10. Horizon Technology Finance Corporation (NASDAQ:HRZN)

Dividend Yield as of November 23: 10.05%

Horizon Technology Finance Corporation (NASDAQ:HRZN) is an American specialty finance company that specializes in structural debt products for life sciences and tech companies. Janne Montgomery initiated its coverage on the stock in October with a Neutral rating, appreciating the company’s strong brand and greater venture debt space.

On November 3, Horizon Technology Finance Corporation (NASDAQ:HRZN) announced a monthly dividend of $0.11 per share, having raised it by 10%. This was the first time the company raised its payout since 2016. However, it has been making consistent dividend payments to shareholders for the past 10 years, which makes it one of the best highest-paying monthly dividend stocks. The stock’s dividend yield on November 23 came in at 10.05%.

In Q3 2022, Horizon Technology Finance Corporation (NASDAQ:HRZN) reported a total investment income of $23.2 million, which saw a 39.5% growth from the same period last year. The company had $31.6 million available in cash. Its total investment portfolio for the quarter is worth over $634.6 million.

As of the close of Q3 2022, 5 hedge funds tracked by Insider Monkey owned stakes in Horizon Technology Finance Corporation (NASDAQ:HRZN), the same as in the previous quarter. These stakes are worth over $6 million collectively.

Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.

For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.

Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.

Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).