High Yield, High Cost: The Real Returns Of ECC And SLR Investment
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Arbitrage TraderInvesting Group LeaderFollow5ShareSavePlay(6min)CommentsSummaryEagle Point Credit Co LLC and SLR Investment Corp. trade at similar discounts and market caps but differ in risk-return profiles.ECC boasts a higher gross asset yield (~13.5%) but with much greater volatility, while SLRC offers a steadier, lower-yield profile (~8.15%).After adjusting for losses and expenses, both ECC and SLRC deliver comparable real returns (~6.4% vs. ~5.2%), but SLRC benefits from cheaper leverage.ECC baby bonds currently provide superior risk-adjusted returns and lower credit risk compared to the common stocks of both companies. Svetlana Popova/iStock via Getty Images We continue to be interested in comparing CEFs and BDC companies. Today, we are focusing on Eagle Point Credit Co LLC (ECC) and SLR Investment Corp. (SLRC). Currently, these 2 companies are trading at similar discountsThis article was written byArbitrage Trader15.47K FollowersFollowArbitrage Trader, aka Denislav Iliev has been day trading for 15+ years and leads a team of 40 analysts. They identify mispriced investments in fixed-income and closed-end funds based on simple-to-understand financial logic. Denislav leads the investing group Trade With Beta, features of the service include: frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of 1200+ equities, IPO previews, hedging strategies, an actively managed portfolio, and chat for discussion. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.