MLPtourguide

Deep Value in American Capital Strategies

With their bonds trading a 42 cents on the dollar, and the stock at 16% of book, the best uses of cash are to buy back debt which is immediately counted as profit or buy back stock which is also a huge boost to book. By shrinking the company, they could amass extraordinary gains at the expense of fees they earn based on assets outstanding. I can live with that. It's amazing that these companies are so loath to shrinking when sometimes it can be a great move financially. Right now, ACAS can make more money using its cash to buy back debt, than to make a loan. It is a sure thing and doubles the reduction in leverage which will get them back to paying dividends even faster.

KKR's Double Whammy

KKR is not the same as KKR financial the symbol KFN. KFN is a fund which is invested in a variety of bonds, not private equity. There are corporate loans made to private companies from LBO financing, but this author exhibits a lack of understanding of the distinction between the Manager-KKR and the fund-KFN which is managed by KKR.

Eight Non-Oil & Gas MLP Recommendations

FEN has very a high expense ratio. According to ETF connect the total expenses are over 5%. Also the fund is highly leveraged. You might consider a larger yet similar fund with much lower expenses like KYE or KYN

FEN Common Shares
Management Fees 2.74%
Other Expenses 2.62%
Total 5.36%

KYE Common Shares
Management Fees 1.90%
Other Expenses 0.00%
Total 1.90%

I am not recommending either, but the expenses are so high on FEN and it is much smaller. Others are TYY and TYG which also are larger and have lower overhead. I do like these for the long run, but beware that they are ALL close to breaching loan covenants on their leverage which could cause cessation of dividend payments for a period of time.