OWL - 2 Very Overrated And 2 Very Underrated BDCs
2024-07-05 12:54:58 ET
Summary
- I'm quite cautious on the BDC sector right now.
- However, there are still some interesting opportunities in the space.
- I discuss two of the most overrated BDCs right now as well as two of the most underrated BDCs.
As my regular readers know, I'm generally not fond of the business development company - BDC - ( BIZD ) sector right now for three main reasons. One, valuations are quite bloated relative to historical averages. Two, the sector has become overcrowded, with hundreds of billions of dollars pouring into the sector in recent years, creating an increasingly unfavorable supply-demand balance for investors, as there's too much money chasing deals right now. Third, the economy is showing clear signs of weakening, with unemployment rising to around 4%, consumer spending confidence weakening, the yield curve remaining sharply inverted, and even Ares Capital Corporation's ( ARCC ) CEO recently warning that defaults and non-accruals are likely going to rise meaningfully this year across the sector....
2 Very Overrated And 2 Very Underrated BDCs