If you’re holding Fifth Street Finance (FSC), criticism that it’s not covering its dividend with net investment income and is not projected to do so in 2014 might have you second-guessing its place in your lineup.
I know that in a static world FSC is running about a nickel shy of covering the current payout. At the same time, the company — as measured by its ability to grow the loan portfolio — ranks in the top five businesses development corporations (BDCs) with its potential to up its total loan portfolio by 49% in the next year alone. This would more than take care of any shortfall.
We’ll learn more about this and the current state of FSC’s business when the company reports Q3 results on Nov. 25. Until then, hang in there. The stock has absorbed that massive 17.6-million-share secondary priced at $10.31 and should make its way back toward $11 in a good market — such as the one we’re in at present.
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