Q: Hello 5i,
How does higher for longer interest rates affect Propel? Is this reason it declined over 6 percent yesterday. Thank you for your response.
Brad
How does higher for longer interest rates affect Propel? Is this reason it declined over 6 percent yesterday. Thank you for your response.
Brad
5i Research Answer:
A small cap stock sensitive to interest rates with a 206% one year gain is going to be volatile by definition. Higher rates can lower the company's spreads on loans, certainly, but it can adapt to this up to a point as loans roll over. Investors dislike the prospects of high rates for the company though primarily because of the possibility of higher loan losses in a difficult/recessionary economy. The trading volume in the decline has not been particularly noteworthy and the fundamental outlook is still positive. We would view the decline, in the absence of any real news, as 'normal' type of small cap trading behaviour. We would be fine slowly buying into this or further weakness.