TRIN - Horizon Technology: High-Quality BDC But Overvalued

2024-02-19 23:17:49 ET

Summary

• Horizon Technology is a BDC with a diverse portfolio made up of 99% floating loans and a dividend yield of nearly 10%.
• The company focuses on providing loans and investments to companies in their development stages, primarily in the technology and life sciences industries.
• HRZN has strong financials, with significant growth in net investment income and a low historical loss rate, but its current premium to NAV makes it a hold for now.

Overview

I really developed a love for BDCs (business development companies) because of how well they've generally performed over the last decade and how large of a dividend income they are able to provide. In the case of Horizon Technology ( HRZN ), the dividend yield is near 10% and has provided a total return that's competitive with the VanEck BDC ETF ( BIZD ). HRZN's portfolio size is over $700M and is very diverse in nature. However, I would not start a position here, as the price trades at a higher premium to NAV than I feel comfortable with....

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