John F. Barry III, the CEO of Prospect Capital Corp (NASDAQ:PSEC), has acquired a significant amount of the company's stock, according to a recent SEC filing. On November 21, Barry purchased 1,000,000 shares of Prospect Capital's common stock at a price of $4.64 per share, amounting to a total investment of $4.64 million. This transaction increases his direct ownership to over 76 million shares. Additionally, Barry holds an indirect stake of 328,590 shares through his spouse. This move reflects Barry's continued confidence in the company's prospects.
In other recent news, Prospect Capital Corporation has expanded its preferred stock offering to $2.25 billion, due to strong demand from various investment channels. This includes the reclassification of 20 million shares from common to preferred stock. Wells Fargo (NYSE:WFC) has adjusted its price target for Prospect Capital from $5.00 to $4.50, citing a lower Secured Overnight Financing Rate (SOFR) curve and an anticipated increase in shares due to the conversion of preferred stocks.
Despite these changes, Prospect Capital reported robust earnings for the fourth quarter of fiscal year 2024, with a net investment income of $102.9 million and a net asset value of $3.71 billion. The company has emphasized its strong balance sheet, diversified funding sources, and significant liquidity, along with a strategic shift towards first lien debt.
As part of recent developments, Prospect Capital clarified that there are no ongoing discussions about forced conversions of preferred stock by the company's board. Analysts have noted the company's successful strategy of tapping into the unsecured term debt market to extend liability duration and reduce counterparty risk. These developments underscore Prospect Capital's strategic decisions to maintain shareholder distributions and strengthen its investment portfolio.
InvestingPro Insights
John F. Barry III's substantial stock purchase aligns with Prospect Capital Corp's (NASDAQ:PSEC) attractive dividend profile. According to InvestingPro Tips, PSEC "pays a significant dividend to shareholders" and has impressively "maintained dividend payments for 21 consecutive years." This consistency in dividend payments could be a key factor in Barry's decision to increase his stake, as it suggests a commitment to shareholder returns.
The company's current dividend yield stands at a robust 11.18%, as reported by InvestingPro Data. This high yield may be particularly appealing in the current market environment, potentially offsetting some of the recent share price volatility. InvestingPro Data shows that PSEC has experienced a 1-month price total return of -8.0%, while its year-to-date return is -10.09%.
Despite these attractive dividend characteristics, investors should note that PSEC faces some financial challenges. An InvestingPro Tip indicates that the company is "not profitable over the last twelve months," with a negative P/E ratio of -18. This information provides context to Barry's investment decision and highlights the importance of considering multiple factors when evaluating the stock.
For a more comprehensive analysis, InvestingPro offers 13 additional tips for PSEC, providing investors with a deeper understanding of the company's financial health and market position.
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