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American Capital, Ltd. Message Board

  • do_foellinger do_foellinger May 1, 2013 5:17 PM Flag

    ACAS vs PSEC

    I will start by saying I own both ACAS and PSEC, for different reasons. As to the earlier post stating poor management and no dividend, I would put forth the following:

    On 5/1/12. PSEC's price was $10.88. On 5/1/13, it was $10.86, down $.02. It paid $1.16 in dividends during the year. It produced an annual return of approximately 10.5%.

    On 5/1/12, ACAS's price was $9.68, On 5/1/13, it was $14.11, down $1.00 for the day but up $4.43 for the year. It paid no dividend. It produced an annual return of approximately 45.7%.

    I would say you own these two stocks for different reasons. I like the steady dividends from PSEC but I love the total return from ACAS.

    Sentiment: Buy

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    • I own both because diversity and I first got PSEC as they purchased Patriot Capital (I bought PCAP arbitrage one of my best trades... ACAS in the 2's was also a good one). ACAS is doing well... I have thought that ACAS would do better if it restored the Div, but NMB and some others convinced me that ACAS was taking a good approach taking advantage of loss and raising share price. I think it is foolish to look at any stock as an island and say you have no use for any other. ACAS has a lot of restoring to do so it has more upside than PSEC but that may not exist forever. Although they are in the same business they are two very different companies. I like them both.

      I have traded on ACAS several times I have made more than lost but lately I have not managed the timing right, I would have loved to sell some on April and bought again on May 1. I have missed the earnings pops and drops and tend not to like that as much.

      Good luck to you.

      Sentiment: Buy

      • 1 Reply to jeffy777
      • Jeffy:
        Sometimes you are better off in just holding the company's you like anmd let management of those company's do the managing. Trying to time buys and sales can be counterproductive to your wealth accumulation by being wrong and building up unnecessary tax obligations also. For example--If you like ACAS there was no way you could have forseen the current bump in the road. I used it as a buying opportunity when it happened. I have more of a chance to be right going forward than by my guessing before the fact.
        I try to remember that each trade has a buyer and a selly. That means that one is always a winner and one is always a loser. So 50% of all people who make a transaction are wrong. thats why I try to make as few trades as possible so I won't be wrong so many times.

        good luck

    • I have bought and sold PSEC catching the dividend most times and made more than just the dividend.Long ago I got out of ACAS while they were still giving dividends. I just do not see them growing as fast as PSEC with the deals PSEC has done compared to ACAS.PSEC revenues are do to pop.Buying back shares and not investing like ACAS is not as good as most investors think 98 million invested in ACAS.PSEC had 800 million invested last quarter. There's more grow in PSEC.

    • I agree with all that you said. To clarify, though, I would add the following to your slice of one year:

      PSEC's annual return is a realized return subject to tax likely at least 15% and possibly up to 23.8%. Though my PSEC stock value is essentially flat, if I pay as little as 15% on my $1.16 in dividends my real return is under $1, or around 9%.

      I like dividend stocks. I love well-paying dividend reinvestment plans. Perhaps the best of this PSEC/ACAS duel would be to reinvest (unfortunately, after tax) PSEC dividends into ACAS stock. Then, at a time when income is needed, sell long-term ACAS.

      If I'm not making too much sense it may be because I'm a bit giddy about picking up some more ACAS shares before they giddy-up and go. I don't see any red, rose, or pink colored flags on the horizon. All things considered, I firmly believe that at this time next year the NAV of ACAS will be north of 23 and the share price at 80%-85% NAV will be knocking on Andrew Jackson's door... Discounting today's confusion, that represents a forward annual return of 33%.

      Sentiment: Buy

    • Same with me. I also own ARCC and recently bought AINV with proceeds from selling MPW. I also sold a bunch of 2015 $15 ACAS puts which I expect to expire without being put to me. Plenty of ways to set up one's portfolio.

      Sentiment: Strong Buy

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