There is a particular magic trick in finance that hides in plain sight. It involves no sleight of hand, no back room dealings, and no regulatory violations. It sits right there in the quarterly earnings reports of Business Development Companies, printed in clean black ink, fully disclosed. And yet most investors walk right past it […]
PIK Income: The Hidden Accounting Trap in Your Favorite BDC Read More »
There’s a peculiar gap in American finance that most people never think about. Banks love lending to massive corporations because the deals are huge and the risks are calculable. Venture capitalists chase technology startups with dreams of hundred-fold returns. But what about the company that makes industrial fasteners in Ohio? The regional logistics firm in
The Middle-Market Medic: How BDCs Keep Main Street Breathing Read More »
There’s a particular breed of investor who checks their brokerage account the way some people check their pulse. They want to see that dividend hit. They want confirmation that their money is working, that capital deployed is capital rewarded. And nowhere is this impulse stronger than among those who invest in business development companies. BDCs
Is Your Dividend a Return of Capital or a Return on Capital? Read More »
There’s something wonderfully absurd about a law that forces companies to hand over their profits. It’s like mandating generosity, which sounds about as effective as legislating happiness or requiring spontaneity. Yet this is precisely what happens with Business Development Companies, and the mechanism behind it reveals something fascinating about how we’ve tried to engineer prosperity
The 90% Rule: Why BDCs are Legally Obligated to Make You Rich Read More »