Hercules punished for conservatism amid frothy market

|About: Hercules Capital, Inc. (HTGC)|By:, SA News Editor

"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