Investing Liberty Investor Alert Observation & Opinion


  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts

    5 Stories To Watch Before The Stock Market Opens Today
    The Dow Jones Industrial Average Is A Big Lie
    How High-Frequency Traders Use Dark Pools To Cheat Investors
    Key Differences Between Investing In Gold Mutual Funds And Gold ETFs
    As Soda Sales Slide, Coca-Cola’s Strategy Baffles Investors
    Why Apple Has Stopped Growing
    Activist Investor Bill Ackman Says This Book Explains His Firm’s Biggest Deal Ever
    Algos Getting Concerned Low Volume Levitation May Not Work Today
    Chinese Banks And 100,000 ‘Outlets’ Selling Gold!
    Ex-Morgan Stanley Chief Economist Admits ‘Fed Is Distorting Markets’
    Futures Flat After Six Straight Days Of Gains
    Global Share Rally Peters Out, Euro Lifted By PMI Boost
    Primark Targets U.S. With First Store Openings
    Goldman Loses Four Asia Prime Brokerage Execs To Rivals
    U.S. Justices Show Little Support For Aereo TV In Copyright Fight

    Cash In On The Latest Technology While Getting Paid Big Dividends

    Fortunes are made and lost on any given day in the market when it comes to investing in the latest technologies.

    Take Apple (AAPL). Perhaps you had the fine sense and superb timing to buy in and get out just at the right times. But more likely — along with countless mutual funds, pension funds and millions of individual investors — you got in during the frenzy last year when it was hitting $700 and now are licking your portfolio’s wounds with the stock in the $400 range.

    The run on the stock continues, although it has lost another 19 percent so far this year even as the Standard & Poor’s 500 index has recovered a bit — gaining more than 11 percent.

    And Apple isn’t alone. Its peers in the tech industry in the U.S. market, as tracked by Standard & Poor’s via its information and technology index, are up so far this year by a measly 3 percent.

    Perhaps Apple will still be a tech leader. Or perhaps it will take a backseat to Samsung Electronics (SSNLF), which continues to be on a tear. Samsung is up more than 100 percent in just the past three years alone and up more than 265 percent over the past decade.

    But do you want to make a bet on your retirement savings on whether the geeks with the propeller hats in the labs are going to come up with the next biggest and greatest tech breakthrough?

    Sure, you do.

    You do, because you know that you need to at least have some investments that can and will grow your portfolio beyond just stacking up dividends.

    And fortunes are made by bringing the world new technologies, from electronic gadgets that we didn’t know we couldn’t live without to new energy technologies and a host of other major and minor advancements that drive the economy and the markets.

    But you need to be careful. Don’t just get on a company’s bandwagon — be it Apple, Intel Corp. (INTC) or Advanced Micro Devices, Inc. (AMD) or a host of other technology companies that have created little more than massive losses, anywhere from 10 percent to as much as 65 percent in just the past 12 months alone.  

    Even Samsung, a favorite company of mine for decades both for its products as well as its shares, has risks that come attached with it for any and all investors, despite its long, positive track record.

    Tech That Pays

    A better way to get the advances of the world of technological innovations while also getting high and rising dividends is through a favorite company of mine that’s in the business of financing and investing in a wide and varied collection of technology companies.

    Hercules Technology Growth Capital, Inc. (HTGC) is a business development company set up under the U.S. Investment Company Act of 1940. It is headquartered in Palo Alto, Calif., at 400 Hamilton Ave.

    That’s about four miles from Google’s headquarters, 11 miles or so from Apple’s headquarters and some 12 miles from Samsung Electronics’ U.S. development office.

    It also has offices in Chicago; New York; Boulder, Colo.; and McLean, Va.

    The McLean office is crucial. The power of the hand of government to be supportive or restrictive has been and can be life-sustaining for a tech company. It can also deal a deathblow. Capitol Hill, the White House, the Supreme Court and countless bureaucrats set rules, enforce regulations and give out grants and licenses.  

    Hercules operates as an investment company. It focuses on a collection of technology companies in consumer and industrial markets, healthcare and related advanced technologies, and clean technologies. It also lends to established midsize technological companies that have proven to be stable and reliable businesses.

    Hercules acts as a classic, old-time merchant bank. It lends money while taking an interest in the businesses and companies in which it invests. And its asset base continues to climb; it’s up more than 50 percent over the trailing year. With that ramp up in the value of the company itself, revenues continue to climb on average for the past three years alone by more than 29 percent.

    With its operating margins running in the 70 percent range and with less leverage than many traditional banks and financials, it runs its business with a focus on being sustainable — even when some of its investments run into hiccups, which tech always has.

    And unlike most banks and financials that are having trouble finding the right companies to lend to — Hercules continues to do well — generating returns on shareholder’s equity and the underlying assets of the company which are multiples of what is considered normal for a commercial or merchant bank.

    The best part is that it performs well in addition to paying its shareholders a big cut of the profits.

    The dividend yield is running currently at 7.58 percent, up nearly 9 percent over the past year.

    Don’t think that this is just about dividends. The company’s profits from financing and from its underlying investments have driven the shares to generate returns of more than 52 percent over the past few years — more than double the returns of the general tech market as tracked by Standard & Poor’s in the U.S. market.

    Hercules Technology Growth Capital - HTGC

    If you think that you’ve missed it or that you and I might be chasing an overvalued and overpriced stock, think again. The stock is still a value, trading at a mere fraction above its book value. Successful banks and financials tend to trade at multiples of book value. So not only does Hercules pay and perform well, but it also remains a value.

    The company also has two preferred stocks with 7 percent coupons. But avoid those. They are callable in about two years or less, which would result in a much lower effective yield of only about 4 percent.

    Instead, go with common shares. With the dividend running at 7.58 percent, they pay a lot more without the risk of the inevitable call. You’ll get to also reap the gains of the company and its smart and sustained group of underlying financings and investments in the best of U.S. technologies. 

    Buy Hercules Technology Growth Capital common stock under the symbol HTGC below $15 a share. For more information from the company, go to its website at

    — Neil George

    Editor’s Note: Can’t make it to see Neil George at The Money Show in Las Vegas? Now you can attend the eMoney Show for free. Hear and learn the experts’ latest recommendations for how to profit in today’s global markets — regardless of market direction. For details and to register today, click here.

    Neil George is the editor of By George, an investment advisory publication. George was the editor of Personal Finance for many years. In addition, he served as editor for a collection of other investment journals published in the United States, Germany and other selected nations. Prior to his career in media, George worked for more than two decades on six continents in senior positions with a select group of financial institutions in investment banking, bond trading, brokerage and asset management. The institutions included Merrill Lynch International Bank in Europe, Asia and the Americas, as well as U.S. Bank and British- and Chinese-based Investec PLC. In addition, George worked to build a collection of independent public and private brokerage and fund-management companies in Los Angeles and New York. He also currently serves as an adjunct professor and board member of Webster University's Walker School of Business and Technology. George earned an MBA in international finance from Webster University in Europe and a bachelor's degree in economics from Kings College.

    | All posts from Neil George

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    AT&T Ups Revenue Growth Forecast On New Pricing Model
    Comcast Seems To Be Having Its Cake And Eating It
    McDonalds Misses Revenue, Earnings Estimates: Blames Weather
    Goodbye Biotech ‘Growth Bubble’; Hello Pharma ‘M&A Bubble’
    Ukraine Currency Collapses Nearly 70 Percent Against Gold In 4 Months
    The Earnings Season: “House Of Cards”
    Why Putin Is Smiling At The Bond Market’s Blockade Of Russia
    ‘The New GM’ Seeks Court Protection Against Ignition Lawsuits
    Novartis Reshapes Business Via Deals With GSK And Lilly
    Comcast’s Profit Rises; Company Adds Video Subscribers
    Futures Flat, But Netflix Jumps In Premarket
    M&A Talk Lifts European Shares, Euro Dips To Two-week Low
    Next Batch Of Companies Hope To Raise $3.6 Billion Through China IPOs
    Netflix Plans Price Raise As Streaming Subscribers Grow
    Ford To Name Fields As CEO Soon, Replacing Mulally
    Randall Munroe Is Right About The First Amendment
    How Good Is Your Password?
    5 Top Dividend Stocks To Buy Now
    Chipotle Continues To Refine The Science Of Burrito Velocity
    BNP Banker, His Wife And Nephew Murdered In Belgium
    The Secret World Of Gold
    Anti-HFT Trading Platform Comes To “Rigged” FX Markets
    Brazil´s President Also Responsible For Refinery Deal: Ex CEO
    Futures Edge Up As Investors Await Earnings Onslaught
    U.S. Insider Trading Cases Face Test At Appeals Court
    Asian Stocks Subdued On Ukraine Caution, Dollar Firms Vs. Yen
    Kraft Recalls 96,000 Pounds Of Hot Dogs Due To Undeclared Allergen
    A Tough Sell: Insurance Against A China Financial Crisis
    Pfizer Considers $100 Billion Bid For AstraZeneca: Report
    In The Driving Seat: China’s Yuppies Are New Market Force For Global Automakers
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.