Fidus Investment's Q4 2024: Contradictions Unveiled on Spreads, Portfolio Exposure, and Leverage Strategy

These are the key contradictions discussed in Fidus Investment's latest 2024Q4 earnings call, specifically including: Spread Compression, Portfolio Exposure, Leverage and Debt Strategy, and Portfolio Credit Quality:



Portfolio Growth and Performance:
- Fidus Investment Corporation's portfolio grew by 14% to $1.1 billion on a fair value basis at the end of 2024 compared to 2023.
- The growth was driven by strategic investments in high-quality companies with durable business models, adhering to underwriting discipline and co-investing in equity.

Dividend and Earnings:
- The company declared a total dividend of $0.54 per share for Q1 2025, equal to 100% of the surplus in adjusted NII over the base dividend from the prior quarter.
- Despite a decline in SOFR, resulting in lower yields, dividends were maintained by capitalizing on equity portfolio performance.

Originations and Realizations:
- Originations totaled $120.3 million in Q4, including $43.9 million in five new portfolio companies and $76.4 million in existing companies.
- The company realized $122.8 million from repayments and transactions, including the exit of four portfolio companies, contributing to a stable portfolio size.

Credit Quality and Risks:
- Non-accruals on a fair value basis for the fourth quarter stayed under 1% of the portfolio, with non-accruals representing 4.1% of the total portfolio on a cost basis.
- Despite the write-down of Quantum IR Technologies, the portfolio's overall health was maintained through diversification and equity portfolio appreciation.