAV accretion [11] Q&A Session Summary Question: Concerns about AI developments affecting the software market - Management acknowledged the rapid advancement of AI and its potential impact on software companies, agreeing that there will be winners and losers in the market [25][26] Question: Risks associated with loan-to-value ratios in the current market - Management indicated that a more challenging capital access environment for software companies could create opportunities for private credit specialists [32] Question: Outlook for 2026 and challenges in the leverage lending sector - Management expects continued challenges in the market, with muted M&A activity and elevated credit stress levels [39] Question: Risks of unknown unknowns in software investments - Management discussed various scenarios regarding AI risks and emphasized the need to focus on equity market reactions before credit market impacts [48][50] Question: Trends in software revenue growth and bookings - Management noted a slowdown in software bookings across the industry, attributing it to various factors including cost pressures and digestion of prior tech investments [60] Question: Proportion of ARR-based structures in the portfolio - Management stated that exposure to ARR loans has decreased in recent years due to tighter pricing and a more challenging environment [62]

Financial Data and Key Metrics Changes - Adjusted net investment income (NII) per share was $0.38, with an adjusted NII return on equity (ROE) of 10.2% [4] - Adjusted net income per share was $0.25, resulting in an adjusted ROE of 6.7% [4] - The company paid a distribution of $0.39 per share [4] - The net asset value (NAV) per share decreased to $14.84 [12] Business Line Data and Key Metrics Changes - GBDC's investment portfolio decreased by 1.5% quarter-over-quarter to $8.6 billion at fair value [8] - The investment income yield was 10%, down 40 basis points sequentially [8] - Non-accrual status investments remained low at 0.8% of the total investment portfolio at fair value [7] - The weighted average rate on new investments was 8.6%, a decline of 30 basis points from the prior quarter [13] Market Data and Key Metrics Changes - The company noted four continuing industry headwinds: lower base rates, tighter spreads, muted M&A activity, and high levels of credit stress [4][5] - The company expects these headwinds to persist, planning for a challenging 2026 [5] Company Strategy and Development Direction - GBDC's investment strategy focuses on providing first lien, senior secured loans to middle-market companies backed by strong private equity sponsors [3] - The board of directors decided to reset the quarterly base dividend to $0.33 per share, about 9% of NAV per share [5] - The company aims to maintain a stable NAV over time and minimize excise taxes while adjusting the base distribution level infrequently [5] Management's Comments on Operating Environment and Future Outlook - Management highlighted that private credit ROEs have decreased, with public BDC net returns down about 4 percentage points year-over-year [20] - The company believes that the current environment presents both challenges and opportunities, emphasizing a selective approach to new loans [22] - Management expressed confidence in their ability to navigate the current credit cycle and highlighted the importance of minimizing realized credit losses [22] Other Important Information - GBDC's liquidity position remains strong, ending the quarter with approximately $1.3 billion in liquidity [19] - The company has been actively repurchasing shares, totaling 5.5 million shares or $76.5 million in aggregate value for the year [10] Q&A Session Summary Question: Concerns about AI developments affecting the software market - Management acknowledged the rapid advancement of AI and its potential impact on software companies, agreeing that there will be winners and losers in the market [25][26] Question: Outlook for 2026 and challenges in the leverage lending sector - Management indicated that the market environment is challenging, with spreads at five-year lows and muted M&A activity [36][39] Question: Deployment outlook and capital allocation - Management emphasized the need to balance share repurchases with finding attractive new loan opportunities [41][42] Question: Risks associated with software moats in the context of AI - Management discussed various scenarios regarding AI risks, suggesting that while there are potential threats, immediate collapse of good software companies is unlikely [48][49] Question: Trends in software revenue growth and ARR loans - Management noted a slowdown in software bookings and indicated a reduced exposure to ARR loans due to tighter pricing [60][63]