Joe E

Review of Current Losing Positions: NZT, ACAS, SKM, GE

Re ACAS. I own some, and some of ALD, another similar company. It is simply true that the secondary market for their equity ownership in the smaller companies they help develop has gone down. Same reason GE is down -- soft economy, tough to borrow money, capital preservation more important than risktaking right now. It is also true that some of the loans they made in the past at what were then good interest rates they would not make now. This makes those loans worth less if they were to sell them. We can expect the dividends to come down over time, in spite of their good record in the past.
Is all this doscounted in the price? Who knows? We do know that Wall Street hates to own companies that will report declining earnings next quarter no matter what the long term might hold.
Over time they should be OK. They are in a good business, their competition is weakened and they are not overleveraged. The biggest risk is that they become fixated on maintenance of the dividend and weaken their companies. Same problem REIT's have. The market clearly expects dividend cuts in the future and so should we.

Hedging Your Bet With American Capital Strategies

If the environment is bad enough to take down ACAS then Citi and BofA are lost too.
Let's hope not.

The worst case here is a dividend cut.