In a recent transaction, John F. Barry III, the Chief Executive Officer of Prospect Capital Corp (NASDAQ:PSEC), purchased one million shares of the company's common stock. The shares were acquired at a price of $4.37 each, amounting to a total investment of $4.37 million. Following this transaction, Barry's direct ownership of Prospect Capital shares increased to over 72.4 million shares. Additionally, there is an indirect holding of 324,288 shares owned by his spouse. This move comes as part of Barry's ongoing involvement and investment in the company.
In other recent news, Prospect Capital Corporation expanded its preferred stock offering due to strong market demand, increasing the offering from $2 billion to $2.25 billion. This strategic initiative involved reclassifying 20 million shares from common to preferred stock. The company reported a net investment income of $102.9 million and a net asset value of $3.71 billion for the fourth quarter of fiscal year 2024.
Wells Fargo (NYSE:WFC) downgraded 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. The firm also adjusted its net operating income (NOI) forecasts for the company for fiscal years 2025 and 2026.
Despite these adjustments, Prospect Capital emphasized its strong balance sheet, diversified funding sources, and significant liquidity. The company is strategically shifting its investment portfolio towards first lien debt. Prospect Capital clarified that there are no ongoing discussions about forced conversions of preferred stock by the company's board. These recent developments indicate that Prospect Capital is making strategic decisions to maintain shareholder distributions and strengthen its investment portfolio.
InvestingPro Insights
John F. Barry III's recent purchase of Prospect Capital Corp (NASDAQ:PSEC) shares aligns with several key metrics and trends highlighted by InvestingPro. The CEO's $4.37 million investment comes at a time when the stock's valuation metrics and recent performance offer a mixed picture for investors.
According to InvestingPro data, Prospect Capital's current dividend yield stands at an impressive 12.22%, underscoring one of the InvestingPro Tips that the company "pays a significant dividend to shareholders." This high yield may be particularly attractive to income-focused investors, especially considering that Prospect Capital "has maintained dividend payments for 21 consecutive years," as noted by another InvestingPro Tip.
However, the company's recent financial performance presents some challenges. The revenue for the last twelve months as of Q1 2025 was $821.73 million, with a concerning year-over-year revenue decline of 7.23%. This downturn is even more pronounced in the quarterly figures, with a 16.9% revenue drop in Q1 2025 compared to the same quarter in the previous year.
Despite these headwinds, Barry's substantial share purchase could be seen as a vote of confidence in the company's future prospects. It's worth noting that an InvestingPro Tip suggests the stock's "RSI indicates it may be in oversold territory," which could partly explain the CEO's decision to increase his stake at current price levels.
For investors considering following Barry's lead, it's important to weigh these insights against other factors. InvestingPro offers 7 additional tips for PSEC, providing a more comprehensive analysis for those looking to make informed investment decisions.
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