American Capital Strategies, Ltd. (ACAS)

All Comments on ACAS

  • commenter
    JadedConsume
    r
    Sep 05 04:16 PM
    My Website
    American Capital Q2 2008 Earnings Update [view article]
    Some of these questions hit good points.

    Rocknob: the dividend is based on taxable income, not adjustments to current valuations of investments ACAS isn't exiting. Big Al45: I made the same mistake, confusing ACAS' SEC-reportable earnings with the taxable income on which ACAS is required to calculate the minimum dividends it must pay to retain its tax status:
    jadedconsumer.blogspot...

    peachbery_tea: I don't think ACAS discloses IN ADVANCE the specific exits it anticipates; this would give counterparties leverage in negotiation by threatening to hold up predicted results by declining to sign documents. ACAS DOES disclose exits after the fact. ACAS also discloses current holdings.

    Johnathan Christopher: yes, ACAS' holdings are illiquid. This isn't reason to hate ACAS, though; it's part of the reason ACAS can expect the returns it produces -- there are few competitors for these deals, and ACAS has no reason to hurry into poor deals or rush out of deals that are paying good money. My overview of ACAS is given here:
    jadedconsumer.blogspot...

    ACAS' ability to raise new funds without diluting its existing shareholders is a testament both to its cleverness and to its dedication to protecting existing shareholders. The new-in-April AGNC deal adds 4ยข/share per quarter to ACAS' earnings while doing three interesting things at once: (a) raising funds non-dilutively, (b) creating a new pool of funds under management, and (c) creating 8x+ leverage in a new investment without impacting the 1:1 debt:equity ratio required by its tax status.
    jadedconsumer.blogspot...

    As demonstrated by the quarter's cash flow (which was positive despite an expected closing transaction being pushed to 3Q), ACAS' liquidity seems to be adequate, as management promises -- and the exit flow allows ACAS to delever (by slowing redeployment) as conditions continue to worsen, so the 1:1 leverage limit should not push ACAS into regulatorily-mandated liquidations with timing not of ACAS' choosing.
    jadedconsumer.blogspot...

    I label my ACAS posts with a tag:
    jadedconsumer.blogspot...

    Best regards,
    --J     Reply
  • commenter
    fireman Jim
    Sep 05 09:49 AM
    American Capital Q2 2008 Earnings Update [view article]
    I continue to add to my position in ACAS. Even if the dividend were to be slashed in half, an 8 to 10 percent return is still remarkable. I am confident a 5 year time line will be very profitable. Reply
  • commenter
    Chicago Mike
    Aug 29 03:48 PM
    My Website
    American Capital Strategies: Dividend Analysis [view article]
    Well, the stock price of ACAS has not faired so well over the last few months! I don't want to get out now and lock in losses, especially since I've read that folks feel confident they will continue to pay out the high level of dividends. Hanging in there for the long haul.

    Anyone else looking to get out?     Reply
  • commenter
    peachberry_t
    ea
    Aug 27 03:42 PM
    American Capital Q2 2008 Earnings Update [view article]
    Does anyone know whether ACAS discloses their scheduled exits are by each quarter/yr? That should give us a fair idea of what ACAS' liquidity should look like and whether they'll be able to support their dividend

    As for the depreciation charges they have been taking. Are these just accounting charges or revaluation charges - i.e. did they mark down beacuse FAS said they had due to lower liquidity or whatever, or are their actually expecting their investments to yield less once its exited?

    Thanks     Reply
  • commenter
    Big Al45
    Aug 27 02:57 PM
    American Capital Q2 2008 Earnings Update [view article]
    Rocknbob has asked the right question. If the $1.24 per share "unrealized depreciation" reported in the recent quarter were to actually occur (and it probably won't), ACAS really lost .33 per share during the quarter.

    The dividend appears to be safe through the 2nd Quarter of 2009, (rollover of 2008 earnings should be sufficient to pay 2 quarters in 2009) but I suspect they will have to reduce subsequent dividends, if the economy doesn't improve.

    Personally, I will continue to buy the dips and sell the rips on this stock.

    For full disclosure: I have no current position in ACAS.     Reply
  • commenter
    Jonathan
    Christopher
    Aug 27 11:38 AM
    American Capital Q2 2008 Earnings Update [view article]
    While this company looks very solid, it appears that many positions are illiquid. Unfortunately the housing economy will not be recovering until late in 2009, since there are two additional shocks to come: the repricing of the Option Arm Mortgages, and the failure of several major banking institutions in the US and Europe.

    There will be general market movers and unfortunately the movement will be down. I am unable to tell if there is sufficient liquidity in the company to withstand an additional 10% drop in the market.

    Remember that this long term bear market began in 2000, and the price, in constant real value (using Gold, or Silver, or Platinum, or Copper or Oil) has been down, even though the "dollar" value does not look that bad.

    Net-net: The 20% dividend really helps reduce the risk, and this is a good business, just expect the rough ride to continue for at least another year. There are few places to hid, an this is one of them     Reply
  • commenter
    Rocknbob
    Aug 27 11:31 AM
    American Capital Q2 2008 Earnings Update [view article]
    One question: how long can they keep on paying that lofty dividend in this economic environment? Reply
  • commenter
    feelcurious
    Aug 27 07:48 AM
    American Capital Q2 2008 Earnings Update [view article]
    I think the weakness in ACAS share price is primarily attibutable to a few factors: 1) Overall decline in the broader market along with a substantial decline in the financial sector, and a misclassification of ACAS (and BDC's in general) as financial sector companies. 2) Negative sentiment aimed at the BDC sector by short interests; eg David Einhorn and his attempts to bring down ALD. Even Cramer states on national TV to avoid ACAS because it is under 'bear attack' and he is not a fan of mezzanine lending. 3) A broad and deep misunderstanding by the general public of how BDC's operate and make money.

    The combination of the above three conditions make it particularly attractive for the 'distort & short' crew to attempt to drive share price lower with a concerted smear campaign. All one has to do is look at the short interest and the days that ACAS been on the REG SHO list to see what is really going on here. There have been some encouraging signs as of late with Cox's statements that broad-based-rules will be enacted to prevent the criminal activity of naked short sellers attempts to bring down companies like ACAS. If this happens any time soon, watch for a strong rebound in ACAS share price. However, there is also the caveat that overall market conditions may continue to deteriorate and ACAS will linger at current price levels for an extended period. But with a fairly solid 20% return almost guaranteed for the forseeable, could you really classify making a long-term investment in ACAS at current price levels 'dead money'??? I don't think so, and I have put my money where my mouth is.     Reply
  • commenter
    wheretoinves
    t
    Aug 26 11:46 AM
    Re-examining My American Capital Strategies Position [view article]
    Davy -- What are your feelings since the Q2 conference call? It seems that NAV is substantially higher that the current share price and guidance on dividends has been reiterated. Reply
  • commenter
    Mayitoval
    Aug 26 09:09 AM
    Lehman Brothers Take-over: Implications for Financials [view article]
    Did you read "Finance for Dummies" and think you could just post an article on SA? Reply
  • commenter
    squashnut
    Aug 26 12:23 AM
    Lehman Brothers Take-over: Implications for Financials [view article]
    "but since these assets will be held to maturity, ACAS will get their money back."

    Wow. Unless they don't.
     Reply
  • commenter
    User 234133
    Aug 25 12:28 PM
    Lehman Brothers Take-over: Implications for Financials [view article]
    Just fluff - no analysis, something a 5th grader would provide for a school report. Reply
  • commenter
    sumosama
    Aug 25 11:40 AM
    Dynamite Drug Stock - Cramer's Lightning Round (8/21/08) [view article]
    If you look at Cramer as purely entertainment, he is great. Not sure I would trust his recommendations anymore.

    BTW, long WM...poorly run company which is why it went from 40 to 4. Now, a screaming trade!
    Reply
  • commenter
    Ishortyou
    Aug 25 05:59 AM
    Lehman Brothers Take-over: Implications for Financials [view article]
    CDO or any structured finance vehicle i.e. ABS-MBS price, is dictated by supply and demand, right now there is a glut in the market or oversupply of them due to uncertainty of how much toxic waste they contain, once those uncertainties clear up and the housing market recovers no doubt that the 0.22cents of a dollar will be 1.22 cents of a dollar. Reply
  • commenter
    omooc
    Aug 24 10:15 PM
    My Website
    Lehman Brothers Take-over: Implications for Financials [view article]
    When MER sold some of its CBOs at 22 cents per dollar, with 75% financed by MER, one commentator, over CNBC, said that the effective rate is actually 5.5 cents on the dollar -- I share this view. Reply
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