Morningstar, Inc. Commentaries
Jul 1, 2014
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H&Q Healthcare Investors (HQH) and H&Q Life Sciences Investors (HQL) both completed rights offerings, which gave existing shareholders the option to purchase additional shares at a ratio of three-to-one. The Healthcare Investors fund raised $189 million, while the Life Sciences fund raised $70 million. We’re surprised to see these funds raise additional capital while the shares of both currently trade at discounts to net asset value. In general, we think it makes more sense for funds trading at a discount to take active measures to buy back shares rather than issue new ones.