10/20/2014

Nano Cap, 37% Discount to NAV, 8.4% Dividend Yield


BDCA Venture (BDCV) is a closed-end investment company. They specialize in making pre IPO investments in emerging growth companies committed to and capable of a public listing.

Corporate Website 

The first thought, BDCV has an investment portfolio trading below fair market value. Further, take part in value accretion realized by participating before a private company goes public.

Source Corporate Website: “Private companies raise a final round of pre-IPO financing to strengthen their balance sheet and demonstrate continued investor commitment. And that’s where BDCA Venture fits in: BDCA Venture is an equity partner to private companies primed to become public. BDCA Venture typically invests in later stage, venture capital-backed private companies with at least $20 million in trailing 12 month revenue seeking to complete an IPO within 2 years.”

Many Micro cap stocks have been depressed. For this reason and others, BDCA price per share negatively impacted with a 52 week change of -33.43%. A strong capital return, dividend yield is 8.44%.

Why consider adding BDCV to a watch list?

BDCA Venture  is a nano cap trading at 45M, enterprise value of 36M led by a strong investment team. Investment team of 4 has the following investing credentials. CEO and founder held senior management positions in the Equity and Derivatives departments of Bear Stearns, Kidder Peabody, Nomura including a cum laude graduate of Harvard College.  The remaining 3 investment team members have experience at Goldman Sachs , all Ivy League graduates, merger/acquisitions attorney,  CFA holder.

Share buybacks and modification of its investment objectives announced 09/25/14 should help narrow the large 37% share price discount to its NAV. June 30, 2014 net asset value was 7.32 per share or $71.6 million. Cash of 9.8M made up 14% of the NAV, publically traded securities of 11.90M or 17%.

The investment objective modification is to direct cash from exited investments into debt investment opportunities. However, the investment team does not expect that the Company’s position in debt investments will constitute a meaningful portion of the portfolio prior to December 1, 2014. Also, the Company is not expected to make any share repurchases until early November after reporting quarterly results in late October.

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No Position at this time.

3 comments:

johnheider1 said...

This one has been a capital incinerator from day one. Fee structure warrants good discount to NAV.

ShadowStock said...

Hi John

I agree they have compensation concerns.
My thought, the stock can make an interesting investment. Develop a position over time on extreme weakness. The large discount to NAV can be a margin of safety with the potential addition of an improved operation and potential to attract an activist shareholder. The 8% dividend is a nice amount to sit and wait. No position.

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