BDC's

This topic contains 1 reply, has 2 voices, and was last updated by  TS Paul 5 years ago.

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  • #11934

    Stan

    TS, Thanks for the BDC topic. I’m looking at BKCC, PSEC, MCC, etc. From what I see the dividends look fairly safe and the stocks themselves seem relatively safe (of course I know almost anything is a “gamble” of some sort). I’m in the camp that thinks the economy will keep slowly improving and thus find BDC’s attractive. But I also do think there could be a significant correction in the stock market and am not sure how this would affect the value of the BDC’s. Based on BKCC’s recent drop it seems like this could be a good time to add to that position. Do you think the selling that was expected prior to the June deadline (i.e. removal from Russell index) has already occurred? Just open to any thoughts from you or others on the BDC topic. Thanks!

    #11938

    TS Paul
    Keymaster

    My sense is the investors who are fearing the drop when they are removed from the indices have sold. But what I frankly don’t know is how much the selling which occurs automatically by the funds tracking the indices will cause them to fall. 8% of all outstanding BDC shares are held by those funds, so that could be a pretty major hit (and a pretty fantastic buying opportunity if we can pick the bottom). My inclination is to wait and see within my own account – I don’t think I will be a buyer until the reconstituted indices are pushed out and the selling is in full swings.

    It sounds like you have already done a lot of research on this subject. For the folks who are trying to catch up, here are a few articles on the subject:

    http://blogs.barrons.com/focusonfunds/2014/03/04/russell-sets-terms-for-booting-bdcs-should-you-buy-the-dip/2/

    http://seekingalpha.com/article/2171413-bdc-pricing-and-the-russell-indices-part-1

    The TSP Allocation Guide www.TSPallocation.com

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