HTGC's performance was spectacular in the last quarter. Issuing 90% of the dividend in stock in order to conserve capital is the right thing to do now. While they might not have to do this, it is in keeping with their generally conservative approach. (Their Audit Integrity score (AGR) is 62 with no flagged expense recognition issues - very good in their type of business.) They will get through these times, maybe even thrive in them. I think that longs will be well rewarded over time.
That said, I am not sure why they are down today - Maybe short term investors disappointed to not get the huge dividend in cash?
I have to say that the managements of SOME of the financial companies out there have been truly heroic in the face of terrible conditions for which they bear little of the blame. ALD and HTGC have both IMHO tried to keep the interest of their shareholders in mind even while others ran for the hills clutching their own millions to their chests. I live on my dividends and have been trying unsuccessfully to get employed despite a fairly serious disability ( for which I have never received a dime and have never applied for any payments ). I haven't seen the documents and don't know what decision I will make. I like this company, but I need to eat. HMmmmmmm
I assure that this decline is just the beginning. I wouldn,t be so sure that the longs will be rewarded(unless the definition of long is measured in years. American Capital (acas) did something last quarter(not distributing the dividend) and has paid a very high price. While HTGC did not follow suite,they did not disclose in advance that they might pay some portion of the dividend in the form of stock...next come lawsuites..bad form on part of management for not being up front with investors before the fact..real amateurs...my personal estimate is that the cash dividend would have cost .32c X 33mil shares or $10.56Mil...today's cost .76 per share X 33mil shares = 25.08 mil in lost market capital. More important is the loss of trust in the senior management and directors. Very hard to quantify over long term..p.s.I sold this morning. I did call yesterday and spoke to a lady representing investor relations and indicated that the stock would get hammered today and it did. The good news is HTGC can be bought much cheaper today..the open question is who will trust the company in the future and be willing to invest?
HTGC is relatively small and a little quirky in the way they do things, I've noticed. But this announcement wasn't bad. I hold several other stocks in much larger companies that simply announced that they were not paying a dividend or that they were paying a greatly reduced dividend. No advanced warning, nor any really expected. HTGC explained their position on this fairly thoroughly, I think. If they had simple cut their dividend by 2/3rds for one quarter it would have been easy to understand. This "dividend" in stock with no substantial $$$ cut is a little different and I am not sure how to analyze it yet.
HTGC closed at $4.99 today, almost down to where I might pick up some more shares. Probably should have. Guess we will all have a chance to see....
I think we're down because paying a dividend in stock is not paying it at all. People who are in this stock for the yield will sell the dividend shares, putting downward pressure on the stock price. I think today's action is in anticipation of the yard sale to come.
I would think that It would be sort like a split though!
It's funny how some of the stocks follow the NASDAQ,S&P,DOW charts, then suddenly get a mind of there own. This one has gone up every time it hit the oversold line in the past???
I agree. They recognized about 3% in unrealized losses which isn't much, but more than I've seen most other BDC's take for the same quarter. In the CC they said they no longer have competition and proforma returns on new loans is running over 25% (factoring in interest, fees and warrants; and presumably not factoring in current leveral of 1.5:1). No significant non-performing loans. Several non-performing loans in 2008, were resolved favorably with full collection, excepting Simpler Networks (?) which represented a realized loss of about $2.7m, or less than 1/2 of one percent of the portfolio.
Thanks for the additional thoughts. I will continue to keep this for the long haul, maybe buy more at this price, which is down about 30% from where I first bought.
Would still like to understand the negative reaction today....I can only hypothesize.