According to the headlines private credit is about bringing the financial apocalypse down upon all our heads.
All the Business Development Companies (BDCs) engaging in this horrific form of high yield lending are worthless.
None of the companies they are lending to will ever be able to pay all this money back as agreed.
Private credit is even worse than private equity and the public is crazy to put their money into the publicly traded vehicles that invest this way.
While I am not a huge fan of retail buying illiquid private equity private credit, I am a huge fan of the type of lending that private credit firms do and have been an enthusiastic owner of publicly traded BDCs.
I am very selective and will only buy those BDCs that have a relationship with a large private asset management firm or Wall Street firm that has deep pockets and extensive resources.
I also prefer to buy when everyone else hates them.
Right now, most people hate them.
When I see the top executives and members of the board at BDCs buying the public is selling I get even more interested.
In recent week s I have seen executives and directors at three very well-connected Business Development Companies making open market purchase of their own stocks.
The Goldman Touch: GSBD Offers Serious Yield
Goldman Sachs BDC (Ticker: GSBD) isn’t your typical corporate lending operation. This is Goldman Sachs we’re talking about, the firm that’s made more money in more markets than any other investment bank on the planet. When they decided to get into the BDC business, they brought their entire deal sourcing machine with them.
The numbers tell a compelling story. GSBD is currently yielding north of 11%, and in some quotes I’m seeing, it’s pushing 20%. Now, I’m always skeptical of yields that look too good to be true, but here’s what matters: the company just reported Q1 net investment income of $0.42 per share, and management is confident enough to declare not just their base dividend, but special and supplemental dividends as well.
But here’s the kicker. On September 15th, Co-CEO Vivek Bantwal stepped up and bought 22,000 shares for nearly $250,000 of his own money. This wasn’t some token purchase for PR purposes. This was a quarter million dollar bet on his own company’s future.
The timing is interesting too. This purchase came right as Goldman was pricing a $400 million bond offering. Management could have waited to see how the market received the new debt. Instead, they bought aggressively ahead of the announcement. That tells me they know something the market doesn’t fully appreciate yet.
GSBD trades with a market cap around $1.3 billion and has $3.86 billion invested across 163 portfolio companies. The Goldman brand opens doors that other BDCs can’t even knock on. In a credit cycle where deal flow and origination capability matter more than ever, that’s a significant competitive advantage.
The Carlyle Advantage: CGBD’s Insider Accumulation
Carlyle Secured Lending (Ticker: CGBD) has been flying under the radar while completing one of the more strategic moves in the BDC space. The merger with Carlyle Secured Lending III significantly expanded their scale and diversification.
The yield here is running between 10 and 13%, which is attractive in its own right. But what really catches my attention is the insider activity. Several insiders including the CFO have recently stepped up and bought shares of the BDC
CGBD’s payout ratio is running over 120%, which raises some sustainability questions. But here’s what the market is missing: the Carlyle platform. These folks have $441 billion in assets under management and relationships throughout the private equity world. In middle market lending, deal flow is everything. And few organizations have better access to quality opportunities than Carlyle.
The recent merger also provides economies of scale that should help with expense ratios going forward. Sometimes the best time to buy a stock is when there are legitimate concerns about the current metrics, but the underlying business is getting stronger.
The Quality Play: MSDL’s Defensive Excellence
Morgan Stanley Direct Lending Fund (Ticker: MSDL) might be the most underappreciated BDC in the market today. While yielding a respectable 10 to 12%, this fund trades at a 14% discount to net asset value. Basically, you’re buying a dollar of assets for 86 cents.
But here’s what makes MSDL special: portfolio quality. We’re talking about a portfolio that’s 96.4% first lien and 99.6% floating rate. They’ve focused on less cyclical sectors like software, insurance, and commercial services. While other BDCs have been chasing yield in riskier credits, MSDL has maintained discipline.
Insiders including the CEO have been consistently buying stock recently in anticipation of a rebound.
The market cap is $1.67 billion, making this the largest of our three plays. Size matters in the BDC world because it provides diversification and reduces the impact of any single credit problem. MSDL has built a fortress balance sheet while maintaining attractive returns.
According to the headlines private cfre3dit is about bringing the financial apocalypse down upon all our heads.
All the Business Development Companies (BDCs) engaging in this horrific form of high yield lending are worthless.
Noe of the companies they are lending to will ever be able to pay all this money back as agreed.
Private credit is even worse than private equity and the public is crazy to put their money into the publicly traded vehicles that invest this way.
While I am not a huge fan of retail buying illiquid private equity private credit, I am a huge fan of the type of lending that private credit firms do and have been an enthusiastic owner of publicly traded BDCs.
I am very selective and will only buy those BDCs that have a relationship with a large private asset management firm or Wall Street firm that has deep pockets and extensive resources.
I also prefer to buy when everyone else hates them.
Right now, most people hate them.
When I see the top executives and members of the board at BDCs buying the public is selling I get even more interested.
In recent week s I have seen executives and directors at three very well-connected Business Development Companie making open market purchase of their own stocks.
The Goldman Touch: GSBD Offers Serious Yield
Goldman Sachs BDC (Ticker: GSBD) isn’t your typical corporate lending operation. This is Goldman Sachs we’re talking about, the firm that’s made more money in more markets than any other investment bank on the planet. When they decided to get into the BDC business, they brought their entire deal sourcing machine with them.
The numbers tell a compelling story. GSBD is currently yielding north of 11%, and in some quotes I’m seeing, it’s pushing 20%. Now, I’m always skeptical of yields that look too good to be true, but here’s what matters: the company just reported Q1 net investment income of $0.42 per share, and management is confident enough to declare not just their base dividend, but special and supplemental dividends as well.
But here’s the kicker. On September 15th, Co-CEO Vivek Bantwal stepped up and bought 22,000 shares for nearly $250,000 of his own money. This wasn’t some token purchase for PR purposes. This was a quarter million dollar bet on his own company’s future.
The timing is interesting too. This purchase came right as Goldman was pricing a $400 million bond offering. Management could have waited to see how the market received the new debt. Instead, they bought aggressively ahead of the announcement. That tells me they know something the market doesn’t fully appreciate yet.
GSBD trades with a market cap around $1.3 billion and has $3.86 billion invested across 163 portfolio companies. The Goldman brand opens doors that other BDCs can’t even knock on. In a credit cycle where deal flow and origination capability matter more than ever, that’s a significant competitive advantage.
The Carlyle Advantage: CGBD’s Insider Accumulation
Carlyle Secured Lending (Ticker: CGBD) has been flying under the radar while completing one of the more strategic moves in the BDC space. The merger with Carlyle Secured Lending III significantly expanded their scale and diversification.
The yield here is running between 10 and 13%, which is attractive in its own right. But what really catches my attention is the insider activity. Several insiders including the CFO have recently stepped up and bought shares of the BDC
CGBD’s payout ratio is running over 120%, which raises some sustainability questions. But here’s what the market is missing: the Carlyle platform. These folks have $441 billion in assets under management and relationships throughout the private equity world. In middle market lending, deal flow is everything. And few organizations have better access to quality opportunities than Carlyle.
The recent merger also provides economies of scale that should help with expense ratios going forward. Sometimes the best time to buy a stock is when there are legitimate concerns about the current metrics, but the underlying business is getting stronger.
The Quality Play: MSDL’s Defensive Excellence
Morgan Stanley Direct Lending Fund (Ticker: MSDL) might be the most underappreciated BDC in the market today. While yielding a respectable 10 to 12%, this fund trades at a 14% discount to net asset value. Basically, you’re buying a dollar of assets for 86 cents.
But here’s what makes MSDL special: portfolio quality. We’re talking about a portfolio that’s 96.4% first lien and 99.6% floating rate. They’ve focused on less cyclical sectors like software, insurance, and commercial services. While other BDCs have been chasing yield in riskier credits, MSDL has maintained discipline.
Insiders including the CEO have been consistently buying stock recently in anticipation of a rebound.
The market cap is $1.67 billion, making this the largest of our three plays. Size matters in the BDC world because it provides diversification and reduces the impact of any single credit problem. MSDL has built a fortress balance sheet while maintaining attractive returns.
