Mon, Nov. 16, 8:47 AM
- Disclosing an 8.4% stake in American Capital (NASDAQ:ACAS), Elliot Management comes out against management's plan to spin out its BDC assets.
- Noting continued low valuation of the stock vs. peers, poor capital deployment, an entrenched board with suspect qualifications, and excessive compensation and overhead, Elliot proposes a five-step plan to help bring the share price to its $23 target:
- 1) Withdraw spin-out proposal; 2) Add more qualified independent board members; 3) Monetize the broadly syndicated loan portfolio, with proceeds used to boost share repurchases; 4) Cut cost by $50M-$75M per year; 5) Engage in a meaningful strategic review.
- The stock's higher by 5% to $15.02 premarket.
- Elliot's "BetterACAS" website is here.
Fri, Nov. 6, 11:07 AM
- American Capital (ACAS +2%) reported gains in both income and book value after the close on Wednesday. A fast pace of buybacks (3.6% of the float in Q3) done at a massive discount to book value, pushed along the quarterly advance in book value.
- Nevertheless, the company is running out stock - today's float of about 260M shares compares to roughly 380M when American Capital began buying back shares four years ago.
- Cantor Fitzgerald upgrades to Buy from Hold. The $19 price target is 38% above last night's close, and a 7% discount to Sept. 30 book value of $20.44.
- Previously: Buybacks boost returns at American Capital (Nov. 4)
- Previously: American Capital beats by $0.03, beats on revenue (Nov. 4)
Tue, Sep. 29, 3:24 PM
- It's not just about energy anymore, according to a BAML report. "The malaise is spreading." High-yield, says the team, "[is] a slow-moving train wreck that just seems to be accelerating."
- Equity-type proxies for the high-yield market, business development companies are under major selling pressure again today, with already large discounts to NAVs growing even wider.
- Previously: Ares Capital greenlighted for $100M in buybacks (Sept. 28)
- Prospect Capital (PSEC -3.6%), Ares Capital (ARCC -2.7%), Apollo Investment (AINV -4%), TCP Capital (TCPC -5.4%), Monroe Capital (MRCC -4.5%), Oxford Lane Capital (OXLC -5.4%), PennantPark Investment (PNNT -1.8%), American Capital (ACAS -2.5%), Medley Capital (MCC -4.1%), Harris & Harris (TINY -5.4%)
- ETFs: BDCL, BDCS, BIZD, FGB
Fri, Jun. 26, 3:43 PM
- Continued strong economic data (June consumer confidence beat expectations) and apparently optimism over a Greek deal getting inked this weekend make for good excuses for today's selling in fixed income.
- The U.S. 10-year yield is up seven basis points to 2.48%. Short-term rate futures continue to read more dovish than the Fed, predicting just one 25 basis point rate hike by year-end.
- TLT -1.2%, TBT +2.4%.
- Among the income favorites, utilities (XLU +0.6%) and equity REITs (IYR +0.2%) are being spared punishment today, leaving jittery investors to focus their selling in mortgage REITs.
- Also in the red are BDCs, led by Prospect Capital (PSEC -2.5%) and Fifth Street Finance (FSC -1.5%). American Capital (ACAS -1.3%), Medley Capital (MDLY +0.1%), THL Credit (TCRD -1.2%), PennantPark (PNNT -1%).
- ETFs: BDCL, BDCS, BIZD, FGB
Wed, Mar. 25, 12:43 PM
- American Capital (NASDAQ:ACAS) had been a big buyer of its stock for nearly three years, but suspended purchases about a year ago amid a strategic review that ultimately led to a plan to spinoff the BDC business.
- While waiting for said spin-off to take place, and under some activist pressure, American Capital today announces the resumption of its repurchase program as of Feb. 23.
- The stock price is currently $15.06 vs. Dec. 31 NAV of $20.50.
- Source: Press Release
- Shares have added about a dime since the news broke, now flat on the session.
Thu, Mar. 5, 3:20 PM
- The activist investor - an owner of about 2.4% of American Capital (ACAS +1.3%) - is pleased with the plan to spin off the asset management business from the BDC, but not thrilled with management's decision since to shun repurchases in favor of funding new investments.
- American Capital believes the market will assign a high multiple to the management business (American Capital Asset Management), and therefore the best use of capital is to build up assets.
- Orange wants to see both a high multiple on ACAM and a share price on the BDC that's more inline with net asset value, and believes investors would reward a management consistently buying back stock when it's meaningfully undervalued.
- American Capital currently trades at about 73% of the last-reported NAV.
- "A balanced combination of growth investments and capital returns would build immediate credibility and demonstrate that management is a good steward of capital," says Orange, urging the company to set aside at least one-third of the $600M-$800M allocated for ACAM growth.
- Shares have gained about 1.5% since the letter hit.
- Source: Press Release
Nov. 6, 2014, 9:14 AM
- Gainers: PLNR +74%. PESI +24%. SWIR +20%. MEET +13%. RVLT +11%. COT +11%. DATA +11%. ACAS +10%. NDLS +9%. KATE +8%. KATE +8%. WFM +9%. HZNP +6%. CECO +6%. DRYS +5%. TRUE +5%.
- Losers: AEZS -51%. SZYM -47%. SNMX -26%. GNW -24%. WWWW -22%. CSOD -19%. PHMD -17%. GERN -14%. MCP -12%. GNRC -11%. WAC -9%. QCOM -7%. Z -7%. PBR -5%.
Nov. 5, 2014, 4:27 PM
- American Capital (NASDAQ:ACAS) will spin off two BDCs - American Capital Growth and Income and American Capital Income - leaving ACAS primarily in the asset management business.
- American Capital Growth and Income's assets will be those primarily issued by companies purchased through American Capital One Stop Buyouts, senior floating rate loans to private companies, and CLO equity investments. This business is at present allocated about $3B of equity.
- American Capital Income's assets will mostly be second lien and mezzanine loans to middle market companies. This business is at present allocated about $1B of equity.
- Both new BDCs will be managed by American Capital. As part of the deal, American Capital will consolidate its operations and remaining assets with American Capital Asset Management. This business at present allocated about $1B of equity.
- The company expects about $25M in cost savings annually, beginning in 2015.
- Source:; Press release
- Previously: American Capital beats by $0.02, beats on revenue
- The earnings conference call is set for tomorrow at 11 ET
- Shares +9.5% after-hours
Nov. 5, 2014, 4:14 PM
Aug. 18, 2014, 11:30 AM
- Prospect Capital's (PSEC +0.9%) sizable $210M lending deal announced this morning and 9 booked deals over $100M in the last year suggest it and many of its larger brethren are competing for larger borrowers who don't fit the mold of the larger syndicated loan market BDCs typically play in, writes Nicholas Marshi.
- On the good side, these "story credits" allow Prospect and other BDCs to charge higher rates and fees than are available in the "dirt cheap" syndicated loan market. And Prospect (and others) have become so big that typical middle market deals aren't enough to move the needle on their portfolios anymore.
- Ideally, though, no individual loan would represent more than a tiny fraction of the portfolio, so while "big fish" deals allow for good earnings and maintenance of the distribution today, Marshi worries about the impact of the blow-up of an individual company or of wider credit issues when the next economic downturn hits.
- Other large players today: Ares Capital (ARCC +0.8%), FS Investment (FSIC), American Capital (ACAS +1.4%), Apollo Investment (AINV +0.4%), Main Street Capital (MAIN +0.1%).
- ETFs: BDCL, BDCS, BIZD
May 7, 2014, 4:28 PM
- Pretax NOI of $16M or $0.06 per share falls 69% from Q4.
- Book value per share of $19.29 up $0.32 from the end of Q4.
- 8.9M shares repurchased at average price of $15.38 each. Repurchases have stopped as company retains Goldman to advise on splitting ACAS's investments and asset management businesses.
- CC tomorrow at 11 ET
- Previously: American Capital beats by $0.05, misses on revenue
- Source: Press Release
- ACAS +2.5% AH
Apr. 10, 2014, 2:57 PM
- 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.
Apr. 1, 2014, 12:53 PM
- American Capital (ACAS +0.4%) Energy & Infrastructure has appointed Robert Wholey as Managing Director. He comes over after nine years at Highstar Capital and prior to that at UBS' Global Energy Group.
- Still reverberating is yesterday's announcement of a suspension in dividends while the company considers strategic moves, one of them maybe being the spinoff of the American Capital Asset Management a la NorthStar Realty Finance.
Feb. 11, 2014, 3:22 PM
- Noting American Capital Asset Management seems to be rather conservatively valued on American Capital's (ACAS -6.8%) balance sheet, FSI Group's Eric Stein - on the company's earnings call (transcript) - asks management if it would consider spinning the business off.
- CEO Malon Wilkus responds that his team is keeping close track of the public market valuations of asset managers. " That possibly presents an opportunity for us. It's extremely -- it's safe. It's something that we're extremely interested in and paying a great deal of attention to."
- Wells' Jonathan Bock follows up, noting there is a recent comp in the form of NorthStar Realty (NRF) which has soared following the plan to spinoff its asset management unit.
- Earlier earnings coverage
Feb. 11, 2014, 9:25 AM
- American Capital (ACAS) announces the launch of the refinancing of its $450M senior secured credit facility in the hopes of changing the terms to "reflect more favorable current market pricing," and to extend the maturity date by a year. Further details will be presented to potential lenders on a conference call tomorrow.
- Press release
- The stock remains lower by 5.9% in premarket trade following last night's earnings results. The earnings call is set for today at 11 ET.
Feb. 10, 2014, 5:33 PM
- Net asset value per share of $18.97 is off 2.9% from $19.54 on Sept. 30, and up 6% from a year ago. Stock closed at $15.94 today.
- 8.9M shares repurchased during Q at average price of $14.88 each, adding $0.13 to NAV per share. For full year, 40.4M shares repurchased for at average price of $13.90 each, adding $0.66 to NAV per share.
- Fall in NAV in Q4 largely the result of the struggles of American Capital Asset Management (AGNC and MTGE) - $185M charge for unrealized depreciation due to reduction in projected management fees. There's also a $152M depreciation charge in American Capital's private finance portfolio driven by declining specific company performance, offset by $115M in unrealized appreciation in European Capital investment.
- CC tomorrow at 11 ET
- Press release, Q4 results
- ACAS -5.9% AH to $15.00.
American Capital Ltd is an asset management and private equity firm. The Company originates, underwrites and manages investments in the middle market private equity, leveraged finance, real estate, energy and structured products.
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