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Insider Invests in TCP Capital

- By Kyle Ferguson

Director Kathleen A. Corbet purchased 3,500 shares of TCP Capital Corp. (TCPC) for $16.54 per share on April 20 according to an SEC filing.

She now owns 3,500 total shares of the company.

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Headquartered in Santa Monica, California, TCP Capital is an externally managed, closed-end, non-diversified management investment company. The company's investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. It invests in the debt of middle-market companies and small businesses, including senior secured loans, junior loans, mezzanine debt and bonds.

On April 20, TCP Capital announced it priced a public offering of 5 million shares of its common stock at $16.84 per share, for total gross proceeds of $84.2 million.

The company gave the underwriters a 30-day option to purchase up to an additional 750,000 shares. The offering is expected to close on April 25.

According to GuruFocus, the company has a 6 of 10 financial strength rating with a cash-debt ratio of 0.09, an equity-asset ratio of 0.57 and an interest coverage ratio of 3.94.

The company has a 4 of 10 profitability and growth rating. It has an operating margin of 77.38% and a net margin of 77.01%. It has a return on assets (ROA) of 7.16% and a return on equity (ROE) of 10.15%.

TCP Capital has a Graham number of $22.43. The Graham number is the upper boundary of the price range a defensive investor should pay for the stock. According to the theory, any price below the Graham number is considered undervalued. Thus, the stock is worth investing in.

Over the past five years, TCP Capital's revenue has increased 53.57%, its net income has increased 35.43%, its earnings per share by 4.81% and its gross margin by 77.96%.

According to the Peter Lynch chart below, the stock is trading below its intrinsic value.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.