Overview - Fidus Investment Corporation has a diversified investment portfolio totaling $1.1 billion as of June 30, 2025, invested in 92 companies[12] - The company targets firms with annual revenues between $10 million and $150 million[20] - Fidus' senior investment professionals have an average of over 25 years of relevant experience[31] Investment Strategy & Performance - Fidus targets investments between $5 million and $35 million per portfolio company[18] - The company's cumulative realized net capital gains from equity investments since IPO is $175.2 million[37] - The adjusted NAV per share at June 30, 2025, was $19.57, a 35.3% premium to the IPO level of $14.46[37] - Fidus has a historical annual median GAAP ROE of 12.5% since its initial IPO[41] Portfolio & Financial Review - The weighted average debt yield of the investment portfolio is 13.1%[47] - Secured debt investments constitute 82.5% of the portfolio[49] - Equity represents 12.0% of portfolio fair value versus cost of 8.0%[58] - The company maintains an attractive 11.2% dividend yield based on total LTM dividends of $2.26 per share as of June 30, 2025[68]

Group 1 - Business Development Companies (BDCs) are gaining popularity among investors looking to benefit from the current higher interest rate environment [1] - Gladstone Capital (NASDAQ: GLAD) has shown strong performance over the past few years, indicating a positive trend in the BDC sector [1] - A hybrid investment strategy combining classic dividend growth stocks with BDCs, REITs, and Closed End Funds can enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1]

Company Overview - WhiteHorse Finance's portfolio fair value was $629.3 million as of June 30, 2025 [8] - The company's net asset value (NAV) per share was $11.82 as of June 30, 2025 [8] - The company's current dividend yield is 17.5% based on the August 6, 2025 share price of $8.78 [8] - Since its IPO in December 2012, WhiteHorse Finance has invested $2,811 million across 263 transactions [12] Portfolio Performance - The weighted average effective yield on income-producing investments was approximately 11.9% at the end of Q2 2025, compared to 12.1% in Q1 2025 [16] - The company's return on its investment in STRS JV at the end of Q2 2025 was 14.0% [16] - Total fair value of investments decreased from $651.0 million in Q1 2025 to $629.3 million in Q2 2025 [24] - Investments on non-accrual status were $24.0 million in fair value, representing 4.2% of investments based on fair value [24] Financial Highlights - Q2 Net Investment Income (NII) and Core NII was $6.6 million, or $0.282 per share [16] - The company completed a $298.15 million CLO term debt securitization in June 2025 [16]

Financial Data and Key Metrics Changes - The company reduced the investment portfolio weighted average debt to EBITDA from 3.5 times to 3.4 times [4] - The investment revenue pick rate decreased from 7.6% to 5.8% [4] - The non-accrual rate improved from 1.7% to 0.8% of the investment portfolio at fair value [4] - Pre-tax net investment income was reported at $0.61 per share, with total investment income increasing to $55.9 million from $52.4 million in the prior quarter [18] - The company's NAV per share decreased from $16.70 to $16.59 [21] Business Line Data and Key Metrics Changes - The company generated $27.2 million in realized gains from two equity investment exits during the quarter [5] - The on-balance sheet credit portfolio grew year-over-year by 21% to $1.6 billion [10] - 100% of new portfolio company debt originations were first lien senior secured [10] - The equity co-investment portfolio consisted of 80 investments with a total fair value of $166 million, representing 9% of the total portfolio [12] Market Data and Key Metrics Changes - The company reported $115 million in total new commitments to three new portfolio companies and 12 existing portfolio companies [6] - Approximately 55% of total capital commitments during the quarter were follow-on offerings in performing portfolio companies [7] - The company noted a distinct pickup in the volume and quality of deals in the past six weeks [8] Company Strategy and Development Direction - The company transitioned its regular dividend payment frequency from quarterly to monthly, declaring a total of $0.58 in regular dividends for the quarter [5] - The company received final approval from the SBA for its second SBIC license, allowing access to $175 million in additional SBA debentures [6] - The company aims to maintain a conservative leverage approach while being opportunistic in raising secured and unsecured debt capital [23] Management's Comments on Operating Environment and Future Outlook - Management noted a competitive landscape in the lower middle market, with banks and non-bank lenders being aggressive in deploying capital [26] - The company anticipates significant activity in terms of new platform company originations and add-on activity in the existing portfolio [8] - Management expressed confidence in maintaining dividends based on the current UTI balance of $1 per share and expectations of continued gains from the equity portfolio [20] Other Important Information - The company reported a robust balance sheet liquidity with approximately $444 million in cash and undrawn leverage commitments [21] - The regulatory leverage ended the quarter at a debt to equity ratio of 0.82 to 1, down from 0.89 to 1 in the prior quarter [23] Q&A Session Summary Question: Can you talk about the competitive landscape right now? - Management noted a supply-demand dynamic with a scarcity of quality assets and aggressive competition from banks and non-bank lenders [26][27] Question: What underpins your optimism in the M&A market? - Management highlighted a strong pipeline with $110 million of originations already closed and additional deals pending [36][37] Question: What is the outlook on operating leverage? - Management indicated that operating leverage is expected to trend down to 1.4% to 1.5% by the end of the fiscal year [40][41] Question: How do you view the competitive pressure from banks? - Management acknowledged that banks are currently competitive, which is driving lower spreads, but noted that this could change [52][53] Question: Any updates on adding an asset manager vehicle within the BDC? - Management confirmed ongoing efforts to enhance earnings and origination capabilities, potentially through strategic initiatives [56] Question: Can you provide a breakout between new versus add-on opportunities? - Management indicated a robust quarter with approximately 75% of originations being new opportunities [62]

Core Insights - BlackRock TCP Capital Corp. (TCPC) experienced a decline in net asset value (NAV) in Q2 2025, primarily due to markdowns on previously restructured portfolio companies rather than new credit issues [12][19] - The company reduced nonaccruals to 3.7% of the portfolio's fair market value, down from 4.4% in Q1 2025 and 5.6% at the end of 2024, indicating improved management of distressed assets [12][19] - The acquisition of HPS by BlackRock has led to the formation of the Private Financing Solutions (PFS) platform, which is expected to enhance TCPC's investment sourcing and risk management capabilities [11][41] Financial Performance - Net realized losses for Q2 2025 totaled approximately $66 million, or $0.78 per share, mainly due to restructurings in several portfolio companies [3][36] - Adjusted net investment income was $0.31 per share in Q2 2025, down from $0.36 per share in Q1 2025; gross investment income was $0.61 per share, down from $0.66 [7][34] - The weighted average annual effective yield was 12% in Q2 2025, compared to 12.2% in the prior quarter [7][33] Portfolio Management - The portfolio included 153 companies across more than 20 industry sectors, with an average investment size of $11.7 million [6][32] - 89% of the $1.8 billion portfolio was invested in senior secured debt, all in floating-rate instruments [6][32] - Four new investments were added to nonaccrual status in Q2 2025 due to uneven performance and liquidity constraints [4][19] Dividend and Share Repurchase - A regular dividend of $0.25 and a special dividend of $0.04 per share were declared for Q2 2025, payable on September 30 [8][24] - The company repurchased 40,830 shares during Q2 2025 [8][25] Leverage and Liquidity - Total liquidity at the end of Q2 2025 was $566 million, with available leverage of $155 million and cash of $107 million [9][37] - Net regulatory leverage rose to 1.28 times, exceeding the targeted range of 0.9 to 1.2 times, due to new investments and delayed repayments [3][38] Strategic Outlook - Management expects net regulatory leverage to return to approximately Q1 2025 levels in the next quarter following investment deployments and delayed repayments [14] - The integration into the PFS platform is anticipated to provide enhanced sourcing and allocation capabilities, benefiting TCPC's investment strategy [41][42]

Financial Performance - Net investment income (NII) was $173 million, or $0.62 per share, down from $187 million, or $0.67 per share in the previous quarter[2] - Adjusted net investment income (Adjusted NII) was $168 million, or $0.60 per share, compared to $182 million, or $0.65 per share for the quarter ended March 31, 2025[2] - Net asset value (NAV) per share decreased to $21.93 as of June 30, 2025, from $23.37 as of March 31, 2025[2] - Adjusted NII coverage of the base dividend was 94%, and total dividend coverage was 86% for the quarter ended June 30, 2025[2] Investment Activity & Portfolio - New investment fundings totaled approximately $1.4 billion in the second quarter[2] - Net investment activity for the second quarter was $311 million, including $561 million of sales to Credit Opportunities Partners JV, LLC (COPJV)[2] - The portfolio is diversified across 218 companies in 23 industries[2,10] - Exposure to the top ten largest portfolio companies was 19% of the total portfolio fair value[2,10] - Senior secured investments represent 64.1% of the portfolio fair value, or 73.4% when looking through to COPJV investments[10,16] Capital Structure & Liquidity - The company has $3.1 billion of liquidity, including undrawn debt, cash, and unsettled trades[2,26] - 54% of drawn leverage was unsecured as of June 30, 2025, and the weighted average effective rate on borrowings was 5.34%[2,28] - 90% of liabilities mature in 2027 and beyond[2,26]

Over the past several years, business development companies have been a focal point of my coverage on Seeking Alpha. Following several years of rising interest rates and the proliferation of private lending, business development companies have stolen the spotlight asAnalyst’s Disclosure:I/we have a beneficial long position in the shares of PBDC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it ...

Core Viewpoint - WhiteHorse Finance reported its financial results for Q2 2025, highlighting ongoing portfolio challenges but expressing confidence in the overall stability of its investments [2][3]. Financial Results - Total investment income for Q2 2025 was $18.838 million, a slight increase of 0.2% from $18.801 million in Q1 2025 [3]. - Total expenses, including excise tax, rose to $12.276 million, up 2.7% from $11.958 million in the previous quarter [3]. - Net investment income decreased to $6.562 million, down 4.1% from $6.843 million in Q1 2025, with a per-share income of $0.282 compared to $0.294 [3][18]. - The company declared a distribution of $0.385 per share for Q2 2025, consistent with the previous quarter [7][8]. Portfolio and Investment Activity - As of June 30, 2025, the fair value of the investment portfolio was $629.3 million, down 3.3% from $651.0 million as of March 31, 2025 [4]. - The portfolio consisted of 132 positions across 71 companies, with a weighted average effective yield of 11.9% on income-producing debt investments [4]. - During Q2 2025, the company invested $33.1 million in three new portfolio companies and added $5.9 million to existing companies [5]. Asset Management - The company transferred assets totaling $22.8 million to STRS JV in exchange for cash during the quarter [6]. - The net realized losses for the quarter were $22.045 million, while net unrealized appreciation was $17.733 million [3]. Shareholder Information - The distribution of $0.385 per share will be payable on October 3, 2025, to stockholders of record as of September 19, 2025 [7]. - The company has maintained distributions at or above $0.355 for 51 consecutive quarters since its IPO [8]. Management Commentary - The CEO noted that while earnings power remains below prior-year levels, progress is being made in resolving underperforming investments [2]. - The focus remains on credits with strong fundamentals, leveraging diversified sourcing capabilities and disciplined underwriting [2].

Core Insights - Business Development Companies (BDCs) are facing challenges due to the higher interest rate environment, which has made it difficult for many to thrive [1] - A hybrid investment strategy that combines classic dividend growth stocks with BDCs, REITs, and Closed End Funds can enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1] Industry Overview - The current economic climate, characterized by elevated interest rates, is exerting pressure on BDCs, impacting their operational performance and growth potential [1] Investment Strategy - A diversified investment approach that includes high-quality dividend stocks alongside BDCs can provide a robust framework for generating income and long-term growth [1]

Core Viewpoint - Hamilton Insurance reported quarterly earnings of $1.55 per share, significantly exceeding the Zacks Consensus Estimate of $1.01 per share, marking an earnings surprise of +53.47% [1] - The company also posted revenues of $740.77 million for the quarter, surpassing the Zacks Consensus Estimate by 25.20% [2] Financial Performance - The earnings of $1.55 per share represent an increase from $1.20 per share a year ago [1] - Over the last four quarters, Hamilton Insurance has surpassed consensus EPS estimates three times and topped revenue estimates two times [2] - The company has seen a year-to-date stock price increase of approximately 11.3%, outperforming the S&P 500's gain of 7.1% [3] Future Outlook - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates of $0.65 for the upcoming quarter and $3.23 for the current fiscal year [7] - The Zacks Rank for Hamilton Insurance is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] - The Insurance - Multi line industry is currently ranked in the top 39% of Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]