This small-cap BDC had a rough 2015 and continues to struggle in 2016. Stock trades at a significant discount to book value and pays a high yield. Like skiing, there's greater risk, often leading to greater rewards. The motto at Mary Jane that you can see on bumper stickers and T-shirts is "No Pain, No Jane." In my "No Guts, No Glory" portfolio, I take a similar approach to investing. Sometimes there's pain in the form of capital losses but the rewards (profits) hopefully outweigh the risks.
One stock that I have been following for quite some time popped up on my radar screen recently. It is an internally managed BDC called KCAP Financial, Inc. (NASDAQ:KCAP). It also uses asset manager affiliates to manage CLO funds. Because the stock was trading at a substantial discount to NAV prior to the earnings report I decided to take a chance and initiate a small position in the stock. Currently my stake in KCAP represents about 3% of my portfolio value. With the news that NAV further declined in the first quarter of this year I am concerned that it may not have been a good decision but I will hold my shares at least until the next quarter and collect the 17% dividend in the meanwhile.
Source: Seeking Alpha
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