03.06.14

Hi Folks,

Key indices are removing Business Development Corporations (BDC) out of the respecive indices. This has caused forced, temporary selling pressure.

Below it or not, short sellers will take this info and short sell too – knowing indices are obligated to exit the BDC’s.

Our BDC Portfolio

1. We have the best-of-the-best BDC’s with high quality management.

2. Action? You can add to the BDC position.

3. What is a BDC? A BDC is truly a basket of non agency (read: junk debt for the most part) debt. 

4. Who are the best non-investment grade debt managers?

   1. Martin Whitman of Third Avenue Management,

           2. Howard Marks of $OAK fame

           3.  Vranos of Ellington fame. 

With an out of the money protective put, you can limit the downside risk on BDC’s to a max loss of 15% -33%. Those are the max loss percentages I would shoot for in buying a protective put.

Todd

 

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