Author Topic: PNNT - PennantPark  (Read 18519 times)

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Re: PNNT - PennantPark
« Reply #50 on: October 29, 2018, 07:25:02 PM »
I picked up more shares last week. I have no new data and no changes to my thinking just seeing it drop i decided to add a little more.
Love watching what people can accomplish through business.
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Packer16

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Re: PNNT - PennantPark
« Reply #51 on: October 30, 2018, 06:06:00 AM »
The question I have folks investing is PNNT park is why invest in something that has so much second lien/pfd/equity so late in the credit cycle?  I would think if you are investing here you would want to invest in a BDC like TSLX where you have first lien secure debt, with a proven underwriting team (I knew them before they ran the BDC all the way back to 2000) & an exclusive flow from a PE entity (TSP) & relationships the team has made over the years.  TSLX also specializes in software recurring revenue, IP finance & bankruptcy DIP financing.   The underwriting team came from a bank (Wells Fargo) so they think about this business different than your typical BDC.  TSLX is yielding around 9% with special dividends & can grow with the new BDC leverage requirements.  The CEO has done some interesting things to create value (like trying to buy other BDCs etc.) 

TSLX is one of the few BDCs that sell a premium to par but it is worth it as they have been able compound value versus the value stagnation/destruction which has happened at the typical BDCs.  For the 5 years to year end 2017, TSLX has a yearly return of 13.8% vs. 3.5% for PNNT.  As a comparison, PNNT had about the same return as a junk bond fund.  Do you know if after the declines of 2014/15 did PNNT change anything they were doing in terms of underwriting?

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DTEJD1997

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Re: PNNT - PennantPark
« Reply #52 on: October 30, 2018, 06:21:44 AM »
The question I have folks investing is PNNT park is why invest in something that has so much second lien/pfd/equity so late in the credit cycle?  I would think if you are investing here you would want to invest in a BDC like TSLX where you have first lien secure debt, with a proven underwriting team (I knew them before they ran the BDC all the way back to 2000) & an exclusive flow from a PE entity (TSP) & relationships the team has made over the years.  TSLX also specializes in software recurring revenue, IP finance & bankruptcy DIP financing.   The underwriting team came from a bank (Wells Fargo) so they think about this business different than your typical BDC.  TSLX is yielding around 9% with special dividends & can grow with the new BDC leverage requirements.  The CEO has done some interesting things to create value (like trying to buy other BDCs etc.) 

TSLX is one of the few BDCs that sell a premium to par but it is worth it as they have been able compound value versus the value stagnation/destruction which has happened at the typical BDCs.  For the 5 years to year end 2017, TSLX has a yearly return of 13.8% vs. 3.5% for PNNT.  As a comparison, PNNT had about the same return as a junk bond fund.  Do you know if after the declines of 2014/15 did PNNT change anything they were doing in terms of underwriting?

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Packer:

Why invest in PNNT?  How about a dividend yield of over 11%? (most of my cost basis is somewhat lower than current market quote).

They did change underwriting standards after the big blow up and dividend reduction...they will not be underwriting much energy/oil/gas loans going forward.

Another factor is that I suspect they will actually have some gains from the O&G loans that were converted to equity a few years ago.  If so, book value is going to be higher than what it currently at.  When they sell out of their equity positions, the capital will be put into more income producing loans.

Another factor to consider is that PNNT has had a historically very good recovery rate from their defaulted debt.  Check out their performance in the great financial crisis.

If there is another downturn like in 08-09, then yes, PNNT is going to have trouble, along with everybody else...but I have a hunch the next downturn is not going to be as severe as 08-09.

Finally, TSLX may very well be a good BDC, arguably even better than PNNT.  If you invest in TSLX, you are also allowed to own PNNT.  The two are not mutually exclusive.

DTEJD1997

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Re: PNNT - PennantPark
« Reply #53 on: November 15, 2018, 07:16:13 PM »
Hey all:

PNNT announced earnings today after the market closed.  Earnings of $.20/share, that was a couple of cents higher than analyst's expectations.

Looks like the dividend will be maintained at $.18/share.

Conference call in the morning.  Will be interesting to hear of progress/valuation on the O&G equity that they have.

Any thoughts?