NII of $18.3M up 22% Y/Y. NII per share of $0.30 up 11.1%. Distributable net operating income per share of $0.33 up 10%. Dividend of $0.31 per share.
Received about $132.6M in principal and paid-in-kind repayments during quarter. Entered commitments to provide debt and equity financings of about $155.7M to new and existing portfolio companies. Net decline in investment portfolio of about $18.6M on a cost basis. This is less than the $50M "lighten down" expected by management two months ago when it reported Q4.
Management was then worried about a frothy market and the stock has been punished for this conservative stance ever since (off about 20%).
Hercules Technology Growth (HTGC +1.5%) is one of the stocks working on a down day after an upgrade to Buy at Sandler O'Neill.
The stock had been punished throughout March after management's sluggish guidance, but last week's update on Q1 activity showed better-than-expected originations - whether that's a good or bad thing amid frothy conditions remains to be seen.
"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."
Celsion (CLSN +7.9%) rallies after announcing a new strategic loan facility with Hercules Growth Capital (HTGC).
Under the deal, CLSN can tap up to $20M in multiple tranches — the first tranche ($5M) was drawn yesterday.
CLSN used ~$4M to payoff an existing loan agreement.
"Our current cash position, $45.5M as of September 30, is expected to provide resources sufficient to fund current operations well into the second half of 2016," CEO Michael Tardugno says, adding that this time frame should include "expenses associated with [the] planned pivotal Phase 3 HCC trial." (PR)
Anything paying income is again being particularly hard hit by the rise in Treasury yields (the 10-year now at a 2-year high of 2.8%).
Selections in mREITs (REM -2.1%), (MORT -1.9%) include RAIT Financial Trust (RAS -4.1%) - whose IRT had an ill-timed IPO yesterday and Ellington Residential (EARN -4.8%) - the market not caring about reasonable Q2 performance, a hefty discount to book, and the launch of a repurchase program. Other mREITs: CYS Investments (CYS -3.6%), Apollo (AMTG -3%), Newcastle (NCT -5%), Invesco (IVR -2.7%), Arlington Asset (AI -1.2%). A leveraged ETF play: MORL.
Hanging in there relatively well are the BDCs: Fifth Street (FSC -1.3%), Triangle (TCAP -1%), MCG (MCGC -1.2%), Hercules (HTGC -1.2%), Ares (ARCC -0.3%).
Main Street Capital (MAIN -4.2%) continues for a 2nd day to bear the brunt of the selling in the BDC sector (BDCS -0.7%). The company's just-published investor day presentation is typical conference stuff - showing how the company is different (and superior) to its sector brethren, explaining the opportunities in lower and middle-market lending, and including several case studies. Also notably lower: MCG Capital (MCGC -1.6%), Prospect (PSEC -1.3%), and Hercules (HTGC -1%).
Hercules Technology Growth Capital Incis a specialty finance company which provides debt & equity growth capital to technology-related companies at all stages, development from seed & emerging growth to expansion & established stages of development.