Hercules punished for conservatism amid frothy market

"We do not like some of the underwriting parameters or pricing that we're seeing in our marketplace today," says CEO Manuel Henriquez on the earnings call (transcript), guiding for Q1 results to be down $0.02-$0.04 per share as the company has been slow to put money to work this year (NII was $0.31 in Q4).

Management expects the portfolio to "lighten down" by $50M in Q1. "There are certain industry sectors that we are divesting ourselves from and certain stages of the companies that we're purposely avoiding for the time being."

"We continue to see frothiness in the market. We're seeing banks being overly aggressive on transactions and we're beginning to see some signs of yield compression in the marketplace. We're seeing weaker underwriting standards being applied in the market and with that, we have chosen to wait out this current frothiness and not follow suit and doing marginal quality underwriting transactions."

HTGC -4%

Last night: Q4 results

Comments (2)
  • Ilioula
    , contributor
    Comments (39) | Send Message
    I read the transcript and fully agree with management. Banks have lots of capital and not much sense.
    28 Feb 2014, 01:44 PM Reply Like
  • edski
    , contributor
    Comments (10) | Send Message
    Punish away! I for one am glad that Hercules has AND USES it's own, well tuned, brain. I wish to thank the board for their steady hand and great investing.
    I bought more after the drop, and wish I had more money for additional shares.
    12 Mar 2014, 01:48 PM Reply Like
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