I am planning to buy back my common shares, although I am overweight already in the baby bonds collecting a sweet 7.7% and rolling down the curve.
At a 21% discount to NAV, given that they are executing decently, it is the least overvalued of the BDCs although obviously SAR is not suitable for a huge investment. I think they will initiate a dividend at around 40 cents per quarter later this year.
bv could be $8.40 at the moment, it could be $8.80, who knows, but I do know that most of the agency-heavy MREITs are selling at 12-15% discounts . . . be generous and say book is $8.80 and a $1 discount is fair . . . $7.80 or so is the point where I would consider re-entering
Anyone looking at this baby bond? It does not mature until 2042 so obviously you have a very long duration but at the current price of around $21 you are getting close to a 9% YTM. It seems like a superior alternative to the common if you think, as I do, that the Fed stays in accomodation mode semi-permanently.
No lender to a public BDC has ever lost a dime of principal although of course the track record for the industry is less than 20 years.
The structural protections aren't very good BUT management here seems unusually committed to capital preservation.
Slowly growing private share count down to 3.9ml from 5.3ml in 2010 BUT the story has totally changed over the past few years from smoking a cigar butt slowly going private with lots of excess cash protecting the downside to one of a biz transition from apparel to accessories and from stable, cost conscious ops to one of growth. I suspect the passing of the CEO's dad may have had something to do with the strategy shift.
IMHO they have a management infrastructure appropriately sized for a company twice as large. (They have around ten vps, for example.) The recent new hires at the top have been very expensive.
I am hanging on at these prices but would not be surprised to see a 20-30% decline if the selling season is flat to plus 5% on sales and down sharply on eps. Book value is $14 per share but there is no longer any excess capital to buy back shares when you take account of the future lease obligations.
Why am I hanging on? Well if two year from now total earnings return to 2010-2011 levels as a % of sales you would have around $8ml on a share count of 3.5 to 3.9ml, depending on whether they squeeze out some more working capital (not likely if they are growing sales). But $2+ per share is certainly possible. If they got a 13x multiple you have a $26 stock.
Still liked it as a cigar butt/golden final share investment better. And maybe I just have a problem admitting I was wrong, having bought my shares at the current price three years ago while the market is up 50+%.
sounds like there will be a regular divvy starting later this year or early next . . . I am guessing about 45 cents per quarter based on the run rate NII after the CLO restructure
Discounts exits for a reason (usually) and in this case the discount exists because the The Street does not like HRZN management's track record or promotional stye. And for good reason IMHO.
That said, I just re-entered for the first time in a long time at $13. I look at KIPO and SVVC and the other VC type BDCs and conclude that unless HRZN really, really suck they MUST hve some warrant winners in the portfolio. The dividend is sustainable as long as undewriting which used to be great goes back to being at least good.
So I am back in with a toe, fulling expecting to be able to average down into the 12s and maybe the 11s on this.
was interested till I saw it was basically a financing arm for UP -- almost 90% of revenue