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Is TICC Capital Corp. (NASDAQ:TICC) Quarterly Distribution At Risk?

TICC Capital Corp. (NASDAQ:TICC)

TICC Capital Corp. (NASDAQ:TICC)

Shares of TICC Capital Corp. (NASDAQ:TICC) fell 10.1% after the management investment company reported disappointing financial results that fell short of Wall Street expectations. The point of concern is that the company’s dividend offerings could be at risk as cash holdings continue to drop.

TICC Capital Corp. (NASDAQ:TICC)

Q3 Financial Results

For the three months ended September 30, 2017 the company reported a net investment income of $6.8 million or $0.13 a share. However, TICC Capital Corp. (NASDAQ:TICC) recorded net realized losses of (-$3.3) million and a net unrealized appreciation of $2.6 million. In total, net assets from operations increased by $6 million or about $0.12 a share.

Investors reacted to the Q3 financial results by pushing the stock lower following a sell-off that began in March. The stock has shed more than 30% since the start of the year as investors’ confidence in the company’s long-term prospects continues to drop.

TICC Capital Corp. (NASDAQ:TICC) makes a good chunk of its earnings from collateralized loan obligations (CLOs). A decline in yields on loans inside CLO’s in the recent past has considerably weighed into the company’s net income. The decline has resulted in a decline in the amount of money payable to investors.

The diversified holding company is notably known for its $0.20 a share quarterly dividend. A decline in cash payments received from CLO is already making some investors reassess their positions in the company.

Management Remarks

TICC Capital Corp. (NASDAQ:TICC) says declining cash distributions were a result of one-time expenses. The company does not expect the charges to repeat in the future. According to Chief Executive Officer Jonathan Cohen, focus will be on syndicated corporate loans. There are also plans to focus on narrowly syndicated loans through purchases in primary and pre-marketing syndications.

“Moreover, our corporate investment activity continues to focus on the rotation of the portfolio into higher yielding loans. We also continued the active rotation of our CLO portfolio with opportunistic purchases and sales,” said Mr. Cohen.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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