Carol Foster, a director at Hercules Capital (HTGC) recently bought 3,850 shares. The buy increased her holdings by 30 percent, and came to a cost of just over $50,000.
This is the first insider transaction of 2020, and the first insider buy since 2015. Foster previously sold some shares last year at a price near where the stock trades today.
Hercules is an investor in early-stage companies, typically with a focus on new technologies. The company is structured as a business development company, which, like a REIT, obligates it to pay out income to its shareholders.
Shares are down 9 percent over the past year, and as with most other companies, the share price took a dive back in March and has been recovering since. The company recently reported earnings growth of 123 percent and profit margins of 42 percent.
Action to take: Thanks to the payout requirement, investors can lock in a dividend yield of about 10 percent here. There’s still some upside potential in shares here as well. With interest rates at zero, Hercules offers a great source of income.
Traders can buy the April 2021 $12.50 calls to play the uptrend as well. The option is just in-the-money, and should move penny-for-penny higher with shares. The option last traded for around $1.10, and can deliver mid-to-high double-digit returns before expiration.