This High-Yield Lender Paying Nearly $0.50 Quarterly Has Plummeted 51%, but One Fund Just Made a Big Bet On It

1 day ago 4

Jonathan Ponciano, The Motley Fool

Fri, March 20, 2026 astatine 10:36 AM CDT 4 min read

Diameter Capital Partners initiated a caller presumption successful FS KKR Capital Corp. (NYSE:FSK), acquiring 2,272,393 shares worthy an estimated $33.65 cardinal during the 4th quarter, according to a February 17, 2026, SEC filing.

According to its SEC filing dated February 17, 2026, Diameter Capital Partners reported a caller holding successful FS KKR Capital Corp, buying 2,272,393 shares during the 4th quarter. The nett summation successful presumption worth astatine quarter-end was $33.65 million, reflecting some the acquisition and changes successful stock terms during the period.

This was a caller position, with the involvement representing 3.8% of Diameter’s reportable AUM arsenic of December 31, 2025.
Top 5 holdings aft the filing:
- NASDAQ: SATS: $409.57 cardinal (45.8% of AUM)
- NYSE: MBC: $66.35 cardinal (7.4% of AUM)
- NYSE: TDS: $43.76 cardinal (4.9% of AUM)
- NYSE: SILA: $40.79 cardinal (4.6% of AUM)
- NYSE: FSK: $33.65 cardinal (3.8% of AUM)
As of Friday, FSK shares were priced astatine $9.99, down 51% implicit the past twelvemonth and good underperforming the S&P 500, which is alternatively up astir 16% successful the aforesaid period.

Metric

Value

Revenue (TTM)	$113 million
Net income (TTM)	$11 million
Dividend yield	25%
Price (as of Friday)	$9.99

FS KKR Capital provides customized recognition solutions, chiefly done elder secured and subordinated indebtedness investments successful backstage U.S. mediate marketplace companies.
The steadfast generates gross chiefly from involvement income connected indebtedness securities, with further upside from equity interests and opportunistic investments successful firm bonds.
It targets backstage mediate marketplace firms successful the United States, focusing connected companies with yearly revenues betwixt $10 cardinal and $2.5 cardinal and EBITDA of $50 cardinal to $100 million.

FS KKR Capital Corp. is simply a concern improvement institution specializing successful indebtedness investments for U.S. mediate marketplace firms. The institution leverages its expertise to operation elder secured loans and, to a lesser extent, subordinated debt, often obtaining equity interests arsenic portion of its transactions. Its strategy centers connected providing tailored recognition solutions to established backstage companies.

This determination is absorbing due to the fact that it leans into 1 of the astir out-of-favor corners of the marketplace close now: backstage credit. FS KKR Capital’s caller banal show shows the steadfast intelligibly facing immoderate pressure, and the financials bash arsenic well. Net concern income inactive held up astatine $0.48 per stock past quarter, capable to screen its dividend, but net swung to a loss, and nett plus worth drifted little to $20.89. That spread betwixt NAV and a banal terms nether $10 is doing astir of the talking.

So does Diameter’s determination awesome it believes the marketplace has perchance overcorrected? For a money that already holds concentrated positions successful names similar EchoStar and Telephone and Data Systems, this fits a pattern. These are superior operation plays wherever downside is often tied to recognition quality, and upside comes from income and mean reversion. If recognition conditions stabilize, the discount to NAV and double-digit output could look compelling. However, if they worsen, leverage cuts some ways.

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