67 WALL STREET, New York - June 27, 2013 - The Wall Street Transcript has just published its Business Development Companies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Consistent BDC Dividend Yield - BDC Risk/Reward Profile - Higher Dividend Yields - Business Development Companies Historical Overview
Companies include: General Electric Co. (GE), Yahoo! Inc. (YHOO), eBay Inc. (EBAY) and many more.
In the following excerpt from the Business Development Companies Report, an expert analyst discusses the outlook for the sector for investors:
TWST: Is there anybody that you really like in the group that you cover?
Mr. Alexander: I have a "buy" rating on Horizon Technology Finance (HRZN) right now. In my peer group, it trades at the largest discount to NAV, a little greater than 8%; it has a 10% yield at this price, and if you look at it on a 12-month basis, if Horizon Technology Finance were to merely return to NAV in 12 months, that would provide an 18% total rate of return, which is competitive with traditional equities and yet without nearly the potential downside risk that you get from investing in the equities market. So we think that premium potential return makes Horizon Technology Finance very attractive in the BDC space.
They are a little bit different than the traditional BDC, which normally invests in middle market companies that may or may not be tied to private-equity-sponsored deals. Horizon instead invests in venture-capital-backed companies that have more of an emerging-growth profile, like biotechnology and information technology and health care technology. As a result of that, they also have a higher proportion of equity kickers in their portfolio, which may have a material positive beneficial impact on NAV beyond the return from the underlying loans.
TWST: Do they have a relationship with venture capitalists as well, generally?
Mr. Alexander: Yes, they do. They have strong relationships with many of the best-known venture capitalist firms. The VC's come to Horizon and use Horizon for small $5 million to $10 million loans to these emerging-growth companies. The emerging growth companies use the loan on top of the venture capital investment; they sort of top off the operating capital necessary to allow the emerging growth company to get their products to market. As such it tends to be a very, very small sliver of the capital stack, and all of these highly sophisticated venture capital companies are in a position where they would need to lose their entire...
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