Violent Capitalist

Prospect Capital: A Relatively Safe Dividend Yield

this is a shocker, i wasn't expecting it to be priced in that low - $9/share I thought was more appropriate, a 10% discount to market.

The dividend may get cut - but not by 50%, just doesnt make sense, they may pare it back 20% (to reflect the resulting dilution), they'll have enough cash to cover dividends, and with debt at $138 mil + their claim to potentially increasing their credit lines, I'm sort of confused about what exactly is going on here at this present moment.

this may have been a deal in the making since early in the year, and PSEC may have thought it still better to raise cash if possible?

Still by selling puts at a 10 strike, I can watch this unfold on the sidelines...

Prospect Capital: A Relatively Safe Dividend Yield

yea but when slip ups happen you get killed then - i plan on holding for 4-5 years at min, would rather have a company cover dividends from interest and reinvest capital gains to earn higher interest/dividend income in the future, and for asset valuations i dont know if this is the bottom or not so I rather stick to a more conservative management style.

btw, book values on all these guys' balance sheets are probably overstated currently..

Prospect Capital: A Relatively Safe Dividend Yield

just an fyi 4Q earnings expected to come in at .30-.40/share

that sucks, but its not terrible - there will probably be some weakness in the shares for the rest of 2009. Nice to sell puts to lock in a lower price (risk reduction). $7.50 will be way too low of a share price for these guys and I'll look to that end to open another short puts position during the rest of 2009.

stickto - ARCC is not of the same level, their capital structure is not more conservative - I dont' like the fact that their leverage is 80+% of net assets, forced to reduce their dividend, and a history of paying higher dividends than net interest income - i just can't fathom why that's a good long-term policy!

Prospect Capital: A Relatively Safe Dividend Yield

psec is not as levered, not as dependent on capital gains

it sounds like it, but they arent the same and thats why these guys have only lost about 30% of their value-