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“Best Entry Point into BDCs in over 5 Years? Discounts Can Be Expensive & Premiums Can Be Cheap” by John Cole Scott

Introduction:

Business Development Companies (BDCs) are a modification of the “1940 Act” created by Congress in 1980 to provide the opportunity for individual non-accredited investors to participate in private investments. BDCs are closed-end funds that provide small growing companies access to capital. They are domestically focused and are required to offer portfolio companies “managerial assistance”. On average, the portfolio company to BDC employee ratio is 2.4 which highlights the BDCs ability to be involved with their lendees in a direct and personalized way. As with mutual funds and ETFs, BDCs have tax-advantages and earnings are passed through to investors in the form of dividends. BDCs have gained interest since the Financial Crisis because traditional banks have generally reduced their focus on small business lending. There have been 14 BDC initial public offering (IPOs) in the past five years with a current market capitalization of $15.5B (47%) of the $32.8B total listed BDC universe. BDCs also provide much needed diversification in our opinion with a 10-year correlation to High Yield Bonds of 43.1% and to Senior Loan Funds of 37.9%. They also provide low correlation to MLP funds at: 44.9%, US Equity Funds at: 43.7% and REIT Funds at: 32.0% as of 12/31/17.

BDCs typically contain 25-150 different investments inside and are focused on loans vs. equity holdings. The loans are typically secured loans and pegged to Libor at a variable interest rate. There are 51 traded or listed BDCs. We benchmark the sector with CEF Advisors’ Debt-Focused BDC Index (http://cefdata.com/index/details/407/). As of February 5, 2018, the index is at a -11.5% discount to NAV and 10.47% indicated market yield, vs. a normal 8%-9% historical level. Leverage is 39.3%, bond exposure is 87.3%, BDC Article Table 175.1% of the loans are variable rate loans. Loans in non-payment or “non-accrual” status are 1.65% vs. a long-term average of 2%. You can see the recent price movements of market prices vs. net asset values in the charts below. Read more…

John Cole Scott Quoted in Kiplinger’s Personal Finance Article “Earn Up to 9% With These Closed-End Funds”

See John Cole Scott of Closed-End Fund Advisors quoted in a February 2018 Kiplinger’s Personal Finance article by Ryan Ermey, Staff Writer. John says “Ideally, you buy into a Kiplinger red logogood, well-managed fund at a 15% discount, and if expenses are reasonable, you just bought a dollar with 85 cents”.

 

Click below to view the article. A subscription may be required.
https://www.kiplinger.com/article/investing/T041-C009-S002-earn-up-to-9-with-these-closed-end-funds.html

CEF Advisors’ Quarterly Closed-End Fund and BDC Universe Update, IPO Review & Outlook January 18, 2018

On January 18th we held our Quarterly Closed-End Fund and BDC Universe Update, Outlook, and IPO Review.  Slide 1 of Jan 2018 Webinar

Please watch the replay or download the slides to see what trends we covered in the CEF industry including:

*Discounts & Discount Trends
*Yield and Yield Trends
*Dividend Changes
*Last Quarter’s and Recent Peer-group performance (NAV and Market Price).
*UNII, Earnings and Return of Capital (RoC) Trends
* Recent CEF IPO’s
* Liquidity & Liquidity Trends
* Activist Updates & Trends
* CEF Deaths & Mergers
* NAV vs. Market Price Volatility
* New CEF Universe Data
* 2018 Outlook
* Pre-submitted & Live Q&A

Slides in PDF Format

John Cole Scott talks About Potential Changes in Closed-End Fund Structure on Investius.com

JCS Investius Headshot 01082018Click below to listen to what John Cole Scott has to say about potential changes in closed-end fund structure during a recent appearance on Investius.com.

 

 

Click Here
http://www.investius.com/2017/12/03/beyond-income/

Chuck Jaffe MoneyLife “Market Call” Interview of John Cole Scott, CIO at CEF Advisors on December 15, 2017.

MoneyLifeliveJohn Cole Scott was interviewed by Chuck Jaffe on Money Life on December 15, 2017. Click here to listen to John discuss the following Tickers:
PML, PMF, ARDC, CSWC; during “Hold It or Fold It:” BIF, GOF, JPC, CCD, FMO

Click HERE to stream the audio from this interview or
right click HERE to download the file and listen another time.

MoneyLife host Chuck Jaffe is chief editor at RagingBull.com. His three weekly columns are syndicated nationally, and his “Your Funds” column is the most widely read feature on mutual fund investing in America. In 2009, Chuck was named to MutualFundWire’s list of the 40 Most Influential People in Fund Distribution, the only journalist ever to make the list. Learn more on their website: http://www.moneylifeshow.com/

John Cole Scott Quoted in Bloomberg Markets

Bloomberg-Markets-LogoJohn Cole Scott was recently quoted in Bloomberg Markets. Click below to read the article.

https://www.bloomberg.com/news/articles/2017-11-30/this-is-the-low-profile-high-stakes-world-of-venture-lending

John Cole Scott talks About Interest Rate Risk on Investius.com

Click on the link below JCS Investius Image Capture 92017 risk
to see what John Cole Scott has to
say about interest rate risk.

 

 

 

Click Here:
http://www.investius.com/2017/11/12/risk/