The Anatomy of a Closed-End Fund
When looking for ways to invest internationally, the amount of choices can be daunting. Closed-end funds can be an efficient way to gain exposure to international regions.
“Home bias” can sizably limit an investor’s portfolio by reducing its ability to capture additional sources of return.
Prospect Capital (PSEC) is targeting spin-offs in order to raise capital to be redeployed in asset classes yielding higher returns.
Prospect Capital’s (PSEC) stock has declined by ~13% over the past six months and ~27% over the past 12 months.
Prospect Capital (PSEC) continues to make use of leverage to generate higher returns. The company’s 4Q15 debt-to-equity ratio increased to 77.6%.
Prospect Capital is deploying investments for the online lending industry, with a focus on near-prime, prime, and subprime consumers, as well as small business borrowers.
Prospect Capital (PSEC) made portfolio investments of $460 million in 4Q15, up from $219 million in 3Q15.
Prospect Capital has elected to invest in higher-interest-yielding asset classes such as structured credit and online lending.
Prospect Capital (PSEC) reported its June quarter (or 4Q15) earnings on August 26, 2015. The company beat Wall Street analysts’ net income estimates.
Ares Capital had cash, revolving lines of credit, and small business administration, or SBA, debentures of $2.4 billion as of June 30, 2015, for investments.
Ares Capital expects that the underlying corporate borrowers in the portfolio at the end of the quarter will deleverage from current levels.
Ares Capital (ARCC) has a diversified portfolio totaling $8.6 billion at fair value as of June 30, 2015. It consists of investments in 207 portfolio companies.
Since the announcement of General Electric’s divestiture, Ares Capital has focused on how to best capitalize on the exit of GE Capital, one of the largest players in the market.
Ares Capital is targeting a minimum yield that’s 400 basis points higher on its second lien debt offerings than what it generates on first lien senior loans.
With a ~9.5% dividend yield and improving portfolio yields, Ares Capital may provide better returns to its shareholders over the next few quarters.
Ares Capital is a specialty finance company. It operates closed-end, non-diversified investment management businesses.
As of June 2015, Ares Capital’s (ARCC) stock declined by ~5% over the past 12 months. The company paid a dividend of $0.38 per share—at par with the year before.
Ares Capital’s (ARCC) net DE ratio improved to 0.63x as of March 31, 2015. The improvement was mainly due to net debt repayments during the first quarter.