|Shares Out. (in M):||426||P/E||0||0|
|Market Cap (in $M):||7,650||P/FCF||0||0|
|Net Debt (in $M):||0||EBIT||0||0|
“Our industry has low barriers to entry… but high barriers to success” (ARCC Investor Day 2019.5)
|Entry||06/18/2019 11:17 AM|
More philosophical than technical, but how do you get comfortable with the "mark to market" risk of BDC's in general and ARCC in particular? The underlying cash flows are very steady, but the NAV can be volatile and the market price even more so. And now we sit with ARCC above book value, the market at an all time high, and credit markets quite tight. Presumably at some point those conditions will reverse and ARCC/all BDC's will trade down a lot - cash flows modest decline, NAV big decline, price huge decline. Would it not be better to wait and buy then?
At what point does scale become a disadvantage - i.e. too big to put money to work at good enough risk adjusted rates? Don't they just become price takers at a certain point? There is no shortage of capital available in private credit right now.
We like ARCC/have owned a long time as well and haven't come up with great answers to these questions. Thanks.