In addition to the insider buying posted here, on 8/24 the CEO, Joe Alala bought 7500 shares at $13.2467 per share.
Lots of good insider buying going on.
That $13.38 seems like a great price and you are in some good company. There has been a lot of insider buying in the last couple of weeks.
The COO bought 3,410 shares on 8/13 and then bought another 2,150 on 8/25. The CEO bought 6,600 on 8/14. A director bought 5,000 on 8/21 and then bought another 5,000 on 8/25. A second director bought 10,000 on 8/24.
I don't know if these guys are any good at market timing but they sure are showing a lot of confidence in the future of CPTA.
On my ihub post I mentioned that so far, since the CC, three broker analysts (Oppenheimer, MLV & Co, and Deutsche Bank) commented on CPTA. They have lowered their target prices (which was expected with the lower Q2 book and lower earnings) but all three reiterated their "Buy" ratings. Oppenheimer said: "Bumpy quarter but solid outlook and great value".
A poster on this board, following the Q1 release, posted the Barclay report on CPTA. Could you please do that again for Q2. I ask because the Barclay estimates were very close to the actual CPTA Q2 results. If you are uncomfortable posting the entire report, perhaps you could post the new Barclay forward estimates. Thanks.
Today, JMP Securities reiterated their Outperform rating making it four for four "Buy" ratings so far.
Also, in addition to John McGlinn, the Chief Operating Officer, buying 3410 shares at $14.65 per share (reported yesterday), Joe Alala, the CEO just bought 6600 shares, indirectly, at prices ranging from $14.89 to $14.94.
I just wish I could have posted the whole message on Yahoo instead of having to post most of it on ihub. We could have had a better discussion here.
Best to you.
You are welcome nyjets.
Hope you were able to get up on the ihub board. The meat of my message was really up there since Yahoo would not allow me to post the whole thing.
Has CPTA sufficiently curtailed the monetization program so that NAV can stabilize and grow? On the CC the CEO said: "Effectively completed the monetization program", and,
"The monetization of Corporate Visions last quarter effectively completed our rotation out of equity securities and into yield".
Keep in mind that CPTA is not out of equity holdings even though their plans to monetize these holdings has diminished. The cost bases of their current equity holdings is $54.6 million. These same holdings have a market value of $82.8 million. Also, new investments keep on coming with equity positions.
Stockholders need to see a couple of things happen to make that wish come true. First, the monetization program must end or slow down to preclude any further "unrealized gain" reversals. That will allow the book value to resume its growth or at least stabilize, depending on other factors. Second, the NII must grow to cover the basic dividend, because that is what both the Company and stockholders want. The total dividend (regular plus extra) is now being so well covered by NII and Net Capital Gains, that extra dividends may come our way this year or next. In the first six months of this year, CPTA paid out $1.14 in dividends while earning $2.44 in NII and Net Capital Gains. Remember, they must pay out NII (Net Investment Income) and NCG (Net Capital Gains).
It is sometimes hard to make big money investing in BDC's because even though the dividend payouts are generally large, the price appreciation can be painfully slow. That is why when a special situation appears in the BDC world, we should take a look.
CPTA just reported Q2 numbers, and the initial reaction by the street was negative and why not. Both earnings and book value (NAV) were down (again) from the previous quarter.
Earnings were down to $.33 per share from $.37 in Q1. But NII really had to be down because in early Q2, CPTA issued 3.5 million new shares, a 27% increase in the share count which puts a lot of pressure on Earnings per Share. If would have helped if CPTA could have immediately invested the $64 million they received from the stock offering, to offset the new shares with new NII, but that is never the way it works. They did get it all invested by the later part of Q2 which will be a big boost to Q3 NII.
The book value dropped by $.40 per share being impacted by unrealized losses of $16.2 million. But $15.8 million of that was simply from the reversal of $15.8 million in unrealized gains as required by GAAP accounting. That reversal occurred because CPTA recorded $15.8 million in realized capital gains in Q2($.99 per share) from the sale of positions in Boot Barn($7.7 million), Corporate Visions($7.1 million), and KBP Investments($0.9 million). And remember, that $.99 per share, or some portion of it, could in time wind up in the shareholders pockets.
There is nothing new about all of the above as CPTA has presented the investment world with lower earnings and lower book for several quarters now and the stock price has reflected that. We should also note that at the same time, the Company has been paying lots of money to its stockholders in the form of dividends, which the stockholders get to keep forever. So if stockholders can now see the stock price rise while still collecting the generous dividends, we will get to the promised land.
Thanks for your comment.
Today, Cantor Fitzgerald reiterated its "Buy" rating on TCPC. Target price is $17.50.
"In a report released today, David Chiaverini from Cantor Fitzgerald maintained a Buy rating on TCP Capital (NASDAQ: TCPC), with a price target of $17.50. The company’s shares opened today at $14.48.
Chiaverini said, “Our BUY rating on TCP Capital is based on 1) its solid dividend coverage with a 2016 NOI-to-dividend coverage ratio of 115%, well ahead of the peer group at 103%, setting the stage for future dividend increases, in our view; 2) ramping up of its small business investment company (SBIC) license, which we estimate should generate an IRR 40% higher than TCP Capital’s core business development company (BDC) business; 3) its shareholder-friendly fee structure with a cumulative total return hurdle of 8% in place that applies to both the calculation of the income incentive fee as well as the calculation of the capital gains incentive fee; and 4) its asset sensitive balance sheet should benefit meaningfully with rising interest rates, with a 100 bp, 200 bp, and 300 bp increase in rates resulting in net interest income growth of 3%, 12%, and 20%,.”
It is a bit of a chaotic stock market out there right now but that makes for some opportunities. Yesterday's news release from TCPC makes that stock especially interesting. The Company issued preliminary estimates for Q2 (ending June). The NII estimate was between $.43 and $.45 per share which is impressive given that the street estimate is for $.39. Also the TCPC estimate far exceeds the quarterly dividend of $.36 setting up a possible dividend increase or an extra dividend. NAV per share was estimated at $15.09 to $15.11, well above the Q1 NAV of $15.03.
From the CPTA Q1 10Q:
"As of March 31, 2015, 76.7% of our income-bearing portfolio was bearing a fixed rate of interest."
In any event, the high current dividend is well covered and secure as CPTA works to generate NII to cover the regular monthly dividend.
The problem is the average investor, most likely, does not understand all of this and he/she will wait for all the CPTA ducks to get in line before buying the stock. But in so doing, those investors will most likely pay a higher price for the stock since, by then, certain risk factors will have been mitigated. For example, an investor could wait for the CPTA regular dividend to be covered by NII and feel safer, but more safety usually comes with a higher stock price. Also, those investors, by waiting, will have given up a large dividend income. Remember, the current $.2067 dividend is paid monthly. Some, however are buying now, collecting a lot of dividend money, and will eventually wind up with both dividend money and capital gains as the Company does its' thing and completes its' monetization program.
Of course, I could be wrong about the whole thing, or the overall stock market could collapse. But those are the risks we take in the hopes of generous compensation. And we always have the high dividend income flow to keep us warm.
As always, just one opinion. And I hope I got all the dates and numbers correct.
Here are some of the options CPTA has regarding the payment of these dividends.
1) They could pay all those gains (and whatever other gains come along this year) to the stockholders this year as extra dividends.
2) They could hold the gains, pay a 4% excise tax, and carry the gains into next year and pay stockholders then. That decision will be made by October 31st (the end of the Capital Gains measurement period) or sooner. They could, for example, continue the $.05 extra monthly dividend into next year, using these gains, if they chose to do so. These dividends (earned in 2015), would all have to be paid out by August 31,2016, the end of their tax year.
3) Some variation of 1) and 2).
Nice discussion on CPTA so decided to add some words.
Yesterday's drop in price probably reflected the fact that CPTA did not declare an extra dividend on top of the extra they are already paying. In the just completed June quarter they realized a capital gain from the sale of their holdings in Corporate Visions. That gain was $.43 per share and CPTA must pay the stockholders that $.43 if not offset by any capital losses. But they don't have to do it now and they chose not to. (By the way, I went through the CPTA entire portfolio and it looks like they don't have any capital losses that might reduce those gains). Additionally, in Q1 (ended in March) CPTA sold 179,348 shares of Boot Barn at 22.33 per share for a net realized gain of $3.3 million. That gain, coupled with the gain from KBP investments, was a contributor to the $.05 extra dividend they are now paying and will continue to pay each month through the rest of this year. But they still own 420,252 Boot Barn shares and they could sell them all now. And BOOT is trading at about $31.75 per share which could produce a net realized gain of 11.5 million or $.70 per share for CPTA. BOOT just bought out another company and the analysts are revising their BOOT target prices. The last three analyst target prices for BOOT were $35, $40, and $41 (all this week), so the profit to CPTA, and the dividends to the stockholders, could get even better. And CPTA has several other companies in their portfolio, which when sold, could add more capital gains. See the recent stockholder presentation for a list of potential Capital Gain candidates.
As pointed out by others, the CPTA stock price is having a very nice day so far today.
In the next post I will list some of the time frame options CPTA has to pay these dividends.
You seem to have confidence in technical analysis(TA) but I'm not sure any TA will really tell us where the CPTA stock price is going from here. Nevertheless, here are a couple of recent items that may throw some light on the subject. The second item deasl with TA.
1) On Friday, June 12th, CPTA director Larry Carroll bought another 5000 shares at an average price of $16.44. He now directly owns 60,000 shares. Two days earlier he bought 3950 shares at $17. Over that three day period he bought $149,350 worth of CPTA stock.
2) The Dividend Channel says CPTA is oversold saying: "Capitala Finance Corporation (NASDAQ:CPTA) presently has a stellar rank, in the top 10% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors".