Source Capital Expands Investment Strategy and Share Programs

Source Capital's Update on Investment Strategies

Recently, Source Capital has made significant announcements regarding its investment strategies and share programs. The Fund's Board of Trustees revealed that for the Discount Management Program's measurement period, which spans from the start of one year to the end of another, the Fund traded at an average discount to its net asset value (NAV) of less than 10%. Additionally, this discount has dipped to under 1%, marking its lowest since a significant period during 2008. This development means there will not be a tender offer for the year.

Future of the Discount Management Program

The Board has proactively approved a contingent tender offer for 2025, alongside a new tender offer for 2026. This update extends the Discount Management Program through the end of the year, allowing the Fund to conduct a tender offer for 10% of its outstanding shares if the average discount exceeds 10% during the specified period. In such a scenario, the tender offer would conclude by the middle of the subsequent year. The Board may also consider further extensions of this program beyond the specified date.

Shareholder Engagement and Repurchase Program

Importantly, the portfolio managers and board members do not plan to tender their shares should a tender become necessary for the years ahead. Alongside the Discount Management Program, the Fund is committed to its Stock Repurchase Program, designed to enhance shareholder value by repurchasing shares when beneficial to the Fund's overall objectives.

Emphasis on Private Credit Investments

Over recent years, Source Capital has been increasing its investments in private credit. This type of investment has shown promising growth, and as of a specified date, around 15.5% of the Fund's NAV is allocated to private credit. If we consider both invested and committed capital, this figure rises to 23.4% of NAV. This strategic move reflects the Fund's ongoing efforts to diversify and bolster its portfolio amid changing market conditions.

Upcoming Investor Call

To keep stakeholders informed, Source Capital is scheduled to host an investor call. This important call will take place at an upcoming date and time, providing shareholders and interested investors opportunities to engage, share insights, and ask questions. Interested parties can find details on how to participate in the call by checking the Fund’s communication channels.

About Source Capital

Source Capital represents a closed-end investment company that operates with guidance from First Pacific Advisors, LP. Shares of the Fund trade under the symbol ‘SOR’ on the New York Stock Exchange. The investment objective remains focused on achieving maximum total return for shareholders, primarily through capital appreciation and investment income, while also emphasizing the preservation of capital. The Fund allows for investments in dividend-paying equities as well as illiquid assets such as private loans, making it an option for investors with a long-term horizon in mind.

Importance of Investor Awareness

Investing in financial instruments, particularly closed-end funds, carries inherent risks. It's essential for investors to consider the Fund's strategies, potential charges, and risks thoroughly before investing. Market fluctuations can impact the value of shares significantly, often leading to trading at discounts or premiums in relation to NAV. In addition, any tender offers may have tax implications for shareholders.

Frequently Asked Questions

What is Source Capital's main investment strategy?

The Fund aims to achieve maximum total return through capital appreciation and income while preserving invested capital.

What percentage of NAV is currently invested in private credit?

As of the latest update, approximately 15.5% of NAV is allocated to private credit investments.

Is there a tender offer scheduled for the coming years?

A contingent tender offer is approved for 2025 and 2026, depending on market conditions regarding the average discount to NAV.

How can shareholders participate in the upcoming investor call?

Details about the investor call will be released through the Fund’s official communication channels.

What does the Stock Repurchase Program achieve for shareholders?

This program aims to enhance shareholder value by repurchasing shares at favorable prices when it benefits the Fund's overall strategy.

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