Ares Capital Corporation (ARCC), Fifth Street Finance Corp. (FSC), and One Thing to Watch Before Buying BDCs

Spoiler alert: American Capital trades at a discount to NAV.

The discount means that American Capital has gobbled up nearly 18% of its outstanding shares this way since the third quarter of 2011.

The result is that we have an unappreciated BDC that closed yesterday at a 22% discount to its year-end NAV. We’ll get a new NAV snapshot when it reports next week.

So, yes, there are bargains to be had in the BDC space. Investors just have to remember to look beyond the actual yields.

The article 1 Thing to Watch Before Buying BDCs originally appeared on

Longtime Fool contributor Rick Munarriz owns shares of American Capital. The Motley Fool has no position in any of the stocks mentioned.

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