The Motley Fool Discussion Boards

Previous Page

Industry Discussions / Real Estate Inv. Trusts: REITs


Subject:  Re: BDCs on Barrons Date:  4/23/2013  3:17 PM
Author:  yodaorange Number:  74176 of 83870

I no longer follow any of the BDC's. Everyone should understand that there were two large BDC's prior to the 2008 crash:

1)Allied Capital aka ALD which essentially went bankrupt. It was the subject of a book by David Einhorn Fooling Some of the People All of the Time. David's big complaint was that ALD did NOT accurately mark all of their investments to market. He had been claiming that for several years before the crash. ALD might have survived intact if the crash hadn't occurred. We will never know. Investors lost something like 90% or 95% in the downfall.

2) American Capital aka ACAS survived the crash, but was severely wounded. It peaked at ~ $50 back in 2007. It is currently trading at ~ $14.00, so many investors have lost a lot of principle. They also suspended their dividend in 2009 and it has NOT been restored.

So this is what happened the the two largest and "best managed" BDC's.

Are you sure that today's BDC's could weather another storm like the last one? Since I don't spend any time on BDC's, I do not have a current opinion. I would certainly be suspicious.

Stated differently, any investment that is currently paying 8%+ yields today is HIGH RISK. The market it telling us that, even if we don't want to hear it. . .


Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us