WhiteHorse Finance, Inc. (WHF) | Investment Case

1. Company Snapshot

1.a. Company Description

WhiteHorse Finance, Inc.is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries.It prefers to invest in United States.

It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

Show Full description

1.b. Last Insights on WHF

WhiteHorse Finance's recent performance was negatively impacted by its Q2 earnings miss, with quarterly earnings of $0.28 per share, falling short of the Zacks Consensus Estimate of $0.31 per share. This decline from $0.4 per share a year ago likely affected investor sentiment. Additionally, the company's business development company (BDC) sector faces intense competition, with Goldman Sachs BDC and others offering attractive yields. WhiteHorse Finance's recent addition to the Zacks Rank #5 (Strong Sell) List also raised concerns.

1.c. Company Highlights

Last Price	7.66
Change Percentage	0.96%
Open	7.56
Previous Close	7.59
Market Cap ( Millions)	178
Volume	48486
Year High	11.31
Year Low	6.39
M A 50	7.06
M A 200	8.66

FCF Yield	54.68%
Dividend Yield	20.55%
ROE	6.03%
Debt / Equity	0.00%
Net Debt / EBIDTA	-143.10%
Price To Book	0.67
Price Earnings Ratio	10.66
Price To FCF	1.83
Price To sales	3.04
EV / EBITDA	4.15

2. WhiteHorse Finance's Q3 Earnings: A Mixed Bag

WhiteHorse Finance reported GAAP net investment income and core NII of $6.1 million or $0.263 per share for Q3 2025, slightly below the $6.6 million or $0.282 per share in Q2 2025. The actual EPS came out at $0.26, missing analyst estimates of $0.2905. The company's NAV per share decreased by 3.6% to $11.41. The results reflect the onset of interest rate cuts, continued pressure on market spreads, and material markdowns on some credits.

Publication Date: Nov -20

                                    📋 Highlights
                                    Decline in Core NII::
                                                Q3 core NII fell to $6.1M ($0.263/share) from $6.6M ($0.282/share) in Q2, reflecting earnings pressure.
Distribution Reset::
                                                Quarterly base distribution cut to $0.25/share, implying an 8.8% annualized yield at $11.41 NAV/share.
Incentive Fee Waiver::
                                                Adviser reduced income-based incentive fee to 17.5% for two quarters, a 2.5% temporary reduction to support distributions.
Share Buyback Program::
                                                $15M repurchase authorized at >40% discount to NAV, deemed highly accretive for shareholders.
Improved Leverage Metrics::
                                                Debt-to-equity ratio fell to 1.07x from 1.22x Q2, with asset coverage at 180.7% (vs. 150% minimum).

                                

Distribution Reset and Share Buyback

In response to the earnings and current market conditions, the Board of Directors reset the quarterly base distribution to $0.25 per share, representing an implied 8.8% annualized yield based on the company's ending NAV per share. Additionally, the adviser voluntarily reduced the incentive fee on net investment income from 20% to 17.5% for the next two fiscal quarters. The Board also approved a share buyback program of up to $15 million, as the company's current share price implies a discount to its current book value of more than 40%.

Portfolio Performance and Outlook

The company's risk ratings showed that approximately 81.8% of its portfolio positions carried a 1 or 2 rating, an increase from 76.8% in the prior quarter. The investment in the STRS JV continues to be accretive, generating a mid-teens return on equity. WhiteHorse Finance expects recoveries from stressed assets, which could potentially increase its capacity and allow for a higher dividend. The company is trading at a significant discount to NAV, with a P/B Ratio of 0.63, indicating potential value for shareholders.

Valuation and Dividend Yield

WhiteHorse Finance's Dividend Yield is 22.03%, which is attractive in the current market. The company's P/E Ratio is 9.95, and its ROE is 6.03%. The Net Debt / EBITDA ratio is -1.43, indicating a healthy debt position. With the share buyback program and the reduced incentive fee, the company is taking steps to maximize distributions to shareholders while preserving the stability of its NAV.

3. NewsRoom

Comparing WhiteHorse Finance (NASDAQ:WHF) and Golub Capital BDC (NASDAQ:GBDC)

Dec -03

Source: defenseworld.net

WhiteHorse Finance, Inc. $WHF Shares Sold by Advisors Asset Management Inc.

Dec -03

Source: defenseworld.net

Reviewing Carlyle Secured Lending (NASDAQ:CGBD) and WhiteHorse Finance (NASDAQ:WHF)

Nov -18

Source: defenseworld.net

WhiteHorse Finance (NASDAQ:WHF) versus Crescent Capital BDC (NASDAQ:CCAP) Critical Comparison

Nov -17

Source: defenseworld.net

WhiteHorse Finance: Losses Likely To Continue Following Q3 Earnings

Nov -14

Source: seekingalpha.com

WhiteHorse Finance (WHF) Q3 2025 Earnings Call Transcript

Nov -10

Source: seekingalpha.com

WhiteHorse Finance (WHF) Q3 Earnings and Revenues Lag Estimates

Nov -10

Source: zacks.com

WhiteHorse Finance, Inc. Announces Third Quarter 2025 Earnings Results, Stock Repurchase Program up to $15.0 Million And Declares Quarterly Distribution of $0.25 Per Share

Nov -10

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.27%)

6. Segments

Investment and Related Activities

Expected Growth: 10.27%

WhiteHorse Finance, Inc.'s 10.27% growth in Investment and Related Activities is driven by increasing demand for customized financing solutions, expansion into new markets, and a strong pipeline of investment opportunities. Additionally, the company's focus on diversifying its investment portfolio and optimizing its capital structure have contributed to its growth.

7. Detailed Products

Term Loans

WhiteHorse Finance, Inc. offers term loans to businesses, providing a lump sum of capital that can be used for various purposes such as expansion, equipment purchases, or refinancing debt.

Lines of Credit

WhiteHorse Finance, Inc. provides lines of credit to businesses, allowing them to borrow and repay funds as needed, with interest only accruing on the outstanding balance.

Invoice Financing

WhiteHorse Finance, Inc. offers invoice financing, which allows businesses to receive immediate payment on outstanding invoices, improving cash flow and reducing the need for bad debt reserves.

Asset-Based Loans

WhiteHorse Finance, Inc. provides asset-based loans, which use a company's assets as collateral to secure a loan, providing access to capital for growth and expansion.

Mergers and Acquisitions Financing

WhiteHorse Finance, Inc. offers financing solutions for mergers and acquisitions, providing capital for strategic growth initiatives.

8. WhiteHorse Finance, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

WhiteHorse Finance, Inc. operates in a niche market, providing financing solutions to middle-market companies. While there are some substitutes available, they are not as effective or efficient, giving WhiteHorse a competitive advantage.

Bargaining Power Of Customers

WhiteHorse Finance, Inc. has a diverse customer base, and no single customer accounts for a significant portion of its revenue. This reduces the bargaining power of customers.

Bargaining Power Of Suppliers

WhiteHorse Finance, Inc. has a strong reputation and is a significant player in the financing industry. This gives it bargaining power over its suppliers.

Threat Of New Entrants

The financing industry has high barriers to entry, including regulatory hurdles and the need for significant capital. This makes it difficult for new entrants to compete with established players like WhiteHorse Finance, Inc.

Intensity Of Rivalry

The financing industry is competitive, but WhiteHorse Finance, Inc. has a strong market position and a diversified portfolio, which helps it to maintain its market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	54.97%
Debt Cost	8.12%
Equity Weight	45.03%
Equity Cost	10.31%
WACC	9.11%
Leverage	122.10%

11. Quality Control: WhiteHorse Finance, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

SLR Investment

A-Score: 7.7/10

Value: 6.9

Growth: 6.6

Quality: 7.8

Yield: 10.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

Tortoise Energy Infrastructure

A-Score: 7.6/10

Value: 4.3

Growth: 6.6

Quality: 9.0

Yield: 10.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

MidCap Financial

A-Score: 7.1/10

Value: 6.7

Growth: 5.8

Quality: 7.8

Yield: 10.0

Momentum: 3.0

Volatility: 9.7

1-Year Total Return ->

New Mountain Finance

A-Score: 6.8/10

Value: 7.1

Growth: 4.1

Quality: 7.7

Yield: 10.0

Momentum: 2.0

Volatility: 9.7

1-Year Total Return ->

WhiteHorse Finance

A-Score: 5.6/10

Value: 5.9

Growth: 3.6

Quality: 5.2

Yield: 10.0

Momentum: 0.5

Volatility: 8.3

1-Year Total Return ->

Eagle Point Credit Company

A-Score: 5.5/10

Value: 4.2

Growth: 3.8

Quality: 6.9

Yield: 10.0

Momentum: 0.5

Volatility: 7.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-11.62%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.11%

WhiteHorse Finance, Inc. - US96524V1061

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WHF

1.c. Company Highlights

Higher Yield

Medium Volatility

Average Growth

Earnings Beats

Revenues Miss

Less Volatile

Earnings Miss

Weak Momentum

Revenues Beats

Expensive

Higher Growth

2. WhiteHorse Finance's Q3 Earnings: A Mixed Bag

Distribution Reset and Share Buyback

Portfolio Performance and Outlook

Valuation and Dividend Yield

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.27%)

6. Segments

Investment and Related Activities

Expected Growth: 10.27%

7. Detailed Products

Term Loans

Lines of Credit

Invoice Financing

Asset-Based Loans

Mergers and Acquisitions Financing

8. WhiteHorse Finance, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: WhiteHorse Finance, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

7.66$

Current Price

7.66$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA