Short Interest in Morgan Stanley Direct Lending Fund (NYSE:MSDL) Grows By 21.9%

Key Points

• Short interest jumped 21.9% in March to 2,865,809 shares (roughly 3.4% of shares), leaving a short-interest ratio of about 3.6 days based on average daily volume.
• Analysts have trimmed price targets and mostly rate the fund a "Hold"; the consensus price target is $15.50 after cuts from several firms including Keefe, UBS and JPMorgan.
• The fund declared a quarterly dividend of $0.45 (annualized $1.80) for an 11.8% yield, but the dividend payout ratio is about 128.6%, highlighting questions about sustainability.

Morgan Stanley Direct Lending Fund (NYSE:MSDL - Get Free Report) saw a large growth in short interest during the month of March. As of March 31st, there was short interest totaling 2,865,809 shares, a growth of 21.9% from the March 15th total of 2,351,569 shares. Approximately 3.4% of the company's shares are short sold. Based on an average daily volume of 788,278 shares, the short-interest ratio is presently 3.6 days.

Wall Street Analyst Weigh In

MSDL has been the subject of several research reports. Keefe, Bruyette & Woods lowered their price objective on shares of Morgan Stanley Direct Lending Fund from $16.50 to $16.00 and set a "market perform" rating for the company in a research report on Thursday. UBS Group lowered their price objective on shares of Morgan Stanley Direct Lending Fund from $18.00 to $16.00 and set a "neutral" rating for the company in a research report on Friday, March 13th. JPMorgan Chase & Co. lowered their price objective on shares of Morgan Stanley Direct Lending Fund from $16.50 to $14.00 and set a "neutral" rating for the company in a research report on Friday, March 13th. Raymond James Financial reissued an "outperform" rating and issued a $17.00 price objective on shares of Morgan Stanley Direct Lending Fund in a research report on Thursday, March 5th. Finally, Wells Fargo & Company lowered their price objective on shares of Morgan Stanley Direct Lending Fund from $16.00 to $14.00 and set an "equal weight" rating for the company in a research report on Monday, March 2nd. One research analyst has rated the stock with a Buy rating and six have given a Hold rating to the company's stock. According to data from MarketBeat, Morgan Stanley Direct Lending Fund currently has an average rating of "Hold" and a consensus price target of $15.50.

Insider Activity

In other news, CEO Michael Jr. Occi purchased 7,000 shares of the business's stock in a transaction that occurred on Monday, March 2nd. The shares were bought at an average cost of $14.87 per share, for a total transaction of $104,090.00. Following the acquisition, the chief executive officer owned 28,500 shares of the company's stock, valued at approximately $423,795. This trade represents a 32.56% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, insider Jeff M. Day purchased 5,000 shares of the business's stock in a transaction that occurred on Thursday, March 5th. The shares were purchased at an average price of $14.89 per share, for a total transaction of $74,450.00. Following the completion of the acquisition, the insider directly owned 22,818 shares in the company, valued at $339,760.02. The trade was a 28.06% increase in their position. The SEC filing for this purchase provides additional information. Corporate insiders own 0.21% of the company's stock.

Institutional Investors Weigh In On Morgan Stanley Direct Lending Fund

Several hedge funds have recently modified their holdings of the business. Van ECK Associates Corp lifted its position in shares of Morgan Stanley Direct Lending Fund by 2.5% in the 3rd quarter. Van ECK Associates Corp now owns 1,967,697 shares of the company's stock worth $31,640,000 after purchasing an additional 48,248 shares during the period. Generali Asset Management SPA SGR lifted its position in shares of Morgan Stanley Direct Lending Fund by 3.9% in the 3rd quarter. Generali Asset Management SPA SGR now owns 1,829,964 shares of the company's stock worth $29,426,000 after purchasing an additional 68,014 shares during the period. UBS Group AG lifted its position in shares of Morgan Stanley Direct Lending Fund by 73.0% in the 4th quarter. UBS Group AG now owns 1,668,693 shares of the company's stock worth $27,500,000 after purchasing an additional 704,394 shares during the period. Muzinich & Co. Inc. lifted its position in shares of Morgan Stanley Direct Lending Fund by 31.1% in the 4th quarter. Muzinich & Co. Inc. now owns 766,451 shares of the company's stock worth $12,631,000 after purchasing an additional 181,830 shares during the period. Finally, Toronto Dominion Bank lifted its position in shares of Morgan Stanley Direct Lending Fund by 26.2% in the 4th quarter. Toronto Dominion Bank now owns 713,641 shares of the company's stock worth $11,761,000 after purchasing an additional 148,020 shares during the period.

Morgan Stanley Direct Lending Fund Price Performance

Shares of MSDL opened at $15.25 on Friday. The company has a 50 day moving average price of $14.86 and a 200-day moving average price of $16.08. Morgan Stanley Direct Lending Fund has a fifty-two week low of $13.66 and a fifty-two week high of $20.00. The stock has a market capitalization of $1.31 billion, a PE ratio of 10.89 and a beta of 0.35. The company has a debt-to-equity ratio of 1.19, a quick ratio of 1.59 and a current ratio of 1.59.

Morgan Stanley Direct Lending Fund (NYSE:MSDL - Get Free Report) last announced its quarterly earnings results on Thursday, February 26th. The company reported $0.49 earnings per share for the quarter, hitting the consensus estimate of $0.49. Morgan Stanley Direct Lending Fund had a net margin of 30.73% and a return on equity of 9.88%. The firm had revenue of $49.57 million during the quarter, compared to analysts' expectations of $97.30 million. Equities analysts predict that Morgan Stanley Direct Lending Fund will post 2.56 earnings per share for the current fiscal year.

Morgan Stanley Direct Lending Fund Cuts Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, April 24th. Stockholders of record on Tuesday, March 31st will be given a $0.45 dividend. This represents a $1.80 annualized dividend and a dividend yield of 11.8%. The ex-dividend date of this dividend is Tuesday, March 31st. Morgan Stanley Direct Lending Fund's dividend payout ratio is presently 128.57%.

Morgan Stanley Direct Lending Fund Company Profile

Morgan Stanley Direct Lending Fund NYSE: MSDL is a closed-end management investment company that seeks to provide investors with attractive current income and the potential for capital appreciation. The fund primarily invests in senior secured loans and other debt instruments issued by middle-market companies. By focusing on floating-rate structures, it aims to offer a measure of protection against rising interest rates while generating regular cash distributions.

The fund's investment strategy centers on building a diversified portfolio of direct lending opportunities across a broad range of industries, including healthcare, business services, and industrials.

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