Kristin Van Dask, CFO of Prospect Capital (PSEC), recently bought 3,330 shares. The buy increased her stake by 275%, and came to a total cost of $74,925.
That follows up on two buys from the company CEO back in May. Those buys totaled nearly 803,000 shares, at a cost of about $4.4 million. Other company insiders have been active buyers over the past year. There have been no insider sales over the past year.
Overall, Prospect Capital insiders own 26.7% of shares.
The business development company is down 11% over the past year.
Relatively high interest rates have impacted the company’s business model, which involves lending capital or making private investments in small but rapidly-growing companies.
Prospect’s revenues were down last year by 6%, and the company had a few portfolio write-downs. However, the company remained profitable overall, and even holds a 15% profit margin.
Action to take: Investors looking for current income may want to look at Prospect or other BDC companies for its big cash payouts.
Prospect currently pays a 13% dividend, however, its payout ratio is nearly twice its income, and could be vulnerable to a cut.
For traders, shares have been largely rangebound over the past year. However, shares could pop higher as interest rates decline. The January 2025 $6 calls, last trading for about $0.1t, could see a big jump if interest rates get cut at some point this year. The option is cheap enough to see triple-digit returns.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.