WhiteHorse Finance, Inc. (NASDAQ:WHF) is included among the 15 Stocks with Highest Dividend to Invest in. B. Riley Cuts WhiteHorse Finance (WHF) Price Target to $7.50 After Soft Q3 Results Photo by Annie Spratt on Unsplash On November 12,‍ B. Ril‍ey cut its​ pric‌e target on⁠ WhiteHorse Finance, Inc. (NASDAQ:WHF) to $7.50 from $9 and maintained a Neutral rating, as reported by The Fly. The analyst noted that the company’s third-quart⁠er results did not fully cover the dividend and‌ that NAV per share de ...

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1]. - A balanced portfolio that includes a mix of growth and income-generating assets can lead to efficient investment income and total returns that align with the S&P 500 [1].

Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Data and Key Metrics Changes - Q3 GAAP net investment income and core NII was $6.1 million, or $0.263 per share, compared to Q2 GAAP and core NII of $6.6 million, or $0.282 per share, reflecting a decrease in earnings [4][18] - NAV per share at the end of Q3 was $11.41, representing a 3.6% decrease from the prior quarter [4][18] - The company reported a net decrease in net assets resulting from operations of $0.6 million [18] Business Line Data and Key Metrics Changes - Gross deployments in Q3 were $19.3 million, offset by repayments and sales of $50.5 million, resulting in net repayments of $31.2 million [8] - The weighted average effective yield on income-producing debt investments decreased to 11.6% as of the end of Q3, down from 11.9% in Q2 [9] - The weighted average effective yield on the overall portfolio also decreased slightly to 9.5% at the end of Q3, compared to approximately 9.8% at the end of Q2 [10] Market Data and Key Metrics Changes - M&A activity has not picked up significantly, although there has been a steady trickle of improvement [14] - In the mid-market, pricing for sponsor deals is in the SOFR 450-500 range, while lower mid-market sponsor deals are pricing in the 475-575 spread over SOFR [15][16] - Non-sponsor deals are generally pricing at SOFR plus 600 and above, indicating a significant pricing premium compared to sponsor deals [15] Company Strategy and Development Direction - The company has reset its quarterly distribution to $0.25 per share, representing an implied 8.8% annualized yield based on the company's ending NAV per share [5][21] - A share buyback program of up to $15 million has been approved due to the stock price discount relative to its book value [7][8] - The company continues to focus on the non-sponsor market, where there are better risk returns and less competition [16] Management's Comments on Operating Environment and Future Outlook - Management expressed that recent results were disappointing due to interest rate cuts and pressure on market spreads [3] - The turnaround of troubled assets is expected to take at least 12-24 months, with ongoing efforts to optimize performance [32][34] - The board will evaluate the quarterly distribution based on core earnings power and other relevant factors [23] Other Important Information - The company recognized $1.8 million in net realized losses and approximately $4.9 million of net unrealized losses in Q3, totaling $6.7 million [11] - Non-accrual investments now represent 2.7% of the debt portfolio at fair value, an improvement from 4.9% in the prior quarter [13] Q&A Session Summary Question: Understanding the new base dividend level of $0.25 per share - Management indicated that the new base dividend is set to be a long-term level based on interest rates and earnings power projections [27] Question: Details on the fee waiver reduction from 20% to 17.5% - The board agreed to waive the 2.5% amount for the next two quarters, with future discussions based on BDC performance [29] Question: Long-term expectations for fair value recovery from troubled assets - Management expects a significant period of time, at least 12-24 months, for troubled assets to recover, with ongoing management efforts [32][34] Question: Performance track record between sponsor and non-sponsor deals - Historically, non-sponsor deals have shown fewer defaults compared to sponsor deals, indicating stronger performance in the non-sponsor market [36] Question: Impact of competition on pricing in the mid-market - Pricing compression in the mid-market is attributed to larger players entering the market due to insufficient volume, affecting spreads [44]

Company Overview - WhiteHorse Finance's portfolio fair value was $568.4 million as of September 30, 2025[9, 13] - The company's investments are diversified across 125 positions in 66 portfolio companies as of September 30, 2025[13] - The average investment size is $3.8 million, while the average debt investment size is $5.2 million[13] - Since its IPO in December 2012, the company has invested $2,825 million in 265 transactions[13, 14] Financial Performance - The Q3 2025 Net Investment Income (NII) and Core NII was $6.1 million, or $0.263 per share[17] - The company received dispositions and principal repayments of $50.5 million in Q3 2025[17] - As of September 30, 2025, STRS JV had total assets of $364.3 million, with the company's return on its investment at 13.8%[17] - The Net Asset Value (NAV) per share at the end of Q3 2025 was $11.41, compared to $11.82 in Q2 2025[17] Portfolio Composition - As of Q3 2025, 99.1% of the debt investments were floating rate[27] - First lien secured loans accounted for 74.7% of the total portfolio composition by fair value[27] - Investments on non-accrual status represented 2.2% of the portfolio based on fair value of debt investments[27]

Core Insights - WhiteHorse Finance (WHF) reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.29 per share, and down from $0.39 per share a year ago, representing an earnings surprise of -10.34% [1] - The company posted revenues of $17.69 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 3.99%, and down from $22.85 million year-over-year [2] - WhiteHorse shares have declined approximately 26.6% year-to-date, contrasting with the S&P 500's gain of 14.4% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.29 on revenues of $18.23 million, and for the current fiscal year, it is $1.15 on revenues of $74.29 million [7] Industry Context - The Financial - SBIC & Commercial Industry, to which WhiteHorse belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Performance - Total investment income for Q3 2025 was $17.7 million, down 22.6% from $22.9 million in Q3 2024[300]. - Net investment income for Q3 2025 decreased to $6.1 million, a decline of 33.4% compared to $9.2 million in Q3 2024[301]. - For the nine months ended September 30, 2025, total investment income was $55.3 million, down 22.9% from $71.8 million in the same period of 2024[300]. - Net investment income for the nine months ended September 30, 2025 was $19.5 million, a decrease of 33.4% from $29.3 million in the same period of 2024[301]. - Total investment income decreased by $5.16 million (22.5%) to $17.69 million for the three months ended September 30, 2025, compared to $22.85 million in the same period of 2024[302]. - Interest income other than payment-in-kind (PIK) decreased by $2.83 million (17.3%) for the three months ended September 30, 2025, and by $10.16 million (24.5%) for the nine months ended September 30, 2025, primarily due to lower yields and a smaller portfolio size[302]. - PIK income as a percentage of total investment income significantly decreased to 2.4% for the three months ended September 30, 2025, down from 9.6% in the same period of 2024[304]. Expenses and Losses - Total expenses for Q3 2025 were $11.6 million, a reduction of 15.4% from $13.7 million in Q3 2024[300]. - Performance-based incentive fees decreased by $764,000 (33.4%) for the three months ended September 30, 2025, and by $2.44 million (33.4%) for the nine months ended September 30, 2025, primarily due to lower pre-incentive fee net investment income[310]. - Net realized losses on investments for Q3 2025 were $(1.8) million, compared to a gain of $0.04 million in Q3 2024[300]. - Net realized losses on investments totaled $2.1 million for the three months ended September 30, 2025, compared to no realized gains in the same period of 2024[315]. - The net change in unrealized gains for Q3 2025 was $(4.9) million, an improvement from $(16.1) million in Q3 2024[300]. - Gross unrealized depreciation on investments was $9.9 million for the three months ended September 30, 2025, compared to $20.8 million in the same period of 2024[316]. Debt and Borrowing - The company authorized a stock repurchase program for up to $15.0 million of its common stock[298]. - As of September 30, 2025, the Credit Facility provided for borrowings in an aggregate principal amount up to $100.0 million, reduced from $335.0 million[342]. - The company is required to meet a borrowing base test and a market value test to permit new borrowings under the Credit Facility[343]. - Advances under the Credit Facility are based on SOFR plus an annual spread of 2.25% for USD denominated borrowings[344]. - As of September 30, 2025, there were no outstanding borrowings under the Credit Facility, with approximately $100.0 million available to be drawn[350]. - The company issued $40 million of 5.375% 2025 Notes, which were fully repaid on September 29, 2025[357]. - As of December 31, 2024, the company had $161.5 million in outstanding borrowings under the Credit Facility, with approximately $173.5 million available to be drawn[351]. Investment Portfolio - As of September 30, 2025, the investment portfolio had an aggregate fair value of $568.4 million, consisting of senior secured loans across 125 positions in 66 companies[365]. - The weighted average effective yield of the portfolio was 9.5%, with income-producing debt investments yielding 11.6%[365]. - The investment portfolio primarily consisted of variable-rate loans, with fixed-rate investments representing only 0.9% based on fair value[365]. - As of September 30, 2025, the total portfolio value was $568.4 million, with an average investment size of $4.3 million and a weighted average effective yield of 10.2%[368][380]. - For the nine months ended September 30, 2025, the company invested $112.4 million in new and existing portfolio companies, while repayments and sales totaled $177.3 million[369]. - The investment performance rating distribution as of September 30, 2025, showed 8.8% rated 1, 73.0% rated 2, 12.0% rated 3, 4.4% rated 4, and 1.8% rated 5[380]. Cash and Assets - The company had cash and cash equivalent resources of $45.9 million as of September 30, 2025, including $36.4 million of restricted cash[324]. - Operating activities provided cash and cash equivalents of $76.3 million during the nine months ended September 30, 2025, primarily from realizations and repayments on investments[322]. - STRS JV had total assets of $364.3 million as of September 30, 2025, an increase from $309.1 million as of December 31, 2024[326]. - The weighted average effective yield on STRS JV's total portfolio was 10.3% as of September 30, 2025, down from 11.1% as of December 31, 2024[331]. - The company increased its capital commitment to STRS JV by an additional $15.0 million in February 2023, bringing the total commitment to $115.0 million[327]. Management and Valuation - The company has a management fee of 1.75% on consolidated gross assets, which reduces to 1.25% for assets financed with over 200% asset coverage[388]. - The company actively monitors portfolio performance, with a risk rating system that grades investments on a scale of 1 to 5, where 1 indicates low risk and 5 indicates payment default[378][379]. - The company’s investment adviser conducts frequent discussions with management and sponsors to evaluate performance against business plans[377]. - The quarterly valuation process includes independent valuation reviews for approximately 25% of investments without readily available market quotations[400]. - The company has retained independent valuation firms to review valuations of non-publicly traded investments at least once annually[400]. - The valuation process involves a multi-step approach, including preliminary valuations by investment professionals and reviews by a valuation committee[405]. - The company values its investments according to ASC Topic 820, focusing on fair value measurements based on market-based inputs[395]. Interest Rate and Hedging - Nearly all performing floating rate investments had interest rate floors, impacting the benefit from interest rate increases[421]. - The company expects that many future loans will also have floating interest rates, which may significantly affect net investment income due to interest rate fluctuations[417]. - The impact of hypothetical interest rate changes on interest income and expense is detailed, showing a potential net decrease of $14,915,000 with a 300 basis point decrease in interest rates[419]. - The company may hedge against interest rate fluctuations using standard hedging instruments, although this may limit benefits from lower interest rates[423]. - Interest income is accrued only if it is expected to be collectible, with loans placed on non-accrual status upon default[412].

Investment Income - For the third quarter ended September 30, 2025, total investment income was $17.7 million, a decrease of 6.1% from $18.8 million in the previous quarter[5] - Net investment income for the quarter was $6.1 million, down 7.0% from $6.6 million in the prior quarter, resulting in a net investment income per share of $0.263, a decrease of 6.7%[5] Total Investments - The company's total investments at fair value decreased to $568.4 million from $629.3 million, reflecting a decline of 9.7%[6] - The weighted average effective yield on income-producing debt investments was 11.6% as of September 30, 2025[6] Shareholder Returns - The board declared a quarterly distribution of $0.25 per share, payable on January 5, 2026, to stockholders of record as of December 22, 2025[1] - A stock repurchase program was authorized for up to $15.0 million of common stock, aimed at enhancing long-term shareholder value[3] Management Fees - WhiteHorse Advisers reduced the incentive fee on net investment income from 20.00% to 17.50% for the next two fiscal quarters[4] Investments and Repayments - During the quarter, the company made investments totaling $14.3 million in two new portfolio companies and added $4.9 million to existing companies[7] - Proceeds from sales and repayments totaled approximately $50.5 million, driven by full repayments from several portfolio companies[7] Net Assets - The net increase in net assets resulting from operations was a loss of $556, compared to a gain of $2,250 in the previous quarter, representing a decline of 124.7%[5]

Core Viewpoint - WhiteHorse Finance, Inc. reported its financial results for Q3 2025, showing a decline in total investment income and net investment income, while announcing a distribution of $0.25 per share for the quarter [1][10]. Financial Performance - Total investment income for Q3 2025 was $17.7 million, down 6.1% from $18.8 million in Q2 2025 [5]. - Total expenses decreased by 5.6% to $11.6 million from $12.3 million in the previous quarter [5]. - Net investment income fell by 7.0% to $6.1 million, with a per-share income of $0.263, down 6.7% from $0.282 [5]. - The company experienced net realized gains of $(1.8) million, a significant improvement from $(22.0) million in Q2 2025 [5]. - Net unrealized depreciation was $(4.9) million, compared to an appreciation of $17.7 million in the previous quarter [5]. Portfolio and Investment Activity - As of September 30, 2025, the fair value of the investment portfolio was $568.4 million, a decrease of 9.7% from $629.3 million as of June 30, 2025 [6][7]. - The portfolio consisted of 125 positions across 66 companies, with a weighted average effective yield of 11.6% on income-producing debt investments [7]. - The company made new investments totaling $14.3 million and added $4.9 million to existing portfolio companies during the quarter [8]. Shareholder Actions - The board of directors authorized a stock repurchase program for up to $15.0 million of common stock [3]. - WhiteHorse Advisers reduced the incentive fee on net investment income from 20.00% to 17.50% for the next two fiscal quarters [4]. Distributions - A distribution of $0.25 per share was declared for Q3 2025, payable on January 5, 2026 [10]. - A special distribution of $0.035 per share was also declared, payable on December 10, 2025 [10].

Core Points - WhiteHorse Finance, Inc. has declared a special distribution of $0.035 per share, payable on December 10, 2025, to stockholders of record as of October 31, 2025 [1] - The company will release its third quarter financial results for the period ended September 30, 2025, on November 10, 2025, followed by a conference call at 2:00 p.m. ET [3] Distribution Details - Distributions are sourced from taxable earnings and may include a return of capital and/or capital gains, with specific tax characteristics reported to stockholders on Form 1099-DIV [2] Company Overview - WhiteHorse Finance is a business development company that invests in loans to privately held, lower middle market companies across various industries, managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, which manages over $70 billion in capital [6]