Net Investment Income (NII)

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Fidus Investment: Q2 Delivers A Rise In Both Income And NAV
Seeking Alpha· 2025-08-20 07:29
Group 1 - Fidus Investment (NASDAQ: FDUS) reported Q2 results with a total dividend yield of 10.7% [1] - The company has the same NII price yield and is trading at a 9% premium to NAV [1] - The article suggests exploring Systematic Income for income portfolios that consider both yield and risk management [1]
Great Elm Capital (GECC) - 2025 Q1 - Earnings Call Transcript
2025-05-06 13:32
Financial Data and Key Metrics Changes - The company achieved record total investment income of $12,500,000 in Q1 2025, a 37% increase from the previous quarter and over 40% year-over-year growth [7] - Net investment income (NII) per share doubled to $0.40 from $0.20 in the prior quarter, primarily due to increased total investment income [7] - The first quarter distribution increased to $0.37 per share, a 5.7% rise from the previous quarter's $0.35 per share [7][14] Business Line Data and Key Metrics Changes - The CLO joint venture (JV) contributed significantly to the income, with cash distributions of $3,800,000 in Q1 2025, compared to $5,000,000 in Q4 2024 [10][36] - The corporate portfolio grew to nearly $250,000,000, with first lien loans comprising 71% of this portfolio as of March 31 [16] Market Data and Key Metrics Changes - The company's net assets as of March 31, 2025, were $132,000,000, down from $136,000,000 as of December 31, 2024 [13] - The NAV per share decreased to $11.46 from $11.79 over the same period [14] Company Strategy and Development Direction - The company is focused on enhancing portfolio strength by increasing secured debt positions and targeting high teens to 20% returns from the CLO JV [16] - A $100,000,000 at-the-market equity program was filed to provide additional capital flexibility [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate sustainable returns and deliver increasing value to shareholders despite market volatility [12][20] - The company anticipates that NII in Q2 2025 will exceed Q1 levels, supported by ongoing capital raising and deployment initiatives [8][36] Other Important Information - The company has zero positions on non-accrual as of March 31, 2025, indicating strong portfolio performance [19] - The company maintains a cautious approach to capital deployment, prioritizing credit quality and seeking investments with minimal risk of permanent capital loss [20] Q&A Session Summary Question: How does the portfolio and funds NAV perform with the widening loan market and private credit spreads? - Management noted modest markdowns in the portfolio but expressed confidence in the overall health of the portfolio, expecting unrealized losses to reverse as market conditions stabilize [26][28] Question: What is the expected ROE on the CLO investment? - The company targets high teens to 20% returns on the CLO investments [59] Question: What is the impact of tariffs on the portfolio? - Initial analysis suggests limited direct exposure to tariffs, with a predominantly domestic focus and minimal exposure to China [20][51] Question: How is the consumer segment of the portfolio characterized? - The largest exposure in the consumer space is to companies with private label products, which are expected to benefit from trade-down effects during economic downturns [54]
Horizon Technology Finance(HRZN) - 2025 Q1 - Earnings Call Transcript
2025-04-30 14:02
Financial Data and Key Metrics Changes - The company generated net investment income (NII) of $0.27 per share, consistent with the previous quarter but down from $0.38 per share in the same quarter last year [26] - The net asset value (NAV) decreased to $7.57 per share from $8.43 at the end of the previous quarter and $9.64 a year ago, primarily due to fair value adjustments and distributions [27] - Investment income for the first quarter was $25 million, slightly down from $26 million in the prior year period, attributed to lower interest and fee income [24] Business Line Data and Key Metrics Changes - The portfolio at the end of the first quarter stood at $690 million, with new debt investments totaling $100 million and equity investments of $2 million [11] - The debt portfolio yield was 15% for the quarter, compared to 15.6% in the same quarter last year, while onboarding yields were 13%, up from 12.6% in the previous quarter [24][12] - The company funded nine debt investments during the quarter, with a significant portion directed towards life science and technology sectors [11] Market Data and Key Metrics Changes - Approximately $92 billion was invested in VC-backed companies in the first quarter, marking a 19% increase from the previous quarter, driven largely by large AI deals [17] - The exit market for VC-backed tech and life science companies remains nearly shut due to tariff-related uncertainties, impacting investor sentiment [18] - The S&P Biotech Select Industry Index is down 14% year over year, reflecting cooling investor sentiment in the life sciences market [18] Company Strategy and Development Direction - The company aims to grow its portfolio while maintaining a focus on high-quality investments, particularly in the tech and life science sectors [10] - The management remains selective in originating loans due to the current macroeconomic environment, with a commitment to optimizing returns from stressed investments [15] - The partnership with Monroe Capital is expected to enhance capital access and operational support, aiding in portfolio growth [9] Management's Comments on Operating Environment and Future Outlook - The management expressed guarded optimism for 2025, despite macroeconomic headwinds impacting recovery from stressed assets [6] - The company anticipates that the venture debt market will remain active, providing opportunities for investment despite current challenges [10] - Management highlighted the importance of maintaining strong liquidity and a robust balance sheet to navigate the current environment [23] Other Important Information - The company declared regular monthly distributions of $0.11 per share through September 2025, supported by undistributed spillover income of $1 per share [7][26] - The company has a committed backlog of $236 million, providing a solid base for future portfolio growth [8] Q&A Session Summary Question: How is the company managing spillover earnings in the current uncertain environment? - The company plans to continue growing distributions through 2025 and will manage spillover earnings quarterly, with confidence in covering distributions over time [32][34] Question: What is the quality of deals currently being pursued? - The company is seeing a higher bar for transaction selection, focusing on companies with strong operational performance and quality VC backing [36][37] Question: Will the company raise leverage ratios to grow the portfolio? - The target leverage ratio is around 1.2x to 1.3x, with the current ratio at 1.29x, indicating a cautious approach to leverage [41] Question: Is there any discussion about cutting the base management fee? - The company’s base management fee is competitive with industry standards, and it is reviewed regularly [43] Question: How does the company plan to address the frozen market conditions? - The company is focusing on generating yield through higher returns from existing portfolio companies rather than relying on warrant expectations [55][52] Question: What is the impact of tariffs on the portfolio? - The primary impact of tariffs is the uncertainty they create, affecting market transactions rather than direct exposure to specific tariffs [63] Question: Has the partnership with Monroe Capital provided additional resources? - The partnership is expected to enhance operational support and focus on stabilizing and growing the business [66]
Horizon Technology Finance(HRZN) - 2025 Q1 - Earnings Call Transcript
2025-04-30 13:00
Financial Data and Key Metrics Changes - The company generated net investment income (NII) of $0.27 per share, unchanged from the previous quarter but down from $0.38 per share in the same quarter last year [27] - The net asset value (NAV) decreased to $7.57 per share from $8.43 at the end of the previous quarter and $9.64 a year ago, primarily due to fair value adjustments and distributions [28] - Investment income for the first quarter was $25 million, a slight decrease from $26 million in the prior year period, attributed to lower interest and fee income [25] Business Line Data and Key Metrics Changes - The total investment portfolio at the end of the first quarter stood at $690 million, with debt investments in 53 companies valued at $644 million and equity investments in 110 companies valued at $46 million [27] - New originations totaled $102 million, offset by $11 million in scheduled principal payments and $68 million in prepayments [27] - The debt portfolio yield was 15%, slightly down from 15.6% in the same quarter last year, while onboarding yields were 13%, up from 12.6% in the previous quarter [25][12] Market Data and Key Metrics Changes - Approximately $92 billion was invested in VC-backed companies in the first quarter, a 19% increase from the previous quarter, driven largely by significant AI deals [18] - The S&P Biotech Select Industry Index is down 14% year-over-year, indicating cooling investor sentiment in the life sciences market [19] - The exit market for VC-backed tech and life science companies remains nearly shut due to macroeconomic uncertainties, impacting the overall venture capital ecosystem [20] Company Strategy and Development Direction - The company aims to grow its portfolio while maintaining a focus on high-quality, well-sponsored tech and life science companies [20] - The management remains selective in originating loans due to the current macro environment, with a commitment to optimizing returns from stressed investments [16] - The partnership with Monroe Capital is expected to provide additional capital and scale, enhancing the company's ability to navigate current market challenges [9] Management's Comments on Operating Environment and Future Outlook - Management expressed guarded optimism for the year despite recent macroeconomic headwinds, including tariff-related uncertainties impacting recovery from stressed assets [5] - The company anticipates that as the macro environment normalizes, it will be positioned to grow its portfolio and increase NII to cover distributions over time [16] - Management highlighted the importance of maintaining a strong liquidity position, with $126 million in available liquidity as of March 31 [23] Other Important Information - The company declared regular monthly distributions of $0.11 per share through September 2025, supported by undistributed spillover income of $1 per share [27] - The advisor has agreed to waive a portion of its quarterly income incentive fees if NII falls below declared distributions [7] - The company is actively managing its portfolio to optimize returns and mitigate risks associated with stressed investments [15] Q&A Session Summary Question: How is the company managing spillover earnings in the current uncertain environment? - Management indicated that they plan to continue growing distributions through 2025 and will manage spillover earnings quarterly, reviewing them in discussions with the board [32][34] Question: What is the quality of deals currently being pursued? - Management noted a higher bar for selecting transactions, focusing on companies performing well operationally and backed by quality VCs, while being selective due to the current market conditions [36][38] Question: Is there a plan to raise leverage ratios to grow the portfolio? - The target leverage ratio is around 1.2x to 1.3x, with the current ratio at 1.29x, indicating a cautious approach to leverage [42][43] Question: How does the company plan to address the high dividend payout relative to debt yields? - Management stated that they review equity needs and funding pipelines quarterly, considering the balance between dividends and investment returns [47][48] Question: What is the impact of tariffs on the portfolio? - Management indicated that while there is some uncertainty due to tariffs, most portfolio companies have planned for potential impacts, and the overall effect has been more about market volatility than specific tariff issues [65][66] Question: What resources are available from the recent Monroe partnership? - The partnership is expected to provide support in stabilizing and growing the business, with ongoing collaboration to enhance operational effectiveness [68][69]