Core Insights - Mr. Mavroudis is a professional portfolio manager with a focus on risk management and in-depth financial market analysis [1] - He has successfully navigated major crises, including the COVID-19 pandemic and the PSI [1] - Mr. Mavroudis is the CEO of FAST FINANCE Investment Services, a registered Greek company [1] Professional Background - Mr. Mavroudis holds multiple degrees, including an MSc in Financial and Banking Management, an LLM in Law, and a BSc in Economics, graduating as valedictorian [1] - He is a certified portfolio manager and holds various certifications related to financial instruments, derivatives, and securities [1] - He is also a licensed Class A accountant-tax consultant and a member of the Economic Chamber of Greece [1] Contributions and Engagement - Mr. Mavroudis writes daily articles for reputable financial media and appears as a guest commentator on television and online programs [1] - He has published three books on investments and teaches in educational seminars [1] - By writing on Seeking Alpha, he aims to engage with a community of investors and market enthusiasts, fostering mutual growth and knowledge sharing [1]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Hercules Capital (HTGC), and suggests that while the average brokerage recommendation (ABR) indicates a favorable outlook, investors should be cautious and validate these recommendations with other tools like Zacks Rank [1][3][5]. Group 1: Brokerage Recommendations - Hercules Capital has an average brokerage recommendation (ABR) of 1.78, indicating a position between Strong Buy and Buy, based on recommendations from nine brokerage firms [2]. - Of the nine recommendations, five are Strong Buy and one is Buy, which account for 55.6% and 11.1% of all recommendations respectively [2]. - Despite the positive ABR, studies indicate that brokerage recommendations often do not effectively guide investors towards stocks with the highest potential for price appreciation [3][4]. Group 2: Limitations of Brokerage Recommendations - Brokerage firms often exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [4][8]. - The interests of brokerage firms may not align with those of retail investors, providing limited insight into future stock price movements [5]. - Analysts' recommendations tend to be overly optimistic, which can mislead investors more often than they provide accurate guidance [8]. Group 3: Zacks Rank as an Alternative - Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, which are more effective indicators of near-term stock price performance compared to ABR [6][9]. - The Zacks Rank is updated more frequently, reflecting changes in earnings estimates promptly, while ABR may not always be current [10]. - For Hercules Capital, the Zacks Consensus Estimate for the current year remains unchanged at $1.96, suggesting that the stock may perform in line with the broader market [11]. Group 4: Current Status of Hercules Capital - The recent change in consensus estimate and other factors have resulted in a Zacks Rank 3 (Hold) for Hercules Capital, indicating a cautious approach despite the Buy-equivalent ABR [12].

Group 1 - The article emphasizes the current favorable conditions for income investors, particularly in the context of high-yielding Business Development Companies (BDCs) experiencing price declines due to volatility in tech stocks, resulting in double-digit yields [2] - iREIT+HOYA Capital is highlighted as a premier service focused on income-producing asset classes, aiming for sustainable portfolio income, diversification, and inflation hedging [1] - The author has over 14 years of investment experience and focuses on defensive stocks with a medium- to long-term investment horizon [2] Group 2 - The article does not provide specific financial advice or recommendations, encouraging readers to conduct their own due diligence before making investment decisions [4][5] - There is a disclosure regarding the author's beneficial long position in HTGC shares, indicating a personal investment interest [3]

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines high-quality dividend stocks with other investment vehicles such as Business Development Companies, REITs, and Closed End Funds to enhance income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The company advocates for a balanced approach to investing, focusing on both growth and income to optimize investment returns [1]. - The strategy aims to create a solid base of classic dividend growth stocks, which can be supplemented with other asset types for increased income potential [1]. Performance Comparison - The total return from this hybrid investment strategy is reported to be on par with the S&P 500 index, indicating its effectiveness in generating competitive returns [1].

Core Viewpoint - Hercules Capital Inc. reported a decline in net investment income for the fourth quarter of 2024, matching the Zacks Consensus Estimate but down 12.5% year-over-year [1] Financial Performance - Net investment income for Q4 2024 was $81.1 million, a decrease of 5.7% from the previous year, with a per-share income of 49 cents [2][1] - Total investment income in Q4 2024 was $121.8 million, slightly down from the year-ago quarter and below the Zacks Consensus Estimate of $124.09 million [3] - For the full year 2024, net investment income was $325.8 million, up 7.2% from 2023, but the per-share income of $2.00 lagged the consensus estimate of $2.01, reflecting a 3.8% decline year-over-year [2] Operating Expenses - Total gross operating expenses increased by 13.9% to $43.5 million, driven by rising costs across all components except loan fees [4] Portfolio and Commitments - The fair value of Hercules Capital's total investment portfolio was $3.66 billion as of December 31, 2024, with gross new debt and equity commitments of $619.5 million in Q4 [5] - The company realized early loan repayments of $225.2 million during the quarter [5] Balance Sheet Position - As of December 31, 2024, Hercules Capital's net asset value was $11.66 per share, an increase from $11.43 a year earlier [6] - The company had $658.8 million in liquidity, including $113.1 million in unrestricted cash and cash equivalents [6] - The weighted average cost of debt rose to 5% from 4.9% year-over-year [6] Market Position and Outlook - The lack of global diversification may limit Hercules Capital's growth prospects, while rising demand for customized financing could support total investment income [7]

Financial Data and Key Metrics Changes - Hercules Capital, Inc. achieved record total investment income of $493.6 million, an increase of 717.1% year over year [7] - Net investment income reached a record $325.8 million, up 7.2% year over year [7] - Annual return on average equity (ROAE) was 17.2% and return on average assets (ROAA) was 7.3% [8] - Total gross fundings for 2024 were $1.81 billion, a 13% increase year over year [7] Business Line Data and Key Metrics Changes - The company originated total gross debt and equity commitments of over $619 million in Q4 [15] - For the year, Hercules committed nearly $2.7 billion of capital and delivered record funding performance of approximately $1.81 billion [15] - Approximately 67% of Q4 fundings were to technology companies, while 42% of new commitments were to life sciences companies [19] Market Data and Key Metrics Changes - Venture capital investment activity for 2024 was $209 billion, a 29% increase from 2023 [30] - M&A exit activity for US venture capital-backed companies reached $82.6 billion, up 27% from 2023 [31] - Fundraising activity finished 2024 at $76.1 billion, indicating a healthy market environment [31] Company Strategy and Development Direction - Hercules Capital plans to manage its business and balance sheet defensively while maintaining flexibility to capitalize on market opportunities [11] - The company aims to enhance liquidity and tighten credit screens for new underwritings [12] - The focus is on maintaining a disciplined approach to capital deployment with an emphasis on diversification [21] Management's Comments on Operating Environment and Future Outlook - Management expects higher market and macro volatility in 2025 but anticipates a favorable new business landscape for growth stage companies [10] - The company is optimistic about increased M&A and capital markets activity in 2025 [11] - Management noted a shift in venture capital investors focusing more on valuation, which may impact companies that raised capital at inflated valuations [27] Other Important Information - Hercules Capital's net asset value per share increased to $11.66, a 2.3% rise from Q3 2024 [29] - The company ended Q4 with strong liquidity of $658.8 million in the BDC and over $1.1 billion across the platform [29] - The company declared a new supplemental distribution of $0.28 for 2025, maintaining its quarterly base distribution of $0.40 [33] Q&A Session Summary Question: Could 2025 end up being another record year for origination activity? - Management expressed optimism about 2025 being another record year if credit quality supports it, with a strong start in Q1 [53][54] Question: Can you discuss the potential size and timing of the next fund for the RIA? - Management indicated that they expect to be in the market for a new fund within the next year, focusing on quality credits rather than rapid capital deployment [58][59] Question: What drove the realized losses in the portfolio? - The largest realized loss was due to a crystallization from a workout event, with a significant portion already recognized as an unrealized loss [66][68] Question: What are the key drivers of funding activity in Q4? - Management attributed the increase in funding activity to the resolution of election uncertainty and a favorable rate environment [76][77] Question: What is the outlook for core yields? - Management provided guidance for core yields in Q1 to be between 12.25% and 12.75%, with current origination yields in the 11.5% to 13% range [81][86] Question: How does the company plan to manage leverage? - Management plans to increase leverage to offset yield compression while maintaining a conservative approach [100][101] Question: What sectors is the company focusing on in light of the new administration? - Management is bullish on sectors with less regulation and expects increased M&A and capital markets activity [105][106]

Core Insights - Hercules Capital reported revenue of $121.78 million for the quarter ended December 2024, a decrease of 0.7% year-over-year, with EPS at $0.49 compared to $0.56 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $124.09 million, resulting in a surprise of -1.85%, while the EPS met the consensus estimate [1] Financial Performance Metrics - Total Fee Income was $6.95 million, exceeding the four-analyst average estimate of $6.64 million [4] - Total interest and dividend income amounted to $114.84 million, below the average estimate of $119.27 million from four analysts [4] - Interest and dividend income from Non-control/Non-affiliate investments was $111.34 million, compared to the average estimate of $113.63 million based on two analysts [4] - Interest and dividend income from Control investments was $3.50 million, slightly below the estimated $3.52 million [4] - Fee Income from Non-control/Non-affiliate investments was $6.91 million, lower than the two-analyst average estimate of $7.35 million [4] Stock Performance - Hercules Capital's shares returned +3.4% over the past month, while the Zacks S&P 500 composite saw a +3.9% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1: Earnings Performance - Hercules Capital reported quarterly earnings of $0.49 per share, matching the Zacks Consensus Estimate, but down from $0.56 per share a year ago [1] - The company posted revenues of $121.78 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.85% and down from $122.6 million year-over-year [2] - Over the last four quarters, Hercules Capital has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2][3] Group 2: Stock Performance and Outlook - Hercules Capital shares have increased approximately 4.2% since the beginning of the year, outperforming the S&P 500's gain of 2.9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the coming quarter is $0.49 on revenues of $125.26 million, and for the current fiscal year, it is $1.99 on revenues of $511.95 million [7] Group 3: Industry Context - The Financial - SBIC & Commercial Industry, to which Hercules Capital belongs, is currently in the top 16% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Financing the Growth of Tomorrow's Companies Today Q4 2024 INVESTOR PRESENTATION February 13, 2025 Important Notice: Forward Looking Statements This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the "safe harbor" provisions of the Pr ...

Financial Performance - Record Full-Year 2024 Total Investment Income of $493.6 million, an increase of 7.1% year-over-year[1] - Record Full-Year 2024 Net Investment Income (NII) of $325.8 million, an increase of 7.2% year-over-year, equating to $2.00 per share[1][2] - Q4 2024 NII of $81.1 million, or $0.49 per share, providing 123% coverage of the base cash distribution[1][3] - Total investment income for the three months ended December 31, 2024, was $121.784 million, a slight decrease of 0.67% from $122.603 million in the same period of 2023[63] - Net investment income for the twelve months ended December 31, 2024, increased to $325.832 million, up from $304.037 million in 2023, representing a growth of 7.2%[63] - Basic net investment income per common share for the three months ended December 31, 2024, was $0.49, compared to $0.56 in the same period of 2023[63] Assets and Investments - Approximately $4.8 billion of Assets Under Management, an increase of 14.2% year-over-year[2] - The total investments at cost as of December 31, 2024, were $3,708.8 million, compared to $3,609.9 million as of September 30, 2024[29] - Hercules' total investments at fair value amounted to $3,659.978 million, up from $3,248.046 million in 2023[60] - Hercules' total assets as of December 31, 2024, were $3,831.591 million, compared to $3,416.926 million in 2023[60] - Hercules held equity positions in 72 portfolio companies with a fair value of $128.7 million as of December 31, 2024[46] Liabilities and Commitments - Total liabilities increased to $1,842.010 million as of December 31, 2024, from $1,614.220 million in 2023[60] - The Company had $448.5 million of available unfunded commitments, representing 11.7% of total assets, a decrease from $489.0 million or 13.4% in the previous quarter[36] - Q4 2024 Total Gross Debt and Equity Commitments of $619.5 million[3][9] Distributions and Shareholder Returns - New Supplemental Cash Distribution for 2025 announced at $0.28 per share, payable over four quarters[2] - Distributions paid per common share remained stable at $0.48 for the three months ended December 31, 2024, consistent with the same period in 2023[63] Operating Expenses - Total gross operating expenses for the twelve months ended December 31, 2024, were $178.539 million, an increase from $165.732 million in 2023, reflecting a rise of 7.3%[63] - Employee compensation expenses for the twelve months ended December 31, 2024, totaled $67.074 million, up from $63.500 million in 2023, indicating a growth of 5.5%[63] Net Asset Value - As of December 31, 2024, the Company's net assets were $1.99 billion, up from $1.85 billion at the end of Q3 2024, with NAV per share increasing 2.3% to $11.66[41] - The net asset value per share increased to $11.66 as of December 31, 2024, compared to $11.43 in 2023[60] Unrealized Gains and Losses - Net Unrealized Appreciation of $13.8 million recorded in Q4 2024, net of foreign currency movements[23] - The net change in unrealized appreciation for the three months ended December 31, 2024, was $13.773 million, down from $31.287 million in the same period of 2023[63] Debt and Leverage - Net GAAP Leverage of 83.9% and Net Regulatory Leverage of 69.9% as of year-end[2] - Hercules' GAAP leverage ratio was 89.6%, with a regulatory leverage ratio of 75.6% excluding SBA debentures[34] Loan Performance - The number of loans on non-accrual decreased to one, with an investment cost of approximately $61.3 million and fair value of $18.2 million, representing 1.7% and 0.5% of the total investment portfolio at cost and value, respectively[27] Recent Transactions - Hercules closed $619.5 million in new debt and equity commitments in Q4 2024, with pending commitments of $578.5 million in signed non-binding term sheets as of February 10, 2025[37] - Hercules' portfolio company Voyager Technologies, Inc. confidentially filed for an IPO in January 2025, with Hercules committing $58.0 million in venture debt starting June 2024[49] - Sandata Technologies, LLC was acquired by HHAeXchange in October 2024, with Hercules providing $22.5 million in venture debt financing beginning May 2024[49] - Snagajob.com, Inc. was acquired by JobGet in November 2024, with Hercules having committed $93.2 million in venture debt financing since June 2016 and holding warrants for 600,000 shares of common stock[49] - Kineta, Inc. announced its acquisition by TuHURA Biosciences, Inc. for $30.0 million in November 2024, with Hercules committing $20.0 million in venture debt financing since December 2019[49] - Ikon Science was acquired by Vela Software in December 2024, with Hercules committing $24.0 million in venture debt financing since October 2019[50] Debt Repayment - Hercules fully repaid $50.0 million principal and $1.1 million of accrued interest on February 5, 2025[53]