Think

INTRODUCTION

Fifth Street Finance‘s (FSC) stock price has been moving sharply up and down throughout 2017, and especially in the weeks after the BDC’s just-arrived CEO resigned. That happened in April. In May the Investment Advisor of FSC – Fifth Street Asset Management (FSAM) – put itself up for sale. In June, the Wall Street Journal leaked a story that FSAM was being acquired by Oaktree Capital. In July we discovered Oaktree was buying the investment management contracts of FSC and sister BDC Fifth Street Senior Floating Rate (FSFR). Now the participants and investors expect a closing of the acquisition by the IVQ of 2017. FSC began the year peaking at a price of $5.67 in January; dropping to $4.31 when the new CEO announced a large number of non-accruing loans and a reduction in distributions in February, and a new low of $3.92 just before the Wall Street Journal leak. Since then FSC jumped to just over $5.0 until the July 14 confirmation of the Oaktree transaction, which then took the stock price to a high of $5.71 on July 18.  From lowest to highest, FSC has moved 45% in a few weeks, and is now trading back close to its YTD high, and at a level achieved before all the developments mentioned above even occurred.