.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear N.R.:

Last April, Wells Fargo and UBS took Golub Capital BDC Inc. public (GBDC-$14.04) with an initial public offering of 7.1 million shares at $14.50, raising $96 million after fees, perks and the usual usurious lawyer’s lucre. Originally, Wells and UBS planned to sell 8.2 million shares between $15 and $16, but the demand wasn’t there.

GBDC is a business development company, founded in 1994. It has $4 billion under management, a team of 48 advisers and is a leading senior lender for middle-market ($50 million to $100 million) leveraged buyouts. According to Reuters, GBDC was tops in its field based upon the number of deals and deal size. Few civilians have heard of Golub Capital, even though it has offices in New York, Chicago and Atlanta. It has been named “Middle Market Lender of the Year” in 2008 and 2009 by Buyouts magazine.

I suspect that GBDC’s impressive list of assets will allow the company to pay consecutively higher quarterly payouts for the foreseeable future. Management is conservatively aggressive and, during the past 15 years, has made a ton of money just using old-fashioned common sense that measures value, future potential and marketability.

I understand your caution, so rather than buying 700 shares, consider a 200-share purchase. I suspect that by this time next year, you will be glad you did, because I think GBDC has the potential to trade in the low $20s.

The Collar Fund (COLLX-$10.20) is unique among mutual funds because it limits the risks of owning stock by creating upper and lower boundaries around its portfolio no matter how much the stock market rises or falls. This is accomplished through stock options. The fund is not for assertive investors who seek aggressive gains, but it is suitable for investors who wish for modest returns and limited risks.

Here’s how it works: A stock is bought at $100 per share, and an option is sold by the fund to an investor for $70, giving the buyer the right to purchase 100 shares of that stock at $110. Then, with the proceeds from that option sale, the fund buys an option for $70, giving the fund the right to sell 100 shares of the stock at $90. So no matter how much that stock fluctuates while it is “collared,” the loss or gain is limited to $10 or 10 percent. And in this manner COLLX collars its entire portfolio.

A conservatively managed collar fund should, over a 10-year time frame, produce an average annual total return of 5 percent to 8 percent. Not sufficient to set the world aflame, but good enough to suggest that COLLX could be compared to a triple-A-rated bond for safety and income. And good enough to recommend that a conservatively managed account would do well to have a portion of its money in a collar fund. COLLX is a no-load equity, and I’ve been pleased with its performance in my individual retirement account.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. ©2010 Creators.com