About

So Many

Did you ever wonder which of the many public BDCs out there to invest in - all of which are involved in "leveraged lending", but each different in many ways ? There are BDCs focused on large cap borrowers and those targeting companies with tiny EBITDAs - and every other segment in-between. There are BDCs whose entire portfolio consists (almost) entirely of loans and those who not only offer debt, but also large slugs of equity stakes. Or BDCs dedicated to financing acquisitions and add-ons initiated by private equity sponsors and those who go directly to borrowers for a host of other purposes. There are BDCs who have leveraged their own balance sheets very close to their regulatory limits, and those that keep a wide berth from the 2:1 debt to equity allowed under BDC rules. There are BDCs that have been publicly traded for nearly twenty years and those who have been around two months, or less. Some BDCs have many billion dollars under management while some others are a fraction of that size. Who to choose to get the best return?

All Over The Place

Also, price volatility is a prominent feature of BDC investing. In a given year most every BDC will trade in a 25%-35% price range, even when paying out an unchanged distribution. One wants to buy low and sell high, but how can you tell when which is which ?

We've struggled with these questions as a BDC investor for two decades. Like our readers, we want to identify the BDCs with the best return prospects, but where to start? Here's our solution, which is both quantitative and qualitative.

By The Numbers

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For every BDC we gather in one table a small mountain of relevant metrics: historic earnings, distributions and changes in net book value. To that we add the analyst consensus for earnings for 2025. Then we go further, adding something you won't find anywhere else: our projections for each BDC's future net book value per share and annual dividend payout. This data allows us to compare key valuation metrics important to investors like current yield; price-to-earnings multiple; price to book value, and prospective total returns (dividend + book value change) across 42 public BDCs. When necessary - as the facts change - we alter the projections to keep them constantly relevant.

Expected Return Table

All these calculations for every BDC - which represent hundreds of hours of analytical work - are contained in the Expected Return Table. As you might imagine, as BDC prices change and new information come in, the expected Total Return changes from day to day, and even minute to minute, as the model operates in real-time. You'll be surprised how much potential returns can change over time and vary between the BDCs involved.

Choices

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As a subscriber, you can access the Expected Return Table at any time - an invaluable and unique tool to assist you in deciding which BDC you might want to purchase and which not. The highest return may not be your first choice - or even second choice - but the Expected Return Table should provide an excellent starting off point for any would-be investor.

Wait! There's More!

We don't just make projections and aggregate data. That can take you only so far as an investor. Qualitative assessments are also critical to making the right BDC stock picks. We regularly write articles about developments at specific BDCs and opine on whether they are more or less attractive as a result. We're not shy to offer our opinion and recommendation as to how to proceed but we expect that every reader will undertake their own research and have their own independent view. We also offer a weekly recap of how BDC prices have fared, who were the winners and losers and why and how the sector is performing in the context of the broader markets. It's required reading for anyone interested in taking the pulse of the BDC market which does not get steady attention in the mainstream financial press.

Covering The Waterfront

At the moment we're focused on writing about the many BDC common stocks on offer but there are many intriguing investments to be made in BDC unsecured debt -typically referred to as "Baby Bonds" - which are also publicly traded. Expect to see us discussing debt as well as common stocks. That's why you'll find the Fixed Income Table at the top of the website, which tracks all the BDC bonds that can be bought and sold in the markets. Overall, between BDC stocks and bonds, there are 70-80 different securities to choose, with a market value above $200bn. And ever growing.

Tops

If you want to know what we consider the very Best Ideas in this universe, just look at the BDC Investment Portfolio we've assembled. There are typically 8-10 names, drawn from the 5 major segments into which we've divided up the leveraged finance market. In each case, we explain why we've given a BDC our benediction and what we're hoping it might achieve. At the same time, we're not shy to mention the risks an investment involves. There are uncertainties a-plenty in BDC investing - both from a macro perspective and at the BDC level. Over time, the Best Ideas will change as some BDCs get "over-bought" - too popular - or fail to meet our expectations. As a subscriber, we'll keep you updated on these changes as they occur.

Quest

In 2025, we've given ourselves a challenge as a stock picker. We're tracking the performance of the BDC Investment Portfolio through the year with the goal of not only generating a superior return but we are also seeking to exceed the return of the only BDC exchange traded-fund, which has the ticker BIZD. After all, what's the point of all the hard work involved in analyzing BDC stocks, choosing some and avoiding others, if you can't beat the index? Subscribers will get monthly updates from us about how the portfolio is performing in absolute terms, and versus BIZD, and you can follow along at any time just by looking at the spreadsheet. For us, this will be a challenging - and possibly humbling - experience.

Last Word

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If you're a regular, or even occasional, investor in the BDC market, this publication should offer you both an immense amount of data and a slew of recommendations to guide your investment choices. When we do offer an opinion - whether in the form of projections or in articles - we are sometimes right and sometimes wrong. Nobody bats a thousand in BDC investing - whatever others might tell you. However we always seek to offer an honest assessment based on our two decades in this sector and our in-depth ongoing research, much of which can be found in our two sister publications - the BDC Reporter and the BDC Credit Reporter. We try to keep our articles short, punchy and unambiguous. In a world full of spin, you're getting our unvarnished view, beholden to nothing more than seeking to maximize investment return.

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