Oaktree Specialty Lending: Get Ready for a Dividend Cut

In October, Oaktree Capital Group (NYSE: OAK) took over the management of Fifth Street Finance, a troubled business development company. It renamed the company Oaktree Specialty Lending Corporation (NASDAQ: OCSL). But don't be confused -- for now, this is a new company in name only.

The underlying assets from which Oaktree Specialty Lending derives its value are the product of its old manager, Fifth Street Asset Management (NASDAQ: FSAM), a fact that becomes clear from its dismal fiscal fourth-quarter earnings report. On Wednesday, Oaktree Specialty Lending revealed that book value plunged $1.01 per share in a single calendar quarter, to $6.16 per share. That's a very "Fifth Street" kind of quarter.

This quarter, Oaktree Specialty Lending's board of directors took an ax to the investment portfolio. Next quarter, the dividend is a likely victim. Many questions also remain unanswered about what Oaktree has in store for this BDC.

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Source: Fool.com