NGP Capital Resources Company is a financial services company established to invest primarily in debt securities of small and mid-size private energy companies.
The Company’s investment objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components. It is a closed-end, non-diversified management investment company that has elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act).
A key focus area for its targeted investments in the energy industry is domestic upstream businesses that produce, develop, acquire and explore for oil and natural gas. The Company also evaluates investment opportunities in such businesses as coal, power, electricity, energy services and alternative energy.
NGPC seems valued at a discount with a Price to Sales ratio of 3.5321, one of the lowest in the Misc. Financial Services industry, which is supported by a Price to Book of 0.4979 that is also among the lowest in the industry.
NGPC pays an annual dividend of $0.48 and, at its current price, yields 8.59%, a level that is in-line with the Misc. Financial Services industry average but above that of the S&P 500 which yields 2.81%. Additionally, this company is in the minority as few others in this industry pay a dividend.
Financial Strength Concerns
Although it reduced the percentage of debt used in its capital structure this year, NGPC has a Debt to Total Capital ratio of 29.58% and is among the most highly leveraged companies in the Misc. Financial Services industry. The company may have difficulty making interest payments. Its Interest Coverage ratio of 0.22 is among the highest in the industry but shows that earnings from day-to-day activities are too small to service the debt.
Vickers Insider Trading Chronology
There have been no insider sells over the past several years, and there have been numerous small buys. Officers buying stock include John Homier, CEO, Stephen Gardner, CFO and Edward Blessing, Director.
This stock is trading at the bottom of its normal trading range.
The stock opened trainding on 11/08/2004 Open $15.00 High $15.09 Low $14.999 Close $15.00
I am very concerned about the Financial Strength of this company since they may have difficulty servicing its debt. I believe the high dividend ratio will be at risk. The stock is up 4.66% since I bought it yesterday, a day before its x-dividend date. Motivated by the 8.59% interest rate yesterday, today I am motivated to sell this stock, probably on Monday after my shares are properly recorded for dividend action.