American Capital Strategies, Ltd. (ACAS)
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ACAS Forum Topics
- All Comments on ACAS
- General Discussion on ACAS
- Biggest Gainers, Losers Since 9/29 [view article]
- Dividend Yields Soar [view article]
- The Ups and Downs of Drips [view article]
- American Capital Strategies Illustrates Private Equity Risks in Merisel Pull Out [view article]
- Global Capital Asset Death Spiral [view article]
- A First Look At How the SEC's Rules Are Working [view article]
- Ticketmaster Loses Its No. 2 Customer to Competitor Live Nation [view article]
- American Capital Agency: Making Money the Old-Fashioned Way [view article]
- American Capital Q2 2008 Earnings Update [view article]
- American Capital Strategies: Dividend Analysis [view article]
- Re-examining My American Capital Strategies Position [view article]
loading ...Recent ACAS Articles
- Biggest Gainers, Losers Since 9/29
- The Ups and Downs of Drips
- A First Look At How the SEC's Rules Are Working
- Ticketmaster Loses Its No. 2 Customer to Competitor Live Nation
- Global Capital Asset Death Spiral
- Global Capital Asset Death Spiral
- American Capital Agency: Making Money the Old-Fashioned Way
- Inverted Yield On Cost Curve: Not Always a Bad Thing?
- American Capital Q2 2008 Earnings Update
- Lehman Brothers Take-over: Implications for Financials
- Full List of Articles »
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vestor
American Capital Strategies: Ride the Recovery [view article]
ACAS is no different than any other company holding private businesses and loans in their portfolios. With the implimentation of fas157 level 3 assets (those not readily traded) are valued based on recent sales of similar investments. Thus, of course if no one is buying, then the values of these investments must be marked down to ridiculously low levels. As hedge funds and brokerages de-leverage / liquidate, fas157 will require BDC's to further mark down holdings. So what?The majority of these private businesses and loans will be held long term and provide stable interest or dividends to ACAS. When liquidation by over-leveraged hedge funds ends and the market fear subsides, then there will be a reversal of the valuations. That is when those short will become longs. Design your options strategy around this and make your next article more clever.
Currently ACAS has indicated that it has covered its 2008 dividend of $4.19, and has cap gains coverage for part of 2009. For a "clear" picture of how ACAS has managed its dividend through prior market struggles see www.americancapital.co.... Of course, past performance, etc...
* The actual issue, IMO, is the rising cost of capital.
REITs, BDCs, MLPs, etc., that pay out most of their income rely on secondary offerings, preferreds and convertibles, and sell-downs of mature assets to pension funds for new capital to fund their expansion. Note I said expansion, not daily expenses - BDC's are not ponzi schemes.
For a different view than the shorts, see www.deepcapturethemovi.../ concerning shorting Overstock.com. ACAS will be good money for Einhorn down and then back up the pps ladder.
However, it is important to note that BDCs, REITs, and MLPs have variable ratios of fixed and/or variable rate debt. In the short-term:
1. New fixed rate debt will be harder to obtain and more costly.
2. Secondaries will be less accretive to NAV, OR even dilutive if required to capitalize unfunded commitments.
3. Convertible or preferred share offerings will likely be less attractive.
On the down side, these businesses may face slower growth prospects combined with decreased demand for their underlying assets (REITs = mortgages, leases, etc.; BDCs = private businesses and loan market; MLPs = pipeline volumes) resulting in decreasing earnings growth, decreasing NAVs, and falling dividend/distribution coverage. Dividends for some securities and CEF's, even while "banked" from prior years may reduce NAV in the short term.
On the positive side, those BDCs and REITs with capital can take advantage of the more favorable lending environment and distressed securities/loans. Those MLPs with a greater fixed rate debt ratio, longer terms on debt, lower unfunded commitments, and higher regulated percentage of business will benefit. Buying into the best companies at attractive yields will position one for multiple years of attractive gains. Look for a reversal in NAV when the hedge funds have finally de-leveraged / liquidated. Oh, and pension funds will still have to find diversified assets such as those private companies owned by BDCs in which to invest.
ACAS is buy for the long term, IMO, though you may get it cheaper - who can say. No need to buy until the chart looks better.
Homework should include general BDC reports from Wachovia (AGEdwards) and ACAS-specific reports from Jefferies for comments on ACAS's portfolio vintage 2007. Reply
Dividend Yields Soar [view article]
SOME OF THESE STOCKS HAVE ALREADY CUT THE DIVIDEND.Your research <sic> is poor Reply
Dividend Yields Soar [view article]
ACAS hasn't cut it's dividend yet in over 10 years of operations. In fact they've continued to increase it.The effective yield has almost doubled as the share price has dropped. But the underlying fundamentals are still strong. Deals are still being made and cash is still coming in. Reply
Dividend Yields Soar [view article]
ACAS has convinced some analysts that its dividend is safe. As a BDC, it must return a high % of its earnings to shareholders. I have no illusions that I'm going to keep getting the same return on it thru the next year's economic difficulties, but even if the divi is cut in half, it's a bargain. By the same reasoning, LYG and BKK are other good income bets. Replyvestor
Review of Current Losing Positions: NZT, ACAS, SKM, GE [view article]
The above assesment of ACAS is off the mark. I would challenge the Einhorn book and refer anyone to the following link: www.deepcapturethemovi.../ for an alternate view.ACAS is no different than any other company holding private businesses and loans in their portfolios. With the implimentation of fas157 level 3 assets (those not readily traded) are valued based on recent sales. Thus, of course if no one is buying, then the values of these investments must be marked down to ridiculously low levels.
However, the majority of these private businesses and loans will be held long term and provide stable interest or dividends to ACAS. When liquidation by over-leveraged hedge funds ends and the market fear subsides, then there will be a reversal of the valuations. That is when those short will become longs.
What you believe is up to you........... do your own DD.
---------------
* The actual issue, IMO, is the rising cost of capital.
REITs, BDCs, MLPs, etc., that pay out most of their income rely on secondary offerings, preferreds and convertibles, and sell-downs of mature assets to pension funds for new capital to fund their business's growth. However, they all have variable ratios of fixed and/or variable rate debt.
1. New fixed rate debt will be harder to obtain and more costly.
2. Secondaries will be less accretive to NAV, OR even dilutive if required to capitalize unfunded commitments.
3. Convertible or preferred share offerings will likely be less attractive.
On the down side, these businesses may face slower growth prospects combined with decreased demand for their underlying assets (REITs = mortgages, leases, etc.; BDCs = private businesses and loan market; MLPs = pipeline volumes) resulting in decreasing earnings growth, decreasing NAVs, and falling dividend/distribution coverage. Dividends for some securities and CEF's, even while "banked" from prior years may reduce NAV in the short term.
On the positive side, those BDCs and REITs with capital can take advantage of the more favorable lending environment and distressed securities/loans. Those MLPs with a greater fixed rate debt ratio, longer terms on debt, lower unfunded commitments, and higher regulated percentage of business will benefit. Buying into the best companies at attractive yields will position one for multiple years of attractive gains. Look for a reversal in NAV when the hedge funds have finally de-leveraged / liquidated. Reply
Dividend Yields Soar [view article]
The financial companies should cut their dividends in full for the next 2 years. They are paying a high cost for capital to make these dividends or diluting their stockholders significantly. That makes no sense. ReplyGoldblum
Review of Current Losing Positions: NZT, ACAS, SKM, GE [view article]
TKTK -For good order's sake, I do not own, nor am I short, ACAS. None of my clients have a position in ACAS.
I merely am pointing out aggressive accounting tactics used by ACAS and others. Will the stock go up or down, I don't know. I advise steering clear of operators such as these. I'm not an expert in ACAS, but paraphrasing Warren Buffett, in investing one need not swing at every pitch. For the reasons stated here and above, I'd advise passing.
Regarding your inflammatory remarks about losing people money, you can find my firm's name through my blog. On my company website I have quarterly newsletters showing verified performance of a composite of client accounts. I submit that my client recommendations have not lost "1000's of people...lots of money".
You're entitled to your opinion. In investing, it's important to do your homework first. Reply
ng
Dividend Yields Soar [view article]
Pfe Reynolds Mo and PM and KFT would be better ReplyAmerican Capital Strategies: Ride the Recovery [view article]
If you like ACAS AND ALD you may want to look at RAS. Reply10 Top Dividend Stocks of the S&P 500 [view article]
As those high yielding stocks get into more and more trouble those dividends are sure to be cut. Its either that or those companies will go bankrupt. What's the point of a 30% dividend if you lose 100% of your investment? ReplyAmerican Capital Strategies: Ride the Recovery [view article]
The last ACAS quarterly dividend was $1.03 ..... not $0.31. Their recent IPO, American Capital Agency (AGNC) had the dividend of $0.31. Also, run your graph titles by Spell Check. Otherwise, a good article. ReplyAmerican Capital Strategies: Ride the Recovery [view article]
My last qtr dividend was $1.03, not $0.31. ReplyGeneral Discussion on ACAS
The 19% dividend yield on ACAS and ALD says the market believes we are merely going to be getting back our capital over the next few years. Not sure about ALD but this is a grossly wrong assessment for ACAS. Forget the mark to market arguments (though they're valid when trying to determine book or Net Asset value) the ACAS cash flow is not going to dry up. ACAS has enough capital to continue to be able to fund additional investments. It does have a large debt to service but the majority is Long term debt not the short term debt that brought down Bear Sterns. At these levels ACAS is a definite buy. The strategy of the author is solid. Replyh
10 Top Dividend Stocks of the S&P 500 [view article]
The table needs to look at the Cash flow per share and to compare that to the dividend payout.Fundamentally, i'd avoid auto, am not completely sure where pharmas fit (too much competition, and politics are pushing for lower health care costs). Reply
American Capital Strategies: Ride the Recovery [view article]
ALD is the better play in this space. Mezz loans are not necessarily more risky if the firm making the loan adheres to strict underwriting standards (which ALD does). With traditional bank financing markets completely dried up, there is a much wider gap between senior loans and equity -- exactly where Mezz players like ALD fit in. There will be some great opportunities over the next 12-18 months for ALD to get premium pricing on lower risk loans simply because commercial banks do not have the necessary regulatory capital to make the same loan at a lower rate.Long ALD. Reply