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BDC’s: What Am I Buying? Prospect Capital Corporation (PSEC), Apollo Investment Corp. (AINV) and More

This is not to say that management will always be correct in their choice of acquisition or investment. For example, buried deep in the 2011 annual report of Main Street Capital Corporation (NYSE:MAIN) is a discussion of the $1.2 million loss incurred on hybrid bicycle manufacturer Currie Tech. As a shareholder, a loss like this is passed directly through into the price of common stock. So when a management team makes a bad bet, shareholders lose value as well.  CEO Vincent Foster recently reiterated that the current performance of the 136 portfolio companies of Main Street Capital is expected to remain strong and the 6% dividend safe.

With the type of diversification and high yields that both Prospect and Apollo offer, they are good additions to a well-rounded portfolio. Wise BDC investors will take the time to read through financial statements and conduct research to understand exactly which BDC is right for their portfolio.  The reward for this research will be a steady and safe dividend.

The article BDC’s: What Am I Buying? originally appeared on and is written by Spencer Houlihan.

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