FRB revisited and updated its rankings for 50 publicly traded business development companies (BDCs) through Q1/16 to reflect trailing shareholder returns relative to BDC averages and external manager compensation structures. By weighting and combining these two scores, FRB created a tiered ranking of BDCs’ overall investment competitiveness.
Based on investment competitiveness, the highest-scoring BDCs are newly led by Monroe Capital, which is an FBR Alpha Generator. Main Street Capital is ranked second, and TCP Capital is ranked third. All three are “outperform” rated.
Monroe Capital is also the new top-scoring BDC based on shareholder returns. The top five scoring BDCs for shareholder returns alone as of Q1/16 were: Monroe Capital (up from a No. 4 ranking previously), TPG Specialty Lending, TCP Capital, Saratoga Investment and Fidus Investment. All five had trailing ROIC and total economic income yields above the BDC average.
Monroe Capital and Fidus Investment showed strong economic income generation over the last 12 months with high dividends and NAV/share expansion. TPG Specialty Lending and TCP Capital were supported by consistent, substantial dividend coverage. Saratoga Investment was driven primarily by economic income generation from high dividends in excess of NAV/share decline.
The full report includes a breakdown of the calculations used in computing the shareholder return score.