Prospect Capital (NASDAQ:PSEC) Shares Gap Up After Insider Buying Activity

Key Points

• Prospect Capital Corporation's share price gapped up to $2.66 following significant insider buying, with CEO John F. Barry acquiring 374,500 shares at $2.66 each, increasing his total ownership to 84 million shares.
• Analyst ratings have turned negative, with Wall Street Zen downgrading the stock from "hold" to "sell" and Wells Fargo lowering its price target from $3.00 to $2.50.
• The company announced a monthly dividend of $0.045 to be paid on November 18th, translating to a substantial annualized yield of 19.8%, despite a negative dividend payout ratio of -40.30%.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report)'s share price gapped up prior to trading on Thursday following insider buying activity. The stock had previously closed at $2.57, but opened at $2.66. Prospect Capital shares last traded at $2.69, with a volume of 889,648 shares traded.

Specifically, CEO John F. Barry acquired 374,500 shares of the stock in a transaction dated Monday, September 22nd. The stock was acquired at an average price of $2.66 per share, with a total value of $996,170.00. Following the completion of the purchase, the chief executive officer owned 84,017,000 shares in the company, valued at $223,485,220. This trade represents a 0.45% increase in their position. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link.

Analyst Ratings Changes

A number of brokerages have commented on PSEC. Wall Street Zen cut Prospect Capital from a "hold" rating to a "sell" rating in a report on Saturday, August 30th. Wells Fargo & Company dropped their price target on shares of Prospect Capital from $3.00 to $2.50 and set an "underweight" rating for the company in a research note on Thursday, August 28th. One equities research analyst has rated the stock with a Sell rating, Based on data from MarketBeat, the company presently has a consensus rating of "Sell" and an average target price of $2.50.

Prospect Capital Price Performance

The company has a quick ratio of 1.16, a current ratio of 1.16 and a debt-to-equity ratio of 0.70. The stock's 50-day moving average price is $2.94 and its 200 day moving average price is $3.36. The firm has a market cap of $1.27 billion, a price-to-earnings ratio of -2.03 and a beta of 0.85.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last issued its quarterly earnings results on Tuesday, August 26th. The financial services provider reported $0.17 earnings per share for the quarter, beating analysts' consensus estimates of $0.13 by $0.04. Prospect Capital had a negative net margin of 69.68% and a positive return on equity of 12.14%. The business had revenue of $166.95 million during the quarter, compared to analyst estimates of $167.08 million.

Prospect Capital Dividend Announcement

The company also recently announced a monthly dividend, which will be paid on Tuesday, November 18th. Shareholders of record on Wednesday, October 29th will be issued a $0.045 dividend. The ex-dividend date is Wednesday, October 29th. This represents a c) annualized dividend and a yield of 19.8%. Prospect Capital's dividend payout ratio (DPR) is -40.30%.

Hedge Funds Weigh In On Prospect Capital

Institutional investors and hedge funds have recently added to or reduced their stakes in the stock. VSM Wealth Advisory LLC acquired a new position in Prospect Capital during the first quarter worth $25,000. American National Bank & Trust acquired a new position in Prospect Capital in the 2nd quarter valued at $32,000. Significant Wealth Partners LLC acquired a new stake in Prospect Capital in the 2nd quarter worth about $36,000. Private Trust Co. NA raised its stake in Prospect Capital by 38.5% in the 2nd quarter. Private Trust Co. NA now owns 11,639 shares of the financial services provider's stock worth $37,000 after purchasing an additional 3,238 shares in the last quarter. Finally, Foundations Investment Advisors LLC acquired a new stake in Prospect Capital in the 2nd quarter worth about $38,000. 9.06% of the stock is owned by institutional investors and hedge funds.

About Prospect Capital

Prospect Capital Corporation is a business development company. It specializes in middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions.

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