Wednesday, January 29, 2014

TCRD: January 2014 Report

Summary and Recommendations

THL Credit (TCRD) is a component in my ‘General’ BDC portfolio and is considered a ‘Buy’.  Last year the stock was up around 15% but has recently begun to dip and is more appropriately priced.  I consider TCRD to be one of the safer BDCs with the potential to grow its portfolio more than most BDCs with it topping the charts in “Total Return BDCs For 2014: Part 3” that discussed the potential for dividend growth.

Some of the key risks for TCRD are decreasing yields in its portfolio and the recent increase in second lien debt investments.  However it still has a quality portfolio with lower than average use of leverage.

This article discusses the pros and cons of investing in TCRD along with earnings projections, dividend sustainability and growth potential over the coming quarters including best and worst case scenarios as well as key risk considerations, updated rankings/pricing compared to the other 25 BDCs that I follow.

Also included:
  • Interest rate sensitivity analysis
  • Timing for future share issuances
  • Projected total returns compared to the other BDCs
  • Price target based on expected total returns
  • Pricing based on multiples of NAV and projected earnings
  • Overall rankings and recommendations
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