comlb
Lieutenant
Posts: 68
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Post by comlb on Jan 29, 2023 15:27:05 GMT
Meryl Witmer on BXSL in Barron's
Next, Blackstone Secured Lending Fund [BXSL] is a business development company that mainly invests in the first-lien senior secured debt of private U.S. companies. It is trading for $22.50 a share. It has reasonable fees, relative to its peers, with a 0.75% management fee and a 15% incentive fee that will step up to 1% and 17.5% in October. The portfolio is diversified, the loan-to-value ratio is 47%, and 98% of the loans are first-lien secured. Importantly, borrowers to which the company lends get to benefit from the Blackstone [BX] network, leveraging in-house knowledge in areas such as cybersecurity, healthcare, and procurement. What makes Blackstone Secured Lending an attractive investment now? Witmer: What caught my eye was the insider buying by Blackstone management. We took a look and saw that in last year’s third quarter, the fund had net investment income of 80 cents a share. It pays a regular quarterly dividend of 60 cents a share and has paid a series of 20-cent special dividends. The loan portfolio is funded by equity and a mix of fixed- and floating-rate debt. Since rates have been moving up and the loans and assets are all floating-rate, net investment income has been increasing. On a pro forma basis, we estimate an annual run rate of $3.60 a share in net investment income, equating to a 16% yield if it were all paid out as a dividend. Blackstone Secured Lending currently yields more than 10.5%, and with special dividends, the yield could be more than 14%. We expect it to generate a return of 10% to 15% in the next several years. Are you concerned about loan losses? Witmer: We don’t expect large losses because the loan-to-value ratios are low. It hasn’t had any bankruptcies yet. It has some short-term PIK [payment in kind] loans, and borrowing costs for the underlying companies are increasing, so maybe there will be a problem here or there. But insiders are buying, and the name has fallen through the cracks.
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Post by steadyeddy on Jan 30, 2023 13:19:51 GMT
Floating rate debt is typically either credit card debt or mortgage debt. Either could suffer if economy suffers. Loan-to-value can suddenly dislocate. Y!Finance shows forward div yield of 10%+
What attracts you to BXSL?
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BXSL
Feb 1, 2023 14:01:34 GMT
via mobile
Post by Fearchar on Feb 1, 2023 14:01:34 GMT
Floating rate debt is typically either credit card debt or mortgage debt. Either could suffer if economy suffers. Loan-to-value can suddenly dislocate. Y!Finance shows forward div yield of 10%+ What attracts you to BXSL? The high yield is obviously attractive. First challenge is understanding the risk. Second challenge is being able to identify a "safe" entry price. I can not do either, but it is on my expanded watch list, but without third party assessment.
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BXSL
Feb 1, 2023 14:22:31 GMT
Post by bugman on Feb 1, 2023 14:22:31 GMT
I can not do either, but it is on my expanded watch list, but without third party assessment. My service recommends it. I purchased just under $23 and it's been a good performer since then (up 7%), with good yield. I have it at a recommended portion and now at 2% of portfolio. Still a recommended buy.
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BXSL
Feb 1, 2023 14:51:20 GMT
Post by marpro on Feb 1, 2023 14:51:20 GMT
PDI has the approximate yield of the same as BXSL. Yahoo gives a rank of only 2, a buy rating. SL is a very risky bet. EPS is also lower than the distribution—eating your seed corn. The price has shot up, and the upside was earlier, and there seems to be cash flow out, not in now. The traders seem to be cashing out now. I would not buy this BDC at this price because there are better alternatives. Similar AGNC, which has government-backed mortgage securities, beat the estimates and pays more than 12.33%. I own it.
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BXSL
Feb 1, 2023 15:50:53 GMT
Post by bugman on Feb 1, 2023 15:50:53 GMT
I hold AGNC-L on the preferred side.
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BXSL
Feb 1, 2023 16:14:01 GMT
Post by marpro on Feb 1, 2023 16:14:01 GMT
I hold AGNC-L on the preferred side. Do you like it? Is it qualified distribution? TIA.
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BXSL
Feb 1, 2023 16:30:15 GMT
Post by bugman on Feb 1, 2023 16:30:15 GMT
I hold AGNC-L on the preferred side. Do you like it? Is it qualified distribution? TIA. Neutral at this point but holding... Qualified - No. I hold it in an IRA so doesn't matter to me. This was the analysis back when I bought it. AGNC_L
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BXSL
Feb 1, 2023 16:32:27 GMT
Post by marpro on Feb 1, 2023 16:32:27 GMT
Do you like it? Is it qualified distribution? TIA. Neutral at this point but holding... Qualified - No. I hold it in an IRA so doesn't matter to me. This was the analysis back when I bought it. AGNC_L
I checked it by googling and going to AGNC website. They are not qualified. Thanks.
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