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Quo vadis, FS KKR?

My biggest bad investment at the moment is $FSK (-2,68%) which is 40 percent in the red. The dividend will probably be paid today, but that is little consolation.

If I'm seeing things correctly, the share is currently trading below book value - which doesn't happen that often. When I look at the figures, I don't really understand why FS KKR was beaten up like that.

Does anyone here have the crucial tip on what I should focus my attention on when looking at the figures?

10 Comentários

All-in-or-nothing@All-in-or-nothing

Well, in my view, a BDC that lends capital to US SMEs is rightly losing ground due to the overall economic situation in the USA. Interest rate cuts or not, the financing conditions for SMEs are likely to remain steep. Things are not looking so rosy for SMEs in the USA at the moment due to consumer restraint in connection with the economic situation, tariff disputes, etc. Additional tariffs on imports etc. also need to be compensated for financially, which experience has shown is much easier for large corporations (by increasing prices) than for Mittelstand🤷🏼‍♂️. Have you looked into risk provisions (provisions for loan defaults, etc.), write-downs on receivables, etc.? These would be the first points I would look into.

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Solitair@Solitair

@All-in-or-nothing Other BDCs have also fallen recently. Even the heavyweights Main and Ares. Falling interest rates are rather bad for BDCs, as their financing is often linked to the prime rate and they can of course no longer charge such high interest rates when interest rates are generally lower

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Charmin@Charmin

@All-in-or-nothing At 3.0%, their default risk (non-accruals) is indeed higher than the industry average. But still within reasonable limits. Again, I did not expect this to have such an impact.

Well, let's see what I do. I don't really have any difficulty getting rid of bad investments, but I probably need to learn/research more here to improve my assessment ...

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Seventrader@7Trader

Why did you buy $FSK and not $KKR?

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Charmin@Charmin

@7Trader KKR seemed disproportionately expensive to me.

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The W.@thewolfofallstreetz

Are you still short Tesla?

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Charmin@Charmin

@thewolfofallstreetz Of course!

I just don't know what that has to do with my question ...

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Sven Kohlenberg@KingCody

"FS KKR Capital completed the placement of USD 400 million unsecured bonds with a coupon of 6.125% maturing in 2031. The funds are to be used for general corporate purposes, including the repayment of existing debt if necessary. Shareholders also approved the possibility of issuing shares below the net asset value in the future. Analyst reactions followed: RBC lowered the price target to USD 18 and Fitch confirmed the BBB- rating with a negative outlook due to increased non-performing loans and portfolio losses."

Source: https://de.investing.com/news/company-news/fs-kkr-capital-schliest-platzierung-einer-400millionendollaranleihe-ab-93CH-3162331

Added to this are the lower interest rates and the fear of further cuts.

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Charmin@Charmin

@KingCody I saw that, but it was only a week ago. FS KKR has been losing ground for months. Yes, lower interest rates may not necessarily help. But I wouldn't have expected the company to end up below book value ...

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Pit@BORG504

I've also had some for a year and a half and the share price is down 26% - I would have been better off selling them in February for €23 with a big plus. I'll just let them run. Dividends will come, they will recover at some point!

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