Prospect Capital (NASDAQ:PSEC) Stock Sees Heavy Call Option Buying

Prospect Capital Corporation (NASDAQ:PSEC) was the recipient of some unusual options trading activity on Thursday. Stock investors bought 2,565 call options on the stock. This is an increase of approximately 353% compared to the average daily volume of 566 call options.

Insiders Place Their Bets

In other news, CEO John Barry. III bought 1,217,105 shares of the business’s stock in a transaction on Friday, September 4th. The shares were bought at an average cost of $2.24 per share, for a total transaction of $2,726,315.20. Following the completion of the acquisition, the chief executive officer owned 90,479,988 shares in the company, valued at approximately $202,675,173.12. This trade represents a 1.36% increase in their position. The acquisition was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. Company insiders own 25.94% of the company’s stock.

Institutional Trading of Prospect Capital

Hedge funds and other institutional investors have recently modified their holdings of the company. Private Management Group Inc. lifted its holdings in shares of Prospect Capital by 51.7% in the second quarter. Private Management Group Inc. now owns 20,534,804 shares of the financial services provider’s stock valued at $47,435,000 after purchasing an additional 6,999,513 shares in the last quarter. Van ECK Associates Corp boosted its position in shares of Prospect Capital by 32.7% during the second quarter. Van ECK Associates Corp now owns 9,685,724 shares of the financial services provider’s stock worth $22,374,000 after buying an additional 2,388,990 shares during the period. Legal & General Group Plc bought a new position in shares of Prospect Capital during the second quarter worth about $9,336,000. Independent Financial Group LLC bought a new position in shares of Prospect Capital during the first quarter worth about $8,644,000. Finally, Private Advisor Group LLC raised its position in Prospect Capital by 0.4% in the 1st quarter. Private Advisor Group LLC now owns 1,711,638 shares of the financial services provider’s stock valued at $4,467,000 after buying an additional 6,262 shares during the last quarter. Institutional investors and hedge funds own 9.06% of the company’s stock.

More Prospect Capital News

Here are the key news stories impacting Prospect Capital this week:

• Positive Sentiment: PSEC reported $0.15 per share, above the $0.10 analyst consensus, and announced a $200 million common-share repurchase program. Repurchases could support per-share value, though the announcement does not establish how much the company will buy back. Prospect Capital results and repurchase program
• Neutral Sentiment: Call-option trading rose to 2,565 contracts, 353% above its average volume. This suggests increased speculative interest, but options activity alone does not reliably predict the stock’s direction.
• Negative Sentiment: Quarterly revenue of $151.7 million fell short of the $163.1 million consensus. Net investment income was $76.4 million, down from $79.4 million a year earlier, while NII per share declined to $0.15 from $0.17. The earnings beat therefore came alongside weaker underlying income. Prospect Capital earnings report
• Negative Sentiment: An Associated Press earnings snapshot reported a $21 million net loss, highlighting that the per-share earnings beat does not mean the company was profitable on a net basis. Fiscal Q1 earnings snapshot
• Negative Sentiment: A Seeking Alpha article raised concerns about PSEC’s high stated yield being supported by a shrinking portfolio, adding to questions about the sustainability of income and distributions. Analysis of Prospect Capital’s yield and portfolio

Prospect Capital Stock Up 1.7%

PSEC traded up $0.03 during trading on Thursday, reaching $1.47. The company had a trading volume of 2,928,394 shares, compared to its average volume of 5,098,063. The company has a debt-to-equity ratio of 0.64, a current ratio of 0.87 and a quick ratio of 0.87. Prospect Capital has a 12 month low of $1.40 and a 12 month high of $3.12. The business’s fifty day moving average price is $1.93 and its 200 day moving average price is $2.35. The company has a market cap of $782.05 million, a P/E ratio of 29.10 and a beta of 0.84.

Prospect Capital (NASDAQ:PSEC) last issued its quarterly earnings data on Wednesday, November 4th. The financial services provider reported $0.15 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.10 by $0.05. Prospect Capital had a net margin of 19.33% and a return on equity of 12.15%. The company had revenue of $151.74 million during the quarter, compared to the consensus estimate of $163.14 million. Equities analysts anticipate that Prospect Capital will post 0.38 EPS for the current year.

Prospect Capital Announces Dividend

The business also recently announced a monthly dividend, which will be paid on Wednesday, November 18th. Investors of record on Wednesday, October 28th will be paid a $0.0350 dividend. The ex-dividend date of this dividend is Wednesday, October 28th. This represents a $0.42 dividend on an annualized basis and a yield of 28.7%. Prospect Capital’s dividend payout ratio is presently 840.00%.

Wall Street Analyst Weigh In

A number of research firms recently commented on PSEC. Zacks Research upgraded shares of Prospect Capital to a “hold” rating in a research report on Monday, October 5th. Weiss Ratings lowered Prospect Capital from a “sell (d+)” rating to a “sell (d)” rating in a report on Wednesday, August 26th. Finally, Wall Street Zen cut Prospect Capital from a “buy” rating to a “hold” rating in a research note on Saturday, August 22nd. One investment analyst has rated the stock with a Hold rating and two have assigned a Sell rating to the company’s stock. Based on data from MarketBeat.com, the stock presently has an average rating of “Sell” and a consensus target price of $2.00.

Prospect Capital Company Profile

Prospect Capital Corporation (NASDAQ:PSEC) is a business development company that provides financing and investment capital to middle-market companies. The company primarily invests in privately held businesses through first-lien and second-lien loans, mezzanine debt, and other debt securities, while also making equity and equity-related investments in selected companies.

Prospect Capital invests across a range of industries and has additional exposure to areas such as real estate, structured credit, and financial services.