Oversubscribed Repurchase Offers: What to expect when you’re expecting disappointment

I feel a certain sense of camaraderie with other investors when I read the results of share repurchase offers. It’s like being in an emergency room waiting area. You know everyone is as helpless and disappointed as you are, but at least you’re not alone. You want nothing more than resolution, but you’ll settle for communication.

Some fund sponsors are great communicators, which I appreciate. As they say, “bad news early is good news.”

Take FS Energy and Power: Frustrating? Yes. Transparent? Also yes.

Quarter after quarter the investment team provides an update on FSEP, even in the face of brutal NAV declines and indefinitely suspended repurchase offers.

Now take Hancock Park Corporate Income, Inc. and NexPoint Capital, Inc.

Neither fund publishes the complete results of their share repurchase offers, just shares accepted. Consequently, investors can only confirm that the repurchase offer was oversubscribed, which they almost certainly already knew. After all, investors who can easily and predictably find liquidity rarely check the results of repurchase offers.

The magnitude of oversubscription is important.

Without it, investors and financial advisors have no way of planning for the future liquidity needs.

Like being a hospital waiting room. All we want is an update.

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