BGX: Not Exploiting Short Opportunities And Likely To Cut Further

2025-05-23 07:25:45 ET

Summary

• BGX offers high income via floating-rate loans and bonds, but its yield lags peers and recent distribution cuts reflect Fed rate policy impacts.
• Despite its 'long-short' branding, BGX rarely uses short positions, missing opportunities to hedge or profit during bond market declines.
• The fund's heavy exposure to floating-rate assets makes it vulnerable to further Fed rate cuts, likely pressuring future distributions and share price.
• The fund has failed to cover its distributions year-to-date, and failed to cover its 2024 distributions with net investment income.
• BGX trades at a modest discount versus peers, but with limited upside and more cuts likely, I see little reason to buy now.

The Blackstone Long-Short Credit Income Fund ( BGX ) is a closed-end fund that provides income-oriented investors with a fairly unique way to achieve their goals. On the surface, this fund is a debt fund that invests primarily in floating-rate loans and bonds. However, the difference between this fund and most other bond funds is that the Blackstone Long-Short Credit Income Fund also has the ability to go short whenever conditions warrant it. This feature allows the Blackstone Long-Short Credit Fund to be one of the few closed-end funds that can benefit from rising long-term interest rates....

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