Morgan Stanley Direct Lending Fund (MSDL)

Price$13.57Cached quoteAs of 2026-10-09 03:20 UTC

AI: Undervalued

Price checkA steep asset discount outweighs real credit damage, leaving the shares modestly undervalued.

At roughly 75% of June net asset value, the market applies a 25% asset discount. Annualized second-quarter net investment income—lending profit after expenses, before portfolio value changes—is $1.80 per share, so the shares cost about 8.1 times that run rate and the regular dividend yields about 12.3%. Those are supported value signals. However, the discount is not free: net asset value fell from $20.81 at 2024 year-end to $19.50, and recent credit losses make further erosion plausible.

Big pictureLoan income still pays the dividend, but falling yields and credit losses weaken durability.

First-half investment income fell about 11.5% from the comparable 2025 period, while second-quarter net investment income declined to $38.2 million from $40.5 million sequentially. The latest $0.45-per-share lending profit only matched the regular dividend, leaving no coverage cushion. Accounting profit was just $3.4 million for the first half because loan values fell. Operating cash flow reached $190.2 million against $81.5 million of dividends, but loan repayments helped; for a lender, this cash measure moves with investment purchases and repayments and can mislead.

Business strengthDiversification and ample borrowing room help, while leverage and troubled loans limit protection.

The $3.6 billion portfolio covered 229 companies in 36 industries, with the average position representing just 0.4%, limiting ordinary single-borrower exposure. At June 30, debt was about $1.98 billion against $1.65 billion of equity, or 1.21 times equity. The fund also reported $1.47 billion of unused credit-facility capacity and $71.6 million of unrestricted cash and liquid investments. However, seven borrowers had stopped paying recognized interest, representing 2.9% of investments at cost, so diversification has not prevented meaningful credit damage.

What could change the storyCredit recoveries and discounted buybacks could lift value; more defaults or rate cuts could erase it.

Share count expanded from 70.5 million at 2022 year-end to 88.5 million at 2024 year-end as capital was raised, but it subsequently fell to 84.5 million. The fund spent $27.2 million on first-half 2026 repurchases, including 831,486 shares bought far below net asset value during the second quarter; that raises asset value per remaining share. The bull case strengthens if troubled loans recover and net asset value stabilizes. The bear case strengthens if non-paying loans exceed 2.9% or lending profit falls below the $0.45 dividend as rates decline.

AI: News

Credit stress widenedMore borrowers stopped paying recognized interest, reducing income and the recorded value of the loan portfolio.

Results released August 6 showed seven non-paying portfolio companies representing 2.9% of investments at cost, up from six companies at March 31. Net asset value declined $0.31 per share during the quarter, alongside $22.8 million of unrealized depreciation and $7.4 million of realized losses. Net investment income also slipped from $0.47 to $0.45 per share. The stock moved only 0.13% lower the next trading day, although that timing does not establish how investors interpreted the report.

Dividend held at reset levelThe regular payout stayed unchanged, but current lending profit provides almost no safety margin.

On August 4, the board declared a third-quarter regular dividend of $0.45 per share, maintaining the reduced 2026 rate after quarterly payments of $0.50 throughout 2025. Second-quarter net investment income was also $0.45 per share, meaning the payout was exactly covered before any further deterioration. At the observed market value, four such payments imply a yield near 12.3%. That income is attractive, but continued payment depends on lending profit holding up despite lower portfolio yields and additional non-paying loans.

Long-term notes pricedNew five-year debt improves funding flexibility but locks in a meaningful interest cost.

On June 29, the fund priced $350 million of unsecured notes carrying 6.10% annual interest and maturing July 15, 2031. Management said proceeds would repay secured borrowings, extending part of the funding profile and reducing reliance on revolving facilities. The trade-off is cost: the portfolio’s combined average borrowing rate was 5.40% during the second quarter. Unless the replaced debt was comparably expensive or the longer maturity proves valuable, the new notes could modestly narrow the spread between loan income and financing expense.

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Revenue

2021

2022

2023

2024

2025

Net income

2021

2022

2023

2024

2025

Free cash flow

No reported data

Total cash / debt

CashTotal debt

2020

2021

2022

2023

2024

2025

Financial statements

	2025	2024	2023	2022	2021	2020
Revenue	$397.3M	$416.1M	$367.7M	$230.6M	$119.8M	—
Operating expenses	$8.2M	−$8.4M	−$17.3M	−$15.8M	—	—
Net income	$122.1M	$215.6M	$231.0M	$48.5M	$83.3M	—
Net profit margin	30.73%	51.81%	62.82%	21.05%	69.49%	—
Basic EPSper basic share	$1.40	$2.43	$3.11	$0.79	$2.67	—
Diluted EPSper diluted share	$1.40	$2.43	$3.11	$0.79	$2.67	—

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

18.61%of listed shares

MORGAN STANLEY15.72M shares · Jun 30, 2026

View holders

Top 20 reported holders of MSDL
Holder	% owned
MORGAN STANLEY	18.61%15.72M shares
UBS Group AG	3.05%2.58M shares
VAN ECK ASSOCIATES CORP	2.38%2.01M shares
Generali Asset Management SPA SGR	2.17%1.83M shares
Lunate Capital Ltd	1.31%1.1M shares
Russell Investments Group, Ltd.	1.26%1.06M shares
TWO SIGMA INVESTMENTS, LP	1.06%893.19K shares
Muzinich & Co., Inc.	0.99%838.9K shares
ARES MANAGEMENT LLC	0.92%775.13K shares
Ensign Peak Advisors, Inc	0.89%748K shares
Altshuler Shaham Ltd	0.77%650.44K shares
AMERICAN FINANCIAL GROUP INC	0.75%631.5K shares
Sumitomo Mitsui Trust Group, Inc.	0.73%616.12K shares
BROWN BROTHERS HARRIMAN & CO	0.64%539.66K shares
WELLS FARGO & COMPANY/MN	0.61%515.96K shares
DG Capital Management, LLC	0.56%475.54K shares
FRANKLIN RESOURCES INC	0.54%456.47K shares
CAZ INVESTMENTS LP	0.47%399.46K shares
TT Capital Management LLC	0.41%343.32K shares
Hennion & Walsh Asset Management, Inc.	0.37%315.8K shares

Percentages use 84.5M shares of this listed class outstanding on Jun 30, 2026.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys19$2.03M disclosed value

Sells (SEC code S)0$0.00 disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Mar 5, 2026Form 4	Day Jeff M.Co-President	BuyCommon Stock, par value $0.001 per share · indirect	5.0K	$14.90	$74.5K	22.8K
Mar 3, 2026Form 4	Mizrachi OritSee Remarks	BuyCommon Stock, par value $0.001 per share	1.0K	$14.49	$14.5K	5.9K
Mar 3, 2026Form 4	MILLER DAVID NDirector	BuyCommon Stock, par value $0.001 per share	5.0K	$14.69	$73.5K	15.0K
Mar 2, 2026Form 4	MILLER DAVID NDirector	BuyCommon Stock, par value $0.001 per share	5.0K	$14.68	$73.4K	10.0K
Mar 2, 2026Form 4	Occi Michael Jr.Chief Executive Officer	BuyCommon Stock, par value $0.001 per share	7.0K	$14.87	$104.1K	28.5K