Dallas, Texas 09/10/2013 (Financialstrend) – Over the past few weeks Fifth Street Finance Corp. (NASDAQ:FSC) has fallen in analyst rankings primarily because it has missed its earnings per share projections. Apart from this, it has also not been able to cover dividend by almost 14% for the last quarter.
This automatically brings down its payout category and profit category for the quarter and is a reflection of the potential reduction in dividend. Many analysts have also begun downgrading the FSC stock and the company cannot really be categorized as a high-yield one.
Moving into aviation space
Last month, the company announced the formation of a new portfolio-company in First Star Aviation, the aircraft-leasing sector. The aviation company will be focusing on acquiring and leasing a commercial-aircraft portfolio to various operators across the world. The equity capital and debt for this venture will be provided by FSC.
The Fifth Star formation is actually a significant-milestone in Fifth Street’s continued growth as it uses its very strong balance-sheet, enhances its yield based platform and diversifies into a new asset class and industry. From a historical viewpoint, the aircraft industry has always produced favorable risk/return profiles and very string risk adjusted returns.
About the company
Fifth Street Finance Corp. (NASDAQ:FSC) is essentially a specialty-finance company. It invests in and lends to SMB companies by private equity-sponsors, in connection with the investments. Its investment objective is maximization of its portfolio’s total-return by the generation of current-income from capital appreciation and debt investments from its own equity investments.
As of 30 September 2011, 90.9 percent of the company’s portfolio was made up of debt-investments that had been secured by 1st or 2nd priority lines on assets of the companies on its portfolio. As of the same date, it held equity-investments of preferred stock, common stock or other equity-interests in 27 out of the 65 portfolio companies.