Why a $6 Million Credit Fund Bet Makes Sense With a 13% Yield on the Table
Key Points
Matisse Capital acquired 897,918 shares in FSCO during the fourth quarter.
The estimated transaction value was $5.66 million based on the reported end-of-quarter value.
FSCO now accounts for 2.52% of Matisse Capital’s reportable U.S. equity holdings, placing it outside the fund’s top five positions.
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Matisse Capital initiated a new position in FS Credit Opportunities Corp. (NYSE:FSCO) during the fourth quarter, buying 897,918 shares in a trade estimated at $5.66 million, according to a January 29 SEC filing.
What happened
According to a SEC filing dated January 29, Matisse Capital disclosed a new position in FS Credit Opportunities Corp. (NYSE:FSCO), acquiring 897,918 shares. The quarter-end value of the stake also totaled $5.66 million, reflecting the combined effect of share acquisition and price movement during the period.
What else to know
This was a new position for Matisse Capital, with FSCO representing 2.52% of its 13F reportable assets after the trade..
Top holdings following the filing:
- NASDAQ: AAPL: $9.98 million (4.46% of AUM)
- NYSE: PCQ: $8.03 million (3.59% of AUM)
- NYSEMKT: DGRO: $7.80 million (3.49% of AUM)
- NASDAQ: MSFT: $6.86 million (3.07% of AUM)
- NASDAQ: GOOGL: $5.89 million (2.63% of AUM)
As of January 28, FSCO shares were priced at $6.03, down 10.6% over the past year.
Fund overview
| Metric | Value |
|---|---|
| Total assets | $1.20 billion |
| Net Income (TTM) | $188.07 million |
| Dividend Yield | 13.1% |
| Price (as of 1/28/26) | $6.03 |
Company Snapshot
- FSCO offers a diversified portfolio of global credit investments, including secured and unsecured loans, bonds, and other credit instruments.
- It operates as a closed-end fixed income fund, generating revenue primarily through interest income and capital appreciation from event-driven credit strategies.
- The fund focuses on companies undergoing corporate events such as mergers or restructurings, seeking exposure to global credit markets.
FS Credit Opportunities Corp. is a closed-end fund specializing in global credit investments and event-driven strategies. FS Credit Opportunities Corp. is a closed-end fund specializing in global credit markets, with a strong emphasis on event-driven investment strategies. The company leverages deep credit expertise to identify undervalued opportunities across diverse sectors and geographies. Its disciplined approach and focus on corporate events position it to deliver attractive risk-adjusted returns to investors seeking income and total return from credit markets.
What this transaction means for investors
Income really matters when volatility sticks around, and this move reflects that reality. A closed-end credit fund trading roughly 14% below its $7.09 NAV while throwing off a 13.4% distribution yield offers a very different risk profile than the mega-cap equities that dominate much of this portfolio.
FS Credit Opportunities sits at the intersection of income and capital preservation. As of its latest update, 86% of assets are senior secured debt, 75% are floating-rate, and average duration is just 0.6 years, limiting interest-rate sensitivity. In a market where rate cuts remain uncertain, floating-rate exposure paired with short duration gives investors income without locking in long-term rate risk.
The fund’s AUM is spread across 77 portfolio companies, with no single holding dominating results. That diversification contrasts with the fund’s larger equity stakes, which are more growth- and sentiment-driven. Here, returns hinge on cash flow, collateral, and credit discipline.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. The Motley Fool has a disclosure policy.
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