Barrington: Investors Want To Own GSVC, But Without The Large Twitter Exposure

Loading...
Loading...
In a report published Tuesday, Barrington Research analyst Jeff Houston commented on
GSV Capital Corp.GSVC
, noting that investors want to own shares but without the fund's large exposure to
Twitter IncTWTR
. At the end of GSV Capital's first quarter, the company was invested in 46 private and four public companies. The top 10 holdings represented 60 percent of net asset value with Twitter the largest holding at 15 percent. GSV continues to own about 800,000 shares and has successfully monetized part of its position. In the first quarter, it sold 400,000 shares at an average price of $48.90 (for a net proceed of $19.6 million), realizing gains of $13.2 million at an internal rate of return (IRR) of 39.3 percent. Subsequent to the quarter end, the firm sold an additional 400,000 shares at an average price of $51.52 at a 43.5 percent IRR. Houston estimated GSV's net asset value to be $15.21, down slightly from March's $15.66 due mostly to the sell-off in Twitter where shares have declined about 24 percent since the end of the first quarter. "While it was great to witness the large exists of Twitter with attractive returns, the stock will continue to suffer from a Twitter-effect until GSV fully exits its position, which is likely delayed with the pullback," Houston wrote. "We have spoken with a number of investors who want to own GSV, but do not like the Twitter exposure." Houston also noted that GSV Capital resubmitted its 851(e) application to the SEC in December 2014 and received comments back from the SEC with a request for additional information. The analyst added that any resolution would be a catalyst for the stock, though "clearly better" if RIC is granted given the tax benefits involved. Bottom line, despite investor sentiment that would prefer a limited Twitter exposure, Houston argued that GSV Capital provides investors with access to disruptive, emerging-growth, privately-held, pre-IPO companies at discounts. Shares remain Outperform rated with a price target lowered to $13 from a previous $15 as shares should trade at a 10 to 15 percent discount to his NAV given the uncertainty around the company's RIC status.
Loading...
Loading...
Posted In: Analyst ColorPrice TargetAnalyst RatingsBarrington ResearchGSV CapitalJeff Houston
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...