Tuesday, June 10, 2014

PennantPark Floating Rate Capital (PFLT) Research


For quarterly projections, pricing, risks and rankings for PFLT, please see 'premium reports'.


Articles for PennantPark Floating Rate Capital (PFLT):

PennantPark Floating Rate Capital (PFLT) is a component in my suggestedRisk Averse’ BDC portfolio due to its safer than average risk profile. PFLT was founded by Arthur Penn in 2010 who also co-founded Apollo Investment (AINV) in 2004 and PennantPark Investment (PNNT) in 2007.

PFLT is not the ‘sexiest’ BDC and is for investors that want solid returns without the average amount of risk assumed with other BDC investments.  PFLT focuses on high quality, 1st lien senior secured investments at floating rates. Over the last three weeks its stock price has outperformed most of its competitors (see page 10) and will hopefully continue to do so in down markets.

One thing about PFLT that surprised me was the interest rate sensitivity analysis (see page 8) with lower than expected returns as rates begin to rise.  This is mostly due to having 100% of borrowings at variable rates.  

PFLT is an investor friendly externally managed BDC with the lowest base management fee in the industry.  Thanks to this lower fee structure even my worst case scenario has PFLT covering dividends in 2014.  As the company begins to mature I believe it will continue to increase its dividends in the coming quarters (see page 6).

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