FSK - FS KKR: Recovering From The Drop And Generating Large Income Yielding 13.35%
2024-04-08 19:00:00 ET
Summary
- Shares of FS KKR Capital Corp declined after their Q4 2023 earnings report, but the author remains bullish on the stock.
- The decline in net investment income and the risk of loans going on non-accrual status are concerns for the author's investment thesis.
- The author believes FSK's management has shown the ability to adapt and navigate difficult situations, and the stock is still attractive compared to its peers in terms of valuation and income potential.
Shares of FS KKR Capital Corp ( FSK ) were declining into their Q4 2023 earnings report and dramatically sold off after they Q4 numbers were published. Shares of FSK had declined by -$1.14 (-5.49%) from January 4 th through February 26 th , then immediately after their Q4 earnings hit the street, shares declined another -$1.15 (-5.86%) over the next two days to $18.48. Shares tried to rebound, then retraced back to the mid $18s over the next two weeks, and since then, have rebounded past the $19 level. It looks like the market wasn't thrilled with the declining net investment income ((NII)) especially since we're in a high interest-rate environment. After going through the numbers and looking at many of the larger business development corporations ((BDC)) results for the 2023 fiscal year, I am still bullish on FSK. The dividend looks well covered and after looking at my personal investment, I plan on adding to my position. I started acquiring shares in April of 2023, and my price per share is $19.24. I made seven purchases since April of 2023 and have already generated 11.97% of my initial investment from their distributed income. I believe FSK represents an opportunity for income investors, as the underlying assets with FSK's portfolio are trading at a discount. I plan on adding to my position in FSK before their Q1 earnings because I feel there is an opportunity for capital appreciation and large amounts of income to be generated....
FS KKR: Recovering From The Drop And Generating Large Income Yielding 13.35%