"substantially due to a reduction in projected management fees from the two mortgage REITs that it manages"
I remember a number of people mentioning that the decrease in NAV doesn't affect fee income from ACAM? So why this now?
Anyway, only two more days to see if valueseeker is right about the SP being 14-15 in a couple of days!
Could go either way tomorrow. AH trading on this issue is so thin. 20K shares up, 2K down. But so what? Tomorrow will tell. Not feeling confident enough to buy any more in AH, but will go out for a nice sushi dinner now...
Sentiment: Strong Buy
That was a disappointment. One to which I was prepared for. I look at it like this... ACAS was a premiere BDC it got hit hard and was in critical condition. ACAS just last year got back to operations as BDC (I know it was always a BDC of sorts) but it had no or little turns. The Old ACAS twice to four times a year had turn in a equity held position and normally made good cash. ACAS is making a turn once a year right now (just thinking someone may prove me wrong). Part of it is they had no inventory they could sell at a gain so they are holding and taking fees and interest and waiting for better prospects. When they start turning inventory again we will really have something. The other BDCs are having similar issues it is just they have heavy levering themselves on the notes side of the BDC business and have very little equity. Which means if rates go up fast there will be some issues with other BDCs. But it is equity turns where the real money is made (IMHO). ACAS is not fully back but neither is the economic conditions. I still like ACAS at these valuations.
This is the part I like...
"American Capital experienced a soft second quarter, due in part to depreciation in American Capital's investment in American Capital Asset Management, or ACAM, substantially due to a reduction in projected management fees from the two mortgage REITs that it manages," said Malon Wilkus, Chairman and Chief Executive Officer. "Nonetheless, we continue our focus on growth of our book value with the result that we were able to produce $21 million of earnings and increase NAV per share by $0.24 to $19.28, a 16% increase over the past year."
Yeah, it's exhilarating to see that the MM's are bidding up the Ask in AH, but I'm a realist. No one is really going to take the bait with these numbers from ACAS. Tomorrow's CC could be the answer to everyone's prayers. That's if they announce a restructuring.
The company is trading at a high discount to NAV because of operational difficulties compared to other BDCs. Both the discount AND operational improvement are necessary for good value.
Maybe if John Paulson were to get and earth-mover onto the board.
second Quarter Earnings Announcement Expected: ACAS has confirmed that earnings will be announced Tuesday. The consensus earnings are $0.25, with a high and low of $0.28 and $0.19, respectively. The mean has not changed significantly as the end of the quarter nears.