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Externally managed BDCs face structural challenges, notably high fees and misaligned incentives, making them difficult portfolio inclusions. I favor internally managed BDCs for long-term value, but selectively own some external names as well. There could be two motives for owning external ones: 1) tactical trades (high risk, high retur) and 2) long-term income compounding.
I'm downgrading the Morgan Stanley Direct Lending Fund to a "Sell" due to rising non-accruals and deteriorating fundamentals. Q2 saw NII per share fall to $0.55 and non-accruals spike from 1.5% to 2.9%, driving a $0.31 NAV decline. Dividend coverage is thin, with base coverage at ~90% on a cash basis and limited prospects for sustainable growth.
The lion's share of BDC players has cut their dividends in the past 12-month period (especially, if we count in supplemental payments). For most BDCs that haven't done that yet, it is only a matter of time before they arrive at such a decision. Among these BDCs, we can also find so-called blue-chip BDCs that some investors view as truly durable income compounders.
Morgan Stanley Direct Lending Fund NYSE: MSDL reported second-quarter net investment income of $38.2 million, or $0.45 per share, down from $0.47 per share in the prior quarter, as higher contributions from its Capstone joint venture were offset by new non-accruals and increased financing costs.
Morgan Stanley Direct Lending Fund (MSDL) Q2 2026 Earnings Call Transcript
Morgan Stanley Direct Lending Fund (MSDL) came out with quarterly earnings of $0.45 per share, beating the Zacks Consensus Estimate of $0.44 per share. This compares to earnings of $0.5 per share a year ago.
NEW YORK--(BUSINESS WIRE)--Morgan Stanley Direct Lending Fund (NYSE: MSDL) (“MSDL” or the “Company”), a business development company externally managed by MS Capital Partners Adviser Inc. (the “Adviser”), today announced its financial results for the second quarter ended June 30, 2026. QUARTERLY HIGHLIGHTS Net investment income of $38.2 million, or $0.45 per share, as compared to $40.5 million, or $0.47 per share, for the quarter ended March 31, 2026; Net asset value of $19.50 per share, as com.
Investors need to pay close attention to MSDL stock based on the movements in the options market lately.