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KCAP Financial, Appealing Yield Of 12.46% And Discount To NAV At 34%? Be Careful

Published Wed, 13 Jun 2018 10:13:49 -0400 on Seeking Alpha

With 12.46% Dividend Yield and Payout Ratio of 511%, some investors will rush to push the buy button on this name. In this article, I will encourage them to think a bit about the current risks of the company's portfolio. While the debt does not seem to be a big problem, the portfolio is not diversified and the managers are investing in other companies affiliated to KCAP Financial (Nasdaq: KCAP). It may be better to proceed with caution here.

Source: kcapfinancial.gcs-web.com
Business Objective Initially formed in August 2006 under the name of Kohlberg Capital Corporation, this business development company ("BDC") changed its name to KCAP Financial, Inc. on July 11, 2012.
The company has noted three investment strategies in its portfolio:
Investments in senior secured term loans and mezzanine debt primarily in privately-held middle market companies.
Allocation of funds in wholly owned asset management entities including Katonah Debt Advisors, and Trimaran Advisors, which manage collateralized loan obligation funds ("CLO Funds").
Investments in debt and subordinated securities, which are issued by CLO Fund Securities managed by affiliated management companies.
Additionally, KCAP Financial, Inc. may also invest in loans to publicly-traded companies, junk bonds, joint ventures, warrants and options to purchase common stock.
What are the type of companies that receive money from KCAP? According to the portfolio included in the... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
KOHLBERG CAPITAL 3.34   30.4 0.11 0.40 11.77


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