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American Capital, Ltd. Message Board

  • armando.barbosa armando.barbosa Jan 23, 2009 12:01 PM Flag

    Please when it will be a divident anouncement?

    It is time to start paying dividends!

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    • lol...this pop will DROP as soon as they announce secondary

    • I agree that the big price drop will come when it sells ex-div not when the announcement is made.

    • This paranoia over shorts is sickening.

      A person shorts 100 shares at $27 or 1000 shares at $2.70, no difference.

      Shorting a $27 stock with a NAV of $125 or a $2.70 stock with a NAV of $12.50 is insane. Especially stupid if the company is right that the relizable value is $175 or $17.50.

      The share value will be dictated by conditions in the economy, not by shorts or longs.

    • I don't know that options are adjusted.

      I don't expect ACAS's shares to fall all that much after the 10/90 dividend announcement.

      I may be wrong but I believe the stock price having fallen so far while ARCC and AINV and other BDCs have held up pretty well suggests that investors have adjusted ACAS's share price to reflect the impact of the stock dividend.

      When I expect ACAS stock to perhaps free fall is when shareholders get the share dividend and convert it to cash en-masse.

      That is usually the outcome of forced stock dividends where the dividend is taxable and shareholders do not want to own any more shares of a stock that has to declare such a large dilutive dividend.

    • I do not understand what he is saying either.

      A drop from 2.70 to 1 is a 63%.

      A drop from 27 to 1 is a 96% drop.

      There is no question that the later is worse. But to keep the illustration proportional the 2.70 stock would drop to 10 cents.


    • It doesn't change the value of the short position because the shorter now has 1/10 of the shares.

      Or maybe I'm just not understanding what you are trying to say. Or maybe I should stay out of arguments that I don't belong in.

    • zippy --You seem to miss the point which is that IF they do a 1 for 10 RS and the price goes to 28, THEN the price loss to $1.00 is $27, instead of the $1.70 it can drop now to reach $1.00 again.

      Life ain't all arithmetic.

    • ACAS has $300 million in taxable earnings from 2008 that they have to pay out or they have to pay taxes on. We own ACAS.

      ACAS got approval to pay that out this year, before the end of 2009 in shares. Someone posted the specifics of the ruling.

      Thus ACAS pays taxes on the 2008 earnings or they payout the earnings to us, and we pay taxes on the shares.

      Since many investors have carry forward losses in this environment, it makes sense for ACAS to pay out the shares and for us to pay the taxes. Makes sense to me.

      Again, the shares are being paid out such that ACAS doesn't have to pay taxes on 2008 earnings, they are taxable to us. From what I read on this board, tax info will be issued on how to treat the share dividend.

      Tax info seems to be published for each of the dividends; what is taxable, what part is capital gains, effect on the cost basis of your investment etc.

    • >>Can't be sure, but I think options are adjusted to account for stock dividends.

      I agree with that. Traded options SHOULD be adjusted. The OCC will decide. I can tell you that there have been several instances where they did not adjust that has caused some consternation among options professionals. The biggest involved a rights offering by Household. But there have been other smaller annoyances.

      The dividend that ACAS will be paying out is just too large for the OCC to ignore. Once the dividend is announced we should be able to read the OCC ruling on how the options will be adjusted.


    • Options are adjusted for splits so that there's a neutral effect regarding the value at the time of announcement.

      Basically if you have 1 contract (100 shares) with a $5 strike. And there is a 2:1 stock split you'd end up with 200 shares with a strike price of $2.5.

      Basically you multiply the total number of shares by the split ratio and divide the strike price by the split ratio.

      Someone check my math!

      Same math applies for shorts. In the 2:1 example you end up with twice the shares at half the price.

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