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American Capital, Ltd. Message Board

  • neschuyler neschuyler Mar 1, 2009 4:19 PM Flag

    Positive VS Negatives for ACAS

    I have been reading this post very closely for the last several months. I have been encouraged by many of the posts. I have to agree on the following:

    1. Management did act responsibly in cutting the dividend to preserve cash.
    2. Getting approval for ECAS was important.
    3. The bank would hurt themselves if they caused BK.

    Some worries:
    1. Why did management wait to the last day the SEC allows to report earnings?
    2. How secure are many of these investments if the economy does not rebound until mid 2010?
    3. Will profit taking hold this stock down as it tries to works it way back up?
    4. What can management do to get the price of this stock up over $10 other than cash dividend? We need to issue those additional 20% shares to take advantage of the buying opportunities available now.

    I'd be interested in any comments.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • "2. How secure are many of these investments if the economy does not rebound until mid 2010?"

      Well, if the economy doesn't rebound by mid 2010, I guess many other companies will have to close business. ACAS, because it's tied to M2M accounting, feel the pain of it already but if these unrealized loss become realized ones, they will be realized for just any other company out there.
      And that will be simply the end of the US stock market and perhaps of the dollar too.
      So the question here is not what will happen to ACAS, but what will happen to any stock listed in the US.

    • I hold several thousand shares of ACAS and purchased
      them at over $25.00 a share over the years and have
      enjoyed the dividends.

      I don't plan on getting out, but buying more shares
      in the $2.00+ range. ACAS has been caught up in the
      financial market doom and gloom and I believe in the
      company whole heartedly. As far as what the management
      did and did not do has no real bearing. The key now is
      to keep a watchful eye on C, BAC and AIG. The government
      will nationalize SOME banks, Citigroup is first on their
      list. BAC will remain untouched as they thrive as a powerful
      financial institution. The real fly in the oinment is AIG.
      AIG dispenses the Federal government pension plans, so what
      will our poor, poor Congess do now with AIG with shares selling in the .40 cent range? Prop them up with billions
      more from the negro in the Whitehouse or simply let them
      go "tits up". Tits up NO, Prop up yes, but not real soon.
      I believe that folks are realizing what a corrupt body of
      government that we have and if a national vote by the
      American voters and not our grand congress were held right
      now concerning term limits for the entire Congressional body,
      the people would win and the obstructionist politicians would
      be out of their corrupt jobs.

      Keep your faith in ACAS and perhaps even ALD.

      I agree with your Strong Buy.

      Best Regards,

      Dick

    • Its_Not_My_Business_But Its_Not_My_Business_But Mar 1, 2009 11:30 PM Flag

      OK .. I'll try.

      In regards to the delay, here's a possibility. Imagine that ACAS actually didn't break the covenants in Q4, but the lenders said, 'hey, that's not going to fly for 3 more months .. we want to know more." So ACAS would have the prospect of anouncing that they didn't break, but possibly within a couple weeks put out a PR saying that they did.

      Better to do both at the same time. Imagine tomorrow announcing that they didn't break in Q4, but project that they would in Q1 and given that, preemtively entered into negotiations with the banks.

      This interim information would have taken time.

      I don't know .. just a WAG. We'll see in the morning.

      NMB

    • Q4 will be ugly, and so will Q1.

      Q4 has the October meltdown of valuations.

      Q1 major indices are off 20% through 28 Feb. Other investments are likely off similar amounts.

      NAV is likely around $13 - $15 as at 31 December, and $8 - $10 as at 28 Feb. We'll see how it is at 31 March come the Q1 report.

    • nice post, I would like to add a 4th positive:

      4. A very, very diverse and good quality portfolio including a wide variety of everyday names


      And some thoughts on the negative points

      Some worries:
      1. Why did management wait to the last day the SEC allows to report earnings? MAYBE THEY WERE HOPING FOR VALUATIONS TO MOVE UP TO HELP MARK TO MARKET LOOK LESS RADICALLY BAD. THAT ISN'T A THEORY, JUST A THOUGHT
      2. How secure are many of these investments if the economy does not rebound until mid 2010? WELL THE PORTFOLIO IS VERY DIVERSE, RANGING FROM AIRPLANE MAKERS TO PACKAGING TO LABELS TO ART GALLERIES TO INSURANCE BROKERAGES TO CABLE BOX REPAIR AND BEYOND. IT HSOULDN'T BE MORE, OR PROBABLY LESS, DAMAGED THA THE ECONOMY AT LARGE. THESE AREN'T SMALL BUSINESSES FOR THE MOST PART, AND THAT SHOULD ALSO HELP.
      3. Will profit taking hold this stock down as it tries to works it way back up? HOPEFULLY, GIVE PEOPLE GETTING LONG MORE TIME TO GET IN.
      4. What can management do to get the price of this stock up over $10 other than cash dividend? We need to issue those additional 20% shares to take advantage of the buying opportunities available now. WHEN THE DIVIDEND RETURNS OR WHEN PEOPLE ANTICIPATE IT RETURNING IT'LL HEAD TOWARDS 10 AND AFTER A COUPLE OF YERS, ASSUMING GOOD YEARS RETURN TO AMERICAN CAPITAL, THE DIVIDEND MAY WELL BE WHAT YOU PAY FOR A SHARE TODAY, AND AFTER A COUPLE OF STEADY DIVIDEND YEARS THERE WILL AGAIN BE A TIME WHEN ACAS TRADES FOR MORE THAN NAV AND ETC. ETC.

    • Re 'some worries'

      1) The deadline for the 10-K and the ER is 3/16/09.

      2) Portfolio is very diversified and avg EBITDA margin is >20%

      3) Yes... there's tons of resistance between here & 7.50... but (hopefully) after tomorrow's ER/CC, it'll be patently obvious that the pps is tremendously under-valued... and ACAS used to have a very high beta, so moves in the pps could be swift.

      4) Mgt's job is to run the business... and in this environment, priority #1 is building the capital base/deleveraging... there'll be no divd announcement until 6/15/09.

      The CC is 11AM tomorrow... listen in !

    • >>We need to issue those additional 20% shares to take advantage of the buying opportunities available now.

      Seriously?

      We will soon know more about the NAV which was ~24. Assume for this post it is 20.

      Do you really think that raising money at $1.35 per issued share is in current stockholders best interest?

      >> Why did management wait to the last day the SEC allows to report earnings?

      Probably hoping for MtM relief before having to issue bad news.

      zip

    • In response let me add a couple of comments:
      1. I agree that suspending the dividend was in the best interest of the shareholders. ACAS has been looking after shareholders well IMO over the years, and continues to do so.
      2. Cleaning up ECAS is important. Europe including Eastern Europe,Russia,the Ukraine,and the UK are in more serious trouble than the USA. ACAS was getting rolling in Europe and just beginning in Asia. My sense here is that credibility in other regions is really important to the future of ACAS. Also, with the world down ACAS could gain some great opportunities if it it survives all this.
      3. The road back above $10/share will be TOUGH. Profits will be taken as will be simply cutting losses. My advice to ACAS is to keep dividends as low as possible and invest in quality,fallen angels.
      4. ACAS' portfolio companies are obviously hurting bigtime. Few I'm sure are still starring like ACAS' AGNC holding. But,hey, as the economy swings around some of these holdings should gain share and do real well. Others will surely fail leaving ACAS with plenty of writeoffs for the future.
      5. As far as earnings' reports go, the later the better. Q4 is a) a disaster for everyone b) a great chance to write down lots of stuff. Far more important are the Q1 and Q2 '09 reports. Is there an uptrend to report no matter how humble? Is survival giving way to a future of some sort? If ACAS can make it through to September I think we'll be breathing again..and perhaps my intake of scotch will go down!

 
ACAS
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