Hercules Capital is heading into its June 18 earnings release with the borrow story shifting meaningfully since last week's note — shorts have continued to retreat, and crucially, the cost of maintaining those positions has collapsed.
The lending market has changed direction sharply. A week ago, the cost to borrow was running above 3%, and availability was pinned below 30% — firmly tight. Both have eased materially. Cost to borrow dropped to just 0.25% on June 9, down from 1.63% the day before and from the 3.31% peak touched on June 2. Availability has recovered to 36.5%, up from a low of around 12% in late May and a 52-week extreme of 3.7% hit on May 13. That loosening means the borrow squeeze that defined the past month has — for now — released. The short score has also nudged lower, from 65.5 a week ago to 64.9, reflecting the easing pressure.
Short interest has continued unwinding in parallel. SI is now at 6.1% of free float, down 5.1% on the week and 13.7% over the past month. That is a sustained retreat from the ~13.2 million shares short in late May, though the position remains meaningful at just over 10.9 million shares. Options positioning has also continued to normalise. The put/call ratio is running at 1.99, around one standard deviation below its 20-day average of 2.19. For a BDC that typically carries structurally heavy put volume, this is a relatively less defensive posture. The contrast with the May 13–22 period — when availability was near zero, cost to borrow was elevated, and put/call was above 2.5 — is stark. Positioning looks cautious but clearly less charged than it was.
The Street remains split on HTGC, and recent analyst moves have done little to resolve that. UBS raised its target to $15.50 in mid-May while staying Neutral, and Piper Sandler lifted its target to $17 in early May. Both remain on the sidelines. Citizens holds a Market Outperform but cut its target to $22 in April — a level that now looks well above where either the stock or consensus sits. The mean analyst target is $19.36, roughly 25% above the current $15.45 price, though that gap is partly a function of a mixed bag of targets rather than uniform bullishness. The dividend score ranks in the 96th percentile, reflecting HTGC's core identity as an income vehicle — it announced a $0.07 special dividend at end of April. EPS momentum scores are weaker, sitting in the 35th–40th percentile range, consistent with the bear case around declining yields and credit risk in its venture-backed loan book.
The institutional holder picture shows a few active managers adding in Q1. UBS Asset Management added 822,000 shares, Two Sigma added 708,000, and D.E. Shaw built a new position of 723,000 shares. Closer to home, the CEO sold just over 20,000 shares in April at $14.74 — a modest transaction — while the COO made a small open-market buy of 5,000 shares at $14.68 in early March. Neither is a directional signal on its own, but the cluster of institutional buying does suggest some buyers were prepared to step in near the April lows. Peer performance is broadly weak: ARCC is up a fraction on the week, but TSLX is down 3.7%, OBDC has slipped 0.4%, and GBDC is down 1.3% — the BDC complex as a whole is trading without conviction.
With earnings eight days away, the key question is whether the recent easing in borrow costs and short-interest decline continues, or whether fresh positioning pressure re-emerges around the print — the most recent comparable earnings event, in late April, saw the stock gain 5.2% over five days following results.
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