Dendrite Research
Deep Value, special situations, biotech

Harvest Capital Credit: Heads Management Wins, Tails You Lose

Harvest Capital Credit (NASDAQ:HCAP) is a business development corporation (BDC) that IPO'd in May. I became interested in HCAP after a quick skim of their numbers, which on their face are extremely favorable. Yahoo Finance reports a P/E of 10.2, and HCAP are holding a big stack of cash that makes their EV/EBITDA 6.1. Their yield is 9%. They pay monthly, which many retail investors appreciate.

Like most BDCs, HCAP makes loans to small- and medium-sized companies which are not able to access the public debt markets like the big guys. The BDC corporate structure allows them to avoid taxes, but requires that they distribute nearly all taxable earnings to shareholders.

HCAP is on the extremely aggressive end

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