The chart below shows Apollo Investment Corporation’s historical share repurchases, or buybacks, over its corporate history. The amount of stock bought back is shown in shares repurchased by fiscal year.
Share repurchases show alignment between a BDC’s management who are generally compensated based on the amount of assets under management, and shareholders who benefit from higher NAV and NII per share. Repurchasing stock below net asset value can create shareholder value by increasing NAV and NII on a per-share basis. Unfortunately, few BDCs are willing to buy back stock in size, as managers rarely have an incentive to shrink a BDC’s balance sheet.
Buybacks as a percentage of shares outstanding
The chart below shows how much stock Apollo Investment Corp. repurchased as a percentage of shares outstanding by fiscal year.
What you should know:
- Apollo Investment Corp. is becoming much more shareholder-friendly when it comes to share repurchases below net asset value. The company authorized a buyback program as early as August 11, 2011 but it was not used until much later.
- Apollo Investment Corp. has indicated that it will continue to repurchase stock when it trades below NAV.
- Apollo Investment Corp. has excellent repurchase disclosures. See pages 50 and 51 of a recent quarterly 10-Q filing to see its repurchase authorizations, and how much it allocates to its automatic 10b5-1 repurchase plans.