A divergence is opening up in Hercules Capital's lending market. Short sellers cut positions by 13.4% over the past week — yet the cost to borrow jumped 58% to 3.31% in the same window. Availability has tightened to 26%. That combination tells a specific story: fewer shorts, but the remaining holders are competing harder for a shrinking pool of lendable shares.
Availability at 26% means only one share is available for roughly every three already borrowed — firmly in tight territory. That's a meaningful deterioration from 41.6% a week ago. The 52-week low sits at 3.7%, hit on May 13, so the current level is not unprecedented for HTGC. But the direction matters: availability has fallen in five of the past seven sessions.
Cost to borrow moved in lockstep. It stood at 2.09% on May 22. By June 2 it had reached 3.31% — a 58% rise in one week and a 54% rise over the month. The ORTEX short score stands at 65.3, near a six-month high, and the utilization rank sits at the 2nd percentile versus all covered stocks. That places HTGC among the tightest borrow markets in the broader universe.
SI % of free float is 6.4% as of June 2. That's down from 7.4% two weeks ago, when shorts were at their most aggressive. The one-week decline of 13.4% is sharp. It reflects genuine covering — not a data artefact. FINRA's official fortnightly figure, last settled May 15, puts short shares at 10.6 million with 5.0 days to cover.
The reduction in shorts has not been enough to ease the lending market. That suggests the covering happened unevenly — some borrowers returned shares while others sought to maintain or initiate positions, creating a net demand squeeze on available inventory.
An earnings event is scheduled for June 18. That date is relevant context. Cost-to-borrow spikes ahead of earnings are common in BDCs as traders position around net asset value and dividend sustainability.
Analyst sentiment is cautious but not bearish. UBS raised its target to $15.50 on May 18 while maintaining Neutral. Piper Sandler raised its target to $17.00 in early May, also Neutral. The mean analyst target stands at $19.36 — well above the current $15.52 close. The stock has pulled back 4.8% over the past month, widening the gap to consensus.
Peers are mostly positive this week. TSLX is up 3.9% over seven days. CSWC and PFLT have each gained roughly 2%. HTGC's 1.2% week-on-week decline stands out against that backdrop.
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