11.49 -0.15 (-1.29%) Sell

Doubt in the minds of HTGC investors as it destroyed investor wealth

13 min read

HTGC significantly underperformed today. On a longer term basis, investors in HERCULES CAPITAL, INC. made -0.0% per day. Thursday's performance of -1.29% was a underperformance compared to it's daily average.

[Themes containing HTGC]

Buy-and-Hold investors in HTGC experienced a maximum drawdown of -13.54% over the last three months. It fell by -12.62% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +12.62% for investors.


HTGC has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 22 Feb, 2017 to 15 Mar, 2018. Over the last 2 years 11 months and 9 days, HTGC underperformed the SP500 index on 47% days. Which indicates that on days HTGC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months HTGC was mostly loss making and delivered on average -0.21% per day. It's best return during this period (of +1.49%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -2.6%) was on Thursday, 8 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 24 Sep, 2018 and ended on 28 Sep, 2018. This bearish trend lost -1.0% of investor capital.

During the last year HTGC had 5 profitable months and 7 loss making months. HTGC returned profits in fewer months than SP500 index. HTGC significantly outperformed SP500 index in Jul 2018, when it returned +6.29% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. HTGC had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -16.34%. It is interesting to note that both HTGC and SP500 index significantly outperform during months when quarterly/annual results are announced.

Success usually comes to those who are too busy to be looking for it.
-- Henry David Thoreau

HTGC is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in HTGC's volatility from 28 Sep, 2018 to 5 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that HTGC has significant positive skewness in it's return distribution. This indicates that investors can expect HTGC to recover from drawdowns quickly. Which makes HTGC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than HTGC. Therefore, SP500 must receive a lower allocation than HTGC in your portfolio. SP500 index usually has shorter drawdown period than HTGC.

On a general note (since you are interested in HTGC), three instruments that are extremely volatile are IX, OPNT and GNK. They must all be evaluated prudently and investors are better off avoiding them at the moment.

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