Ticker: TCPC, Buy below $16.
TCP Capital Corp is a Small-Cap Business Development Company that is focused on middle market lending.
Why I Would Buy
- Dividend – Yields over 9%. This dividend is well covered by Net Investment Income (110% dividend coverage in 2017).
- Insider Trends – Officers has been aggressive buyers for last 12 months, especially so within the last 3 months.
- Credit Ratings – TCP Capital’s debt is rated investment grade, a testament to the company’s strong balance sheet.
- Cheap – TCPC currently trades below its book value.
- Fee Structure – TCPC has one of best advisory fee structures in the BDC industry, its base and incentive fee compensations are shareholder friendly.
What Could Go Wrong
- High Beta – BDCs like TPC that serve the middle markets are strongly correlated to the domestic US economy, and will suffer disproportionately in an economic downturn.
Disclosure: I am long TCPC, please read additional disclosures here before taking any action based on this post.