TCPC: This Stable 10.1% Yielding BDC Is A Strong Buy At These Levels

Summary

  • TCPC is a higher quality BDC and is currently trading lower (below book value) for the reasons discussed in this article.
  • There is a very good chance that the stock price for TCPC will rally especially after the company reports Q3 2018 results 5 weeks from now.
  • Lower stock prices will likely drive additional share repurchases limiting downside for investors.

You can read the full article at the following link:

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I consider to BlackRock TCP Capital (TCPC) to be one of the most undervalued business development companies (“BDCs”) given its history and potential dividend coverage, supported by a higher quality portfolio and management as discussed in this article.

TCPC Article Follow-Up:

As mentioned in “I Recently Purchased This 10% Yielding BDC“:

“I recently purchased additional shares of TCPC at a price of $14.22 before the March 2018 ex-dividend date and have already earned $0.72 per share in dividends (including $0.36 paid tomorrow). The Relative Strength Index or RSI is an indicator that I use after selecting a BDC that I would like to purchase, but waiting for a good entry point. Currently, TCPC has an RSI of 38 as shown below and in my BDC Google Sheets indicating that the stock is becoming ‘oversold’ or ‘undervalued’ as discussed below. However, it should be noted that there are currently quite a few BDCs with RSI’s below 40.”

The following is the chart from the previous TCPC article linked above:

After the article, TCPC’s share price increased closer to $15 as shown below:

However, the stock price has fallen back to $14.25 with an RSI of 38:

What Happened?

As shown above, TCPC reported Q2 2018 results on August 8, 2018, with its net asset value (“NAV”) per share declining by $0.29 per share or 1.9% (from $14.90 to $14.61) due to net unrealized losses of $20.5 million (or $0.35 per share) from:

  • $7.3 million on its investment in Kawa Solar Holdings
  • $4.5 million on its investment in Real Mex
  • $3.3 million on its investment in AGY Holdings
  • $3.0 million on its investment in Green Biologics

It should be noted that the recent NAV decline from was from unrealizedlosses and these investments have been discussed in my previous TCPC articles and on the recent earnings call…….

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