The Board of Directors of Source Capital, Inc. (NYSE: SOR) (the
“Fund”) today approved increasing the Fund’s regular monthly
distribution rate 12.6% from $0.185 ($2.22 annualized) to $0.2083
($2.50 annualized) for each of the next three months as
follows:
Regular Monthly Distributions:
Month
Rate per Common Share
Record Date
Payable Date
June 2023
$0.2083
June 16, 2023
June 30, 2023
July 2023
$0.2083
July 18, 2023
July 31, 2023
August 2023
$0.2083
August 16, 2023
August 31, 2023
This equates to an approximate 6.7% distribution rate based on
the Fund’s closing market price on Friday May 5, 2023. The
distribution rate may be adjusted in the future based on a variety
of factors including, but not limited to, interest rate levels and
credit spreads, the Fund’s investment allocation to public and
private credit of varying quality and/or to potentially higher
returning (but lower yielding) equities, and the amount of leverage
employed.
The portfolio managers note that as of March 31, 2023,
approximately 29% of the Fund was invested in, or committed to, the
private credit/loan asset class compared to 26% as of March 31,
2022.
About Source Capital, Inc.
Source Capital, Inc. is a closed-end investment company managed
by First Pacific Advisors, LP. Its shares are listed on the New
York Stock Exchange under the symbol “SOR.” The investment
objective of the Fund is to seek maximum total return for
shareholders from both capital appreciation and investment income
to the extent consistent with protection of invested capital. The
Fund may invest in longer duration assets like dividend paying
equities and illiquid assets like private loans in pursuit of its
investment objective and is thus intended only for those investors
with a long-term investment horizon (greater than or equal to ~5
years).
You can obtain additional information by visiting the website
at www.fpa.com, by email at crm@fpa.com,
toll free by calling 1-800-982-4372, or by contacting the Fund
in writing.
Important Disclosures
You should consider the Fund’s investment objectives, risks,
and charges and expenses carefully before you invest.
Distributions may include ordinary income, net capital gains
and/or returns of capital. Generally, a return of capital would
occur when the amount distributed by the Fund includes a portion of
(or is comprised entirely of) your investment in the Fund in
addition to (or rather than) your pro-rata portion of the Fund’s
net income or capital gains. The Fund’s distributions in any period
may be more or less than the net return earned by the Fund on its
investments, and therefore should not be used as a measure of
performance or confused with “yield” or “income.” A return of
capital is not taxable; rather it reduces a shareholder’s tax basis
in his or her shares of the Fund. If the Fund estimates that a
portion of its distribution may be comprised of amounts from
sources other than net investment income, the Fund will notify
shareholders of the estimated composition of such distribution
through a separate written Section 19 notice. Such notices are
provided for informational purposes only and should not be used for
tax reporting purposes. Final tax characteristics of all Fund
distributions will be provided on Form 1099-DIV, which is mailed
after the close of the calendar year.
It is important to note that differences exist between the
Fund’s daily internal accounting records and practices, the Fund’s
financial statements prepared in accordance with U.S. GAAP, and
recordkeeping practices under income tax regulations. Please see
the Fund’s most recent shareholder reports for more detailed tax
information.
The Fund’s distribution rate may be affected by numerous
factors, including changes in realized and projected market
returns, Fund performance, and other factors. There can be no
assurance that a change in market conditions or other factors will
not result in a change in the Fund’s distribution rate at a future
time.
As with any stock, the price of the Fund’s common shares will
fluctuate with market conditions and other factors. Shares of
closed-end management investment companies frequently trade at a
price that is less than (a “discount”) or more than (a “premium”)
their net asset value. If the Fund’s shares trade at a premium to
net asset value, there is no assurance that any such premium will
be sustained for any period of time and will not decrease, or that
the shares will not trade at a discount to net asset value
thereafter.
The Fund’s daily New York Stock Exchange closing market prices,
net asset values per share, as well as other information, including
updated portfolio statistics and performance are available by
visiting the website at
https://fpa.com/funds/overview/source-capital, by email at
crm@fpa.com, toll free by calling 1-800-279-1241 (option 1), or by
contacting the Fund in writing.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the
securities in any state in which such offer, solicitation or sale
would be unlawful under the securities laws of any such state. In
the event of a tender offer, there may be tax consequences for a
stockholder. For example, a stockholder may owe capital gains taxes
on any increase in the value of the shares over your original
cost.
Investments, including investments in closed-end funds, carry
risks and investors may lose principal value. Capital markets are
volatile and can decline significantly in response to adverse
issuer, political, regulatory, market, or economic developments. It
is important to remember that there are risks inherent in any
investment and there is no assurance that any investment or asset
class will provide positive performance over time. Value style
investing presents the risk that the holdings or securities may
never reach our estimate of intrinsic value because the market
fails to recognize what the portfolio management team considers the
true business value or because the portfolio management team has
misjudged those values. In addition, value style investing may fall
out of favor and underperform growth or other style investing
during given periods. Non-U.S. investing presents additional risks,
such as the potential for adverse political, currency, economic,
social or regulatory developments in a country, including lack of
liquidity, excessive taxation, and differing legal and accounting
standards. Non-U.S. securities, including American Depository
Receipts (ADRs) and other depository receipts, are also subject to
interest rate and currency exchange rate risks.
Fixed income instruments are subject to interest rate, inflation
and credit risks. Such investments may be secured, partially
secured or unsecured and may be unrated, and whether or not rated,
may have speculative characteristics. The market price of the
Fund’s fixed income investments will change in response to changes
in interest rates and other factors. Generally, when interest rates
rise, the values of fixed income instruments fall, and vice versa.
Certain fixed income instruments are subject to prepayment risk
and/or default risk.
Private placement securities are securities that are not
registered under the federal securities laws and are generally
eligible for sale only to certain eligible investors. Private
placements may be illiquid, and thus more difficult to sell,
because there may be relatively few potential purchasers for such
investments, and the sale of such investments may also be
restricted under securities laws.
The Fund may use leverage. While the use of leverage may help
increase the distribution and return potential of the Fund, it also
increases the volatility of the Fund’s net asset value (NAV), and
potentially increases volatility of its distributions and market
price. There are costs associated with the use of leverage,
including ongoing dividend and/or interest expenses. There also may
be expenses for issuing or administering leverage. Leverage changes
the Fund’s capital structure through the issuance of preferred
shares and/or debt, both of which are senior to the common shares
in priority of claims. If short-term interest rates rise, the cost
of leverage will increase and likely will reduce returns earned by
the Fund’s common stockholders.
The Fund invests in Special Purpose Acquisition Companies
(“SPACS”). SPACS involve risks, including but not limited to: (i)
having no operating history or ongoing business other than seeking
acquisitions; (ii) not being required to undergo the rigorous due
diligence of a traditional initial public offering (“IPO”); (ii)
investors may become exposed to speculative investments; (iv)
providing sponsors certain incentives not found in traditional IPOs
which may cause potential conflicts of interest in the structure of
the SPAC; (v) inability to identify an acquisition target or obtain
approval for a target by shareholders; and/or (vi) shareholders may
not have sufficient voting power to disapprove a SPAC transaction.
As with any investment, an investment in a SPAC may lose value.
SPACS may be considered illiquid, may be subject to restrictions on
resale, or may be diluted by additional offerings.
This material has been distributed for informational purposes
only and should not be considered as investment advice or a
recommendation of any particular security, strategy or investment
product. No part of this material may be reproduced in any form, or
referred to in any other publication, without express written
permission.
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version on businesswire.com: https://www.businesswire.com/news/home/20230508005709/en/
Investors: 800-982-4372, crm@fpa.com, www.fpa.com
Media: Tucker Hewes, Hewes Communications, Inc., 212-207-9451,
tucker@hewescomm.com
Source Capital (NYSE:SOR)
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