Insider Activity Report: Prospect Capital (PSEC)

Grier Eliasek, COO at Prospect Capital (PSEC), recently bought 26,750 shares across two transactions. The buys came to a total price just over $153,000, and increased the COO’s position by about 2 percent.

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  • Those buys came a few weeks after the company CFO bought 5,000 shares, paying just over $28,000 and increasing her stake by about 7 percent. Insiders have only been buyers over the last two years.

    In total, Prospect Capital insiders won 27.4 percent of shares.

    The business development company is down nearly 25 percent over the past year. Rising interest rates have reduced business borrowing needs, and the company’s equity stakes may also be impacted by rising interest rates.

    Prospect is a business development company, or BDC. They’re structured like a real estate investment trust, or REIT. That means they have to pay out most of their earnings as income.

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  • Prospect pays a monthly dividend, with a current annual yield of about 12.3 percent.

    Action to take: Investors looking for income may like Prospect for its monthly payout and high overall yield. A drop in interest rates next year may lead to some share price appreciation as well.

    For traders, the stock has started to trend higher following the peak in interest rates over the past few weeks. There may be further upside in the weeks ahead.

    The January 2024 $6 calls, last going for about $0.15, could see high double-digit returns in the coming weeks. Traders should look to take a quick profit.

     

    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 of the companies mentioned in this article.

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