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PennantPark Investment Corporation (PNNT)
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Brookfield Asset Management Inc Class A Limited (BAM)
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Blue Owl Capital Corporation (OBDC)
Q: Please compare the first two with BAM. Seems they have much higher dividends, and lower valuation. Would you comfortable to pick one today for a long term investing? Thank you!
5i Research Answer:
OBDC is significantly smaller, but it is cheaper at 8X earnings. The 9.2% dividend reflects the sector. It is a direct lending company to middle size businesses, and we would not consider it comparable to a private equity company such as BN. Its risks are entirely to its loans, and it does not take equity positions. It is highly sensitive to rates and charge offs. Think of it like a bank, specializing in smaller companies. PNNT is similar, yet even smaller and more risky. Market cap is only $465M. It invests in senior loans and again has the same risks. The payout ratio is only 25% but the dividend has been cut many times, including a 66% reduction last year. Neither name compares well to BN, in our view.