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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: MCsweet who wrote (47935)	5/14/2012 12:52:59 PM
From: Bocor	Read Replies (1) \| Respond to of 78666

why hold something that could go down 50%+? One reason would be to reinvest the dividends at much lower prices if you have the stomach for the long haul.

To: MCsweet who wrote (47935)	5/14/2012 1:32:58 PM
From: Sergio H	2 Recommendations Read Replies (2) \| Respond to of 78666

Hi MCsweet. Is there risk in a BDC? Hell yea! But some points to consider when evaluating risk and evaluating an individual BDC: Not all BDCs are the same and historically, ARCC is an extreme example of what could go wrong. BDCs are less leveraged than banks as they must maintain a 1/1 debt to equity ratio. Not one BDC went bankrupt or received govt. bailout during the credit crises. Consolidation solved the problem in the most part as the stronger BDCs swallowed up the weaker ones. Well managed BDCs have low debt ratio and/or the ability to raise cash by issuing shares and have been doing so. An additional weapon in their arsenal is taking advantage of low interest rates to refinance near term maturing debt into longer term debt as several BDCs have been doing. I don't think anyone should be 100% loaded in BDCs, but its worth a look in this area to see if it fits your investment outlook and a portion of your portfolio. I am currently invested in four BDCs.