Seeking Alpha

Jaded Consumer

 
View as an RSS Feed
View Jaded Consumer's Comments BY TICKER:
Latest  |  Highest rated
  • American Capital Ltd.: What A Share Is Worth [View article]
    NMB: I'm not predicting 1 share paid per 20 held, I'm simply pointing out that with only a fraction of ACAS' NAV the companies are likely to be paid in fractional shares so that each share has enough assets behind it to merit a valuation similar to that of other newly-launched ACAS-managed public funds. The fraction might be ¼, for example. Your reverse-split idea is interesting, to keep ACAS share price in a range over $10.

    I'm definitely interested to see what news shows on the subject. I'm not making predictions of specific numbers, but I wouldn't be surprised if ACAS targets a NAV of $20 at launch for the new issues. That was, after all, the launch NAV of AGNC and MTGE.
    Nov 13, 2014. 09:34 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    NMB:
    I would suggest that the per-share dividend might be declared at a ratio other than 1 share of a new company per share held of ACAS. For example, if ACGI were paid at .05 shares per ACAS share, a shareholder with 100 shares of ACAS would end up holding 5 shares of ACGI after the transaction – but there'd be much more NAV in each share.

    Given that ACAS has previously issued shares at $15 and $20, I would be unsurprised to find ACAS engineered the stock dividend so that at issuance it also had a round number, with ACAS shareholders getting odd fractions and cash payments for partial shares.

    Just a thought.

    Best regards.
    Nov 11, 2014. 08:57 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    The earnings call contains a discussion of it; check it out at ACAS' web site. It's still up. Management explains its intent to conduct the split as a stock dividend.
    Nov 10, 2014. 08:26 AM | Likes Like |Link to Comment
  • Apple's Innovation: Proof It's Over, Or Reason To Buy? [View article]
    The refusal to buy over $103 looks like it's over.
    Nov 9, 2014. 04:57 PM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    My recollection of Cramer's analysis was that he didn't understand it, therefore sell.

    The more people do that, the more they create an opportunity to buy.

    My biggest regret was waiting for $1.80 to invest, when I was looking right at it while it hit $0.60. But I hadn't done the math yet. Alas.

    Thanks for reading!
    Nov 9, 2014. 04:17 PM | Likes Like |Link to Comment
  • On The 'Decline' Of Apple [View article]
    So how's that downgrade working out?
    Nov 9, 2014. 10:57 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    Thanks for stopping by. I'm working on a piece that assesses the scale of the dividends available post-transaction, but I'm afraid I don't have uninterrupted time to work on it at the moment.

    As for reaching back into the fire, I'd feel a lot differently about the company if I hadn't had enough background in bankruptcy to feel confident the market had the risks all wrong in 2009 and more than doubled my position at $1.80, then requested share dividends instead of cash for the 2009 dividend. My question is whether the ride back up is over, which should be the same as a purchase decision but feels different even if it "shouldn't".

    If your interest is current income from dividends, there should be no reason not to continue your course until ACAS' post-split BDCs show some hard evidence on their dividends. On the other hand, the fact ACAS is valued at a discount makes it attractive to get in on the BDCs' issuance early – and I think the funds-management business will continue to make good money internationally. When ACAS burns off its loss-carryforward – which should be easier with its entire funds-management business flowing into the carryforward – I'd expect a dividend from ACAS too. (Yes, it'll keep some money to seed new funds, but when it sells off funds this will return investible cash to ACAS.)

    Thanks for reading. I appreciate the kind words, and look forward to providing more useful information.
    Nov 9, 2014. 10:49 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    The whole point of including ACAS' chart from its annual report is to emphasize the very point you make. However, I haven't read the options grant(s) and don't know if transactions of the sort contemplated result in immediate right of exercise, even though I can tell there's no economic reason to exercise the options with strikes north of $20.

    I sought to present a worst-case dilution as a sort of balm to the "it's not mispriced, you're ignoring the dilution" comments I'd encountered elsewhere.

    Interestingly, I see in the SEC filings that BlackRock is invested in ACAS. Hmm. ACAS seems to maintain a large-investor list on its site:
    http://bit.ly/1zEp2Ij
    Nov 9, 2014. 10:34 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    NMB:
    Thanks for the catch. I think that pushes the NAV to $18.18 based on the year-end share count for 2013 and the options overhanging at the end of 2013, but there's still a complicating factor: the chart comes from the 2013 annual report and isn't updated in any of the quarterly filings. Since the shares outstanding have changed (graph shares outstanding at YCharts, for example) I wonder whether the options table has changed without our getting an update.

    Consequently one should regard the numbers more as a tool to assess scale than a precision instrument. Making the most pessimistic assumptions I can, I still conclude the "The Sky Is Falling" dilution fearmongers have overstated the problem significantly. But the best thing I've learned from them is that the overhanging options actually cap options issuance for the near term, protecting shareholders from surprise dilution until a major exercise clears options from the books.

    To yblarr's comment: it'd sure be nice if management bothered to present data of this type, with an assurance of current numbers. I understand from ACAS that the reason they don't is that nobody makes them: only earnings is required to be presented on a fully-diluted basis. An attitude like that is ugly, and undermines confidence.

    Thanks for reading.
    Nov 9, 2014. 10:28 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    NMB: I haven't read the terms of the options grant to see if a contingency like this has been addressed in the grants. Irrespective of the terms, there's a host of things management could do and I don't care to speculate. I'm simply looking at the worst dilution that could apply and deciding that even such dilution leaves the current price in an attractive place.

    Personally I like the idea of the company having reached a ceiling on options issuance so investors can look at the business without thinking about the dilution undertow.
    Nov 9, 2014. 10:01 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    ACAS will spin off two BDCs that will be qualify as RICs for tax purposes. Pre-split, ACAS is a BDC that is taxed as a C-corp rather than as a RIC – and after the split, ACAS won't be a BDC but a C-corp fund manager.
    Nov 9, 2014. 09:57 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    The pre-split ACAS doesn't, but post-split two BDCs will.
    Nov 9, 2014. 09:56 AM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    I think the best measure of ACAS-managed funds' dividends is ACAS-managed funds. ACSF contains a lower-yield bond portfolio than I expect in ACAS' income fund. For the growth and income shares, I'd look to historic ACAS dividends as a guide, with the caveat that the interest rate environment has changed rather dramatically since ACAS paid a dividend. Maybe there's an article in that ...
    Nov 9, 2014. 09:55 AM | 1 Like Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    ACAS has fought to obtain valuation as an asset manager, only to be saddled with NAV-based valuation. Post-split, ACAS will _continue_ to hold ~$1B in investments, both as seeds for new funds and to meet skin-in-the-game requirements for European CLO regulators. So ACAS will have some post-split investment returns. It just won't be carrying entire portfolio companies on its books.

    Those portfolio companies will be in a BDC, for people who want equity in a BDC. Those who only want income, and not the whole range of One Stop Buyout components, can buy the income BDC instead of the one that does One Stop Buyouts.

    This should improve valuation of the BDC components by allowing investors to buy what they want. The aftermath for ACAS will be earnings driven predominantly by fee income, which will allow management to get what it's long wanted: analysis as a fund manager instead of as a fund. ACAS will just have to prove it can build fee income without having to own the fund. Based on its efforts this year, it seems they can do that just fine.
    Nov 7, 2014. 05:58 PM | 1 Like Like |Link to Comment
  • American Capital Ltd.: Loving The Hate [View article]
    Skaterdude, I wouldn't sneeze at the two-year chart.

    I don't like share giveaways, but management has been given an incentive to make shares valuable and what I see management doing seems consistent with growing per-share value. So I'm still in.
    Nov 6, 2014. 08:39 AM | Likes Like |Link to Comment
COMMENTS STATS
693 Comments
512 Likes