Core Insights - The current market presents a favorable environment for income investors, with many high-yielding assets available at attractive valuations [2] - The focus is on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1][2] Investment Strategy - The investment group iREIT+HOYA Capital specializes in high-yield, dividend growth investment ideas, targeting dividend yields up to 10% [2] - The group offers research on various asset classes including REITs, ETFs, closed-end funds, preferred stocks, and dividend champions [2] Analyst Position - The analyst has a beneficial long position in FDUS shares, indicating a personal investment interest in the stock [3]

Core Insights - The current market presents a favorable environment for income investors, with many high-yielding assets available at attractive valuations [2] - The focus is on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1][2] Investment Strategy - The investment group iREIT+HOYA Capital specializes in high-yield, dividend growth investment ideas, targeting dividend yields up to 10% [2] - The group offers research on various asset classes including REITs, ETFs, closed-end funds, preferred stocks, and dividend champions [2] Investor Profile - The investment approach is defensive in nature, aimed at medium- to long-term horizons, which helps in managing risks associated with initial investment principal [2]

Core Insights - This year, two fundamental aspects have negatively impacted Business Development Companies (BDCs), causing investor anxiety particularly regarding yield perspectives [1] Group 1 - The performance of BDCs has been depressed due to specific market conditions [1]

Group 1 - The Q3 earnings season is nearing its end, with most major BDCs having reported their financial results [1] - Roberts Berzins has over a decade of experience in financial management, focusing on corporate financial strategies and large-scale financings [1] - Berzins has contributed to the institutionalization of the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [1] Group 2 - Berzins has been involved in developing national SOE financing guidelines and frameworks to channel private capital into affordable housing [1] - He holds a CFA Charter and an ESG investing certificate, and has experience with the Chicago Board of Trade [1] - Berzins actively participates in thought-leadership activities to support the development of pan-Baltic capital markets [1]

Core Insights - Fidus Investment (NASDAQ: FDUS) has been consistently ranked among the top three Business Development Companies (BDCs) since March 2024, indicating strong performance and investor confidence [1] Company Overview - Fidus Investment has shown improvement across various metrics, suggesting a positive trend in its operational and financial performance [1] Analyst Background - The analyst, Roberts Berzins, has over a decade of experience in financial management, focusing on corporate financial strategies and large-scale financings [1] - Berzins has contributed to the institutionalization of the REIT framework in Latvia, aimed at enhancing liquidity in pan-Baltic capital markets [1] - His work includes developing national financing guidelines for state-owned enterprises and frameworks for channeling private capital into affordable housing [1] - Berzins holds a CFA Charter and an ESG investing certificate, and has experience with the Chicago Board of Trade [1]

Core Insights - Fidus Investment (NASDAQ: FDUS) has been consistently ranked among the top three Business Development Companies (BDCs) since March 2024, indicating strong performance and investor confidence [1] Company Overview - Fidus Investment is recognized for its improving financial metrics and overall performance, which has attracted attention from analysts and investors alike [1] Analyst Background - The analyst, Roberts Berzins, has over a decade of experience in financial management, focusing on corporate financial strategies and large-scale financings [1] - Berzins has contributed to the institutionalization of the Real Estate Investment Trust (REIT) framework in Latvia, aimed at enhancing liquidity in the pan-Baltic capital markets [1] - His work includes developing national State-Owned Enterprise (SOE) financing guidelines and frameworks to channel private capital into affordable housing [1] - Berzins holds a CFA Charter and an ESG investing certificate, and has experience with the Chicago Board of Trade [1]

Core Viewpoint - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with other asset classes like Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The company advocates for a diversified approach to investing, suggesting that a solid base of dividend growth stocks can be complemented by other investment vehicles to create a balanced portfolio [1]. - The strategy aims to boost investment income while still capturing total returns that align with the performance of the S&P 500 index [1]. Performance Insights - The article highlights that the hybrid investment system can yield a total return that is competitive with traditional index funds, indicating a potential for long-term growth and income generation [1].

Core Viewpoint - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with other asset classes like Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The company advocates for a diversified approach to investing, suggesting that a solid base of dividend growth stocks can be effectively supplemented with alternative investments to boost overall returns [1]. - The strategy aims to achieve a total return that aligns with the performance of the S&P index, indicating a balanced focus on both income generation and capital appreciation [1].

Financial Data and Key Metrics Changes - Total investment income for Q3 2025 was $37.3 million, a decrease of $2.7 million from Q2 2025, primarily due to a decline in interest income and fee income [10] - Net investment income (NII) for Q3 was $0.49 per share, down from $0.53 per share in Q2 2025 [11] - Adjusted NII was $0.50 per share in Q3, compared to $0.57 per share in Q2 2025 [12] - Total expenses for Q3 were $19.9 million, a decrease of $1.5 million from Q2 2025 [11] - Net asset value grew 2.7% to $711 million at quarter end, compared to $692.3 million as of June 30, 2025 [6] Business Line Data and Key Metrics Changes - Originations for Q3 included $69.7 million in first-lien securities and $4.7 million in equity investments, totaling $74.5 million [7] - The portfolio grew to $1.2 billion on a fair value basis as of September 30, 2025, equal to 102% of cost [7] - First-lien investments comprised 82% of the debt portfolio, while equity investments stood at $143.4 million, or 12% of the total portfolio [8] Market Data and Key Metrics Changes - M&A activity increased in Q3 compared to the first half of the year, with expectations for continued deal flow into Q4 [5] - The weighted average interest rate on outstanding debt was 4.9% as of September 30, 2025 [12] Company Strategy and Development Direction - The company focuses on investing in high-quality, lower-middle-market companies with resilient business models that generate recurring revenue [4] - The strategy includes supporting portfolio companies with growth capital and leveraging long-standing relationships with deal sponsors [5] - The company aims to preserve capital and generate attractive risk-adjusted returns for shareholders [9] Management's Comments on Operating Environment and Future Outlook - Management noted that market activity is expected to be relatively decent in Q4 2025, with strong expectations for originations [8] - The company has limited exposure to tariff impacts from China, with only 5% to 6% of the total portfolio affected [24] - There are no significant concerns regarding the impact of the government shutdown on portfolio companies [26] Other Important Information - Total dividends paid for Q3 amounted to $0.57 per share, including a supplemental dividend of $0.14 per share [5] - The board declared a total dividend of $0.50 per share for Q4, payable on December 29, 2025 [6] Q&A Session Summary Question: Market activity outlook for Q4 - Management indicated that deal flow has picked up and is expected to remain strong in Q4, with several add-on investments already made [17][18] Question: Deal terms and pricing - Management noted that pricing in the lower middle market has stabilized, with no significant changes in deal structures [19][20] Question: Exposure to tariff policy related to China - Management confirmed limited exposure to tariffs, with only two companies significantly affected, both performing well [24][25] Question: Impact of government shutdown - Management stated that exposure to government contracts is limited and not currently impacting portfolio companies [26][27]

Core Insights - Fidus Investment (FDUS) reported quarterly earnings of $0.5 per share, matching the Zacks Consensus Estimate, but down from $0.61 per share a year ago [1] - The company posted revenues of $37.25 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 0.79%, but down from $38.38 million year-over-year [2] - Fidus Investment shares have underperformed the market, losing about 1% since the beginning of the year compared to the S&P 500's gain of 15.6% [3] Earnings Performance - The company has surpassed consensus EPS estimates three times over the last four quarters [1] - Fidus Investment has topped consensus revenue estimates four times over the last four quarters [2] - The current consensus EPS estimate for the coming quarter is $0.46 on revenues of $38.35 million, and for the current fiscal year, it is $2.07 on revenues of $151.75 million [7] Market Outlook - The estimate revisions trend for Fidus Investment was unfavorable ahead of the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The outlook for the Financial - SBIC & Commercial Industry, to which Fidus Investment belongs, is currently in the bottom 23% of Zacks industries, suggesting potential challenges ahead [8] Comparative Analysis - Crescent Capital BDC (CCAP), another company in the same industry, is expected to report quarterly earnings of $0.47 per share, reflecting a year-over-year decline of 26.6% [9] - Crescent Capital BDC's revenues are anticipated to be $42.42 million, down 17.8% from the year-ago quarter [10]