| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 41.35 | 66 |
| Intrinsic value (DCF) | 9.70 | -61 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 40.49 | 62 |
First Eagle Alternative Capital BDC, Inc. (NYSE: FCRX) is a business development company (BDC) specializing in direct and fund-of-fund investments in middle-market companies. Focused on debt and equity securities, FCRX targets businesses with annual revenues of $25 million to $500 million and EBITDA between $5 million and $25 million. The company invests in sectors such as outsourced business services, healthcare, financials, retailing, media, and consumer discretionary, avoiding start-ups and distressed situations. FCRX primarily structures its investments as unsecured subordinated debt, mezzanine debt, second lien secured debt, and associated equity components like warrants or preferred stock. With a disciplined investment approach, FCRX often acts as a lead or sole investor, deploying $10 million to $25 million per transaction. The company’s strategy emphasizes stable cash flows and capital preservation, making it a key player in the middle-market lending space. Operating in the Financial Services sector, FCRX provides investors with exposure to private credit opportunities while generating income through dividends.
First Eagle Alternative Capital BDC (FCRX) presents an attractive investment opportunity for income-focused investors, given its dividend yield of $1.25 per share and a diversified middle-market credit portfolio. The company’s disciplined underwriting and focus on non-cyclical sectors mitigate some risks, but its high leverage (total debt of $875.8 million vs. cash of $10.1 million) and exposure to economic downturns remain concerns. With a market cap of ~$918 million and a low beta (0.02), FCRX offers stability but limited growth upside. Investors should weigh its strong cash flow generation ($58.9 million operating cash flow) against sector-wide risks like rising interest rates and credit defaults.
FCRX competes in the crowded BDC space by targeting lower-middle-market companies with structured debt solutions, differentiating itself through a hybrid debt-equity approach and sector specialization. Its competitive advantage lies in its ability to act as a lead investor, providing flexible capital solutions to underserved borrowers. However, its smaller scale compared to larger BDCs like Ares Capital (ARCC) limits its ability to participate in larger syndicated deals. FCRX’s focus on non-cyclical industries (e.g., healthcare, business services) provides resilience, but its reliance on subordinated debt exposes it to higher default risks. The company’s low beta suggests minimal correlation to broader equity markets, appealing to risk-averse investors. Yet, its high debt load and modest cash reserves could constrain liquidity during market stress. Competitors with stronger balance sheets may outperform in a downturn, but FCRX’s niche focus and consistent dividend payouts support its appeal in stable economic conditions.