HRZN - Hercules Capital: A Strong Performer Among VC-Focused BDCs

2024-05-24 07:00:00 ET

Summary

• Hercules Capital is a strong performer among venture-capital focused Business Development Companies in the Technology & Life Sciences sectors.
• The company reported strong Q1 earnings, with double-digit growth in net investment income and total investment income.
• Hercules Capital has outperformed its peers in terms of growth, NAV, and dividend coverage, leading to a higher premium on its share price.
• Hercules Capital's strong performance in 2023 led to a record Q1 in terms of funding and originations.
• As a result of their strong performance, HTGC trades at a premium near the top of its historical range of 1.1x -1.7x.

Introduction

As an income-focused investor, Business Development Companies are huge staples within my portfolios. I remember before the start of interest rate hikes and the banking crisis in 2023 I would read about how BDCs were considered risky investments and therefore not as attractive. Fast-forward to 2024 with higher interest rates and many have seen strong price appreciation....

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