Kristin Van Dask, CFO at Prospect Capital (PSEC), recently bought 15,200 shares. The buy increased her stake by 17%, and came to a total cost of $65,208.
This is the first insider buy since September, when the company’s CEO, COO, and a director bought over 1 million shares in total across a series of transactions. Insiders have been gradual buyers of shares over the past two years, and there have been no insider sales over the same period.
Overall, Prospect insiders own 26.6% of shares.
The business development company is down 25% over the past year, as revenues have fallen by 17% and the BDC has seen some losses on its portfolio.
While some of the company’s investments may face a write-down, as with any BDC, shares trade at about 0.5 times their book value, likely a substantial discount to the real value of their book of business right now.
Action to take: Investors may like shares here given the discount to their book value and the high current dividend yield of 12%. However, Prospect did just recently cut its dividend payment, and it may take time for shares to recover from the post-cut drop.
For traders, shares may have put in a short-term low following the dividend cut, although only time will tell. The January 2025 $5 calls, last trading for $0.05, could see triple-digit returns if shares bounce higher over the holiday season.
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.