Updated: Jan 23, 2017 @ 11:40 am

The chart below shows Fifth Street Finance’s historical share repurchases, or buybacks, over its corporate history.

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.

The details:

  • Fifth Street Finance launched a new $12.5 million authorization in November 2016.
  • Fifth Street Finance’s board of directors authorized repurchases in October 2008. That program was little used.
  • Fifth Street Finance has only recently made more use of its repurchase authorization to buy back stock under NAV.