HTGC - Capital Southwest: Solid Investment But Time Your Entry Carefully
2024-06-22 02:46:28 ET
Summary
- Capital Southwest is a financial company lending to medium-sized businesses, with a 40% stock price increase in the last year.
- The company manages a high-risk, high-reward portfolio of loans and equity investments, with a focus on diverse industries and strong cash flows.
- While the company is undervalued when considering dividends, the interest rate risk poses a potential impact on financial results and dividend distribution.
Overview
Capital Southwest ( CSWC ) is a financial company that lends to medium-sized businesses. It borrows a lower yield or issues equity to grow a portfolio of loans and equity investments. Capital Southwest earns money due to the spread between its yield when lending money and the yield on the debt it borrows. You can see in Figure 1 that in the last year has gained 40% in its stock price performance. It is impressive if you consider it is a high dividend security....
Capital Southwest: Solid Investment, But Time Your Entry Carefully