More on why its time to pick up Fifth Street Shares

Fifth Street Finance Corp (NASDAQ:FSC) has my attention today. For my followers unfamiliar with the name it is a specialty finance company known as a business development company. It finances growing companies and its goal is to make money from the interest and other terms of the loan agreements it has in place. Fifth Street lends to and invests in small and mid-sized companies in connection with investments by private equity sponsors. This business generates strong margins and earnings but comes with the risks of the financed companies going under. Still, the model works and has allowed Fifth Street to pay its sizable dividends. That said, the new management team that has come in is cleaning house and its actions have driven the stock down to a fresh new 52-week low of about $7.00 (figure 1). But these actions may just save the company and protect a long-term investors. In this article I will address the company just two months after I thought it was worth owning at $8.50. Here we are now, down 17%. So what is the long-term investor to do? Well, I think with this new management, we have a 'new' investment. The company seems like it will operate more conservatively with this new team following its earnings report this morning. There is a lower dividend which I will cover in a bit, but the yield is still stellar. And the dividend is sustainable. For those holding, I will.......READ MORE