Prospect Capital Corporation (Nasdaq: PSEC)

Prospect Capital Corporation – Nasdaq: PSEC

Prospect Capital Corporation is a business development company – they are a lender to midsize companies and invest in real estate. Typically, investors consider business development companies for their attractive dividends in our low interest-rate environment. Business development companies are a sensitive and hotly debated asset in investment circles. However, there are a few good reasons that Prospect Capital Corporation may be worth a look.

First, according to InsiderMonkey.com, thirteen hedge funds held positions in PSEC. This is important because hedge funds are traditionally run by people that have their own money at risk. Secondly, continuing the theme of whose money is at risk, senior management are the largest shareholders of PSEC with more than $160 million of common stock, including over $50 million purchased in the March 2016 quarter. Senior management has never sold a share. Additionally, a key part of analyzing a business development company is the quality of their debt. Prospect Capital Corporation first-lien and second-lien secured loans comprise approximately 71% of PSEC’s investment portfolio, and majority of those are first-lien. In the current rising interest-rate market PSEC has positioned itself to benefit by investing predominately in floating rate assets and borrowing at fixed rates. Lastly, it is trading near its 2016 highs. Did we mention that PSEC has a dividend rate over 10%?

For those that like to pour over financial statements, this is a stock you might think about you to adding to your list. Industry insiders consider Prospect Capital to be in the process of strengthening its balance sheet by selling off some of its less profitable assets. It continues to pursue a robust pipeline of investment opportunities and interested investors should pay close attention.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

Ticker Symbol PSEC
Last Price a/o 4:00 EST  $               8.26
Average Volume 1.75 million
Market Cap $2.96 Billion
Sales $771.6 million
Shares Outstanding 358.4 million
Share Float 334.6 million
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 9.37%
Short Interest Ratio 17.92
Quarterly Return 5.66%
YTD Return 33.41%
Year Return 39.80%

 

Author: Steve Clark

Steve Clark is a 23 year Wall St professional with stints in M&A, risk management, and algorithm trading.

Leave a Reply

Your email address will not be published. Required fields are marked *