Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you help us understand why you have issued common equity at the same time that the balance sheet is already underlevered and NII is near the distribution, especially with the added pressure of declining SOFR? A: The issuance was a modest move to counter a significant concentrated event. We wanted to avoid being pressured on the balance sheet due to a large liquidity event on the horizon. The equity appreciation was largely from a single investment, and we wanted to ensure we weren't short if that valuation was impaired. - Respondent: Unidentified_4
Q: Are you still looking for balance sheet leverage, debt to equity of 0.9 to 1.25, or have you changed that target range? A: We will move back up to that range. There were times last quarter when the marginal funding cost of equity was below that of debt, which doesn't push us to increase leverage as much as before. - Respondent: Unidentified_4
Q: Are there any success fees receivable from the Antenna Research exit? A: No, it was a straight-up equity gain. Exit fees are not a material factor in our investment activity. - Respondent: Unidentified_4
Q: What's your outlook for DK I and EGS, which seems to be struggling? A: Optimism for DK I has diminished, and we're working on the best exit strategy. For EGS, we're elevating engagement to realize the investment, including potential sales and cost cuts. - Respondent: Unidentified_4
Q: Have you considered including preferred dividends above the line for calculating pre-incentive fee income? A: It's an accounting concept, and while we think about it for other modeling, accounting rules dictate its classification on the balance sheet and income statement. - Respondent: Unidentified_5
Q: Can you give an indication of the scale of portfolio activity in the December quarter? A: The deals currently in queue will exceed cash proceeds. We expect the most active quarter of potential turnover, aiming to be flat or slightly positive in terms of portfolio scale. - Respondent: Unidentified_4
Q: Are you considering working with commercial banks on a blending solution for financing? A: Yes, we consider first-in-last-out structures and asset-backed solutions with commercial banks, especially as rates compress. This helps us deploy capital cost-effectively. - Respondent: Unidentified_4
Q: Is there a concern about being overexposed to a single vintage due to high activity in one quarter? A: Vintage is not a major factor; we focus on growth and sector diversity. We monitor sectors closely and are selective, closing less than 5% of deals we evaluate. - Respondent: Unidentified_4
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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