American Capital and Northstar Realty struggle


Particularly hard hit in a red BDC sector (BIZD -1%) is American Capital (ACAS -3.2%). The stock had run up sharply two weeks ago on hopes for a spinoff of the asset management business, but receptive public markets are necessary for such a move. With today's decline, the shares have given back about all of those gains.

Also struggling over the past couple of weeks is Northstar Realty Finance (NRF -3.4%) which is spinning off its asset management unit.

Comments (6)
  • scott710
    , contributor
    Comments (20) | Send Message
     
    It takes Buyers to advance a stock. Could it be that absence of big buyers (like ACAS itself) contributed to the big sucking sound?
    10 Apr 2014, 03:07 PM Reply Like
  • Pablomike
    , contributor
    Comments (4483) | Send Message
     
    Do you think??? Look at the chart. Straight down after they said no more buyback.
    10 Apr 2014, 07:39 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11175) | Send Message
     
    Why won't ACAS pay a dividend?
    11 Apr 2014, 09:29 AM Reply Like
  • Approximately Right
    , contributor
    Comments (29) | Send Message
     
    Dividend is very likely to resume once spin-off of portfolio investments is complete. Asset manager is held on the books at about 7 times earnings (14% yield). My guess is the market will assign a much higher multiple once it stands on its own.

     

    BTW, I'm referring to a spin-off of the portfolio investments and not a spin-off of the asset manager based on the CFO's comments from the most recent conference call:

     

    “The better way to think of it would be that you would spin out the BDC and leave the asset manager at ACAS. And ACAS really transforms itself to ACAM.”
    11 Apr 2014, 01:21 PM Reply Like
  • Pablomike
    , contributor
    Comments (4483) | Send Message
     
    They thought the buy backs were a better way to spend their cash. Now that they have suspended the buybacks maybe they will pay divvy.
    11 Apr 2014, 11:38 AM Reply Like
  • dwarfe
    , contributor
    Comments (11) | Send Message
     
    The share buy backs have worked great for a person like me that booked some large long term capital gain losses from the Bush recession. I bought ACAS on the cheap in 2009 and I have been able to sell shares now at a big long term capital gain and pay no tax with my offset. If they had paid BDC dividends I would have been on the hook for ordinary income. Thanks Malon
    17 Apr 2014, 03:14 PM Reply Like
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