Hercules Capital: VC-Focused Name With Less Risk And Better Return Prospects Than Average BDC

May 04, 2024 7:35 AM ETHercules Capital, Inc. (HTGC)HTGC18 Comments
Roberts Berzins, CFA
10.54K Followers

Summary

  • Hercules Capital, Inc. is a favorable investment choice in the VC-focused BDC sub-sector due to its strict underwriting standards and low debt levels.
  • HTGC's Q1 2024 earnings report showed strong improvement across key metrics, with no contraction in any critical metric compared to Q1, 2023.
  • Even in the context of Q4, 2023, which was the record quarter for HTGC, the results came in strong.
  • HTGC's Q1, 2024 robust momentum in new investment commitments and funding strengthens its NII outlook and portfolio growth potential.
  • On top of this, the leverage remains low and non-accruals almost non-existent. My previous bull case still remains intact.

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Jonathan Kitchen

As many of my readers and followers have probably noticed, I am structurally bullish on the BDC market except for VC-focused players that, in my opinion, introduce unnecessary risk, which oftentimes is not sufficiently compensated by the yield spread between such

This article was written by

10.54K Followers
Roberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policy-level work includes the development of national SOE financing guidelines and framework for channeling private capital into affordable housing stock. Roberts is a CFA Charterholder, ESG investing certificate holder, has had an internship in Chicago board of trade (albeit, being resident and living in Latvia), and is actively involved in "thought-leadership" activities to support the development of pan-Baltic capital markets.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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