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American Capital, Ltd. Message Board

  • bg4value bg4value Aug 8, 2014 6:28 PM Flag

    So we have to be patienter? But it makes sense doesn't it?

    As they take the equity off their own balance sheet (yeah NMB I was bummed that they didn't have the cash from ACE III yet), they have to put that cash somewhere..........the ACAS equity ends up with much less risk (as AUM for ACAM) and the cash is the nest-egg for the BDC. Seems to me, having learned lessons of he past, they are parking that cash in an ultra-safe vehicle. They have been very clear from the start that this was going to be complicated and take a long time. What are the risks? Well, number one is a recession as we wait seemingly forever....but can I ask (assuming ACE III closes), is that really a risk or an opportunity.......all that low yielding 'stuff' is so because it is pretty darn safe...........what if there is a recession.......doesn't that spell huge opportunity for ACAS to transform the BDC side of things into really higher yielding assets when the right ideas come up.......anyhow, I'll continue to be patient as I believe the company in any form is substantially undervalued, and relatively low risk. Have a good weekend folks.

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    • What bothers me is that management fees and other expenses have not dropped even though, clearly they are dismantling the one stop business and parking huge amounts of cash in bonds. Where is the drop in overhead and fees? Sure, they will eventually split this thing up when they can find a way to profit for themselves from further inflated fees from numerous entities instead of one. In the meanwhile, why not cut back on unneeded staff in the areas where they are doing almost no deals like the one stop buyout business?

      • 3 Replies to youcanpickum
      • blair.wagner Aug 10, 2014 10:53 AM Flag

        Great point! However few if any managements have taken a pay cut without a fight!

        Sentiment: Hold

      • Youcan:
        Everybody wants everybody else to work for them for less. Every employee wants to get paid more. from their employer. that is a basic reality everywhere in the market place. If you as a stockholder are not happy then you have the opportunity to sell your position and take your money and pay the IRS a portion and invest the balance elsewhere. If enough people do that and the price goes down to $5.00 maybe management will take notice and change their ways-----------or take the company private and keep all the money for themselves.

        Thats the way the world works.

      • Youcan, you have a good point. But really, what is it you're investing in in ACAS?.........a pps that is considerably less than realistic is NAV?.......there is every reason to believe it is 100 pct reality.....heck, they marked ECAS to essentially worthless when accounting rules etc. said it was and as time passed and in spite of some spicy recent dividends they have yet to mark it to about ACAM?......absolutely seems fairly valued (of course AGNC and MTGE will affect that) about the rest of the holdings?........when ACE III closes, it is not a lot different than cash (soon to be levered).......okay, so in my view, it is worth the 20 bucks a share..........assume, the expenses/overhead have a lot to do with some major work being done transforming the equity on the books to the AUM in ACAM and that a lot of the costs will be transferred to the different entitites once a split occurs. As much as anyone, I get all jazzed coming up to ER's waiting for the "NEW ACAS"........but after a quick breath, it is what it is........something that costs 15 that's worth at least 20..........and if I want a dividend, I look to my MTGE (but that has it's own set of risks). Of course, I could be really wrong......but the more of the ACAS equity positions that become cash/snr floating loans.and eventually higher yield investments, the more I'm a believer in management and I have no gripe with the costs........for now.

    • B4V When everything is completed then it will make sense.

      • 1 Reply to zeit0001
      • Hey Zeit,

        "When everything is completed...". Zeit, I don't think anything will ever get to a point of "completion", whatever that means in the stock market. It seems to me that buying a stock like ACAS is akin to getting married to a soap-opera. Lot's of episodes, lot's of twists and turns. older characters dying off, "new" characters being introduced.

        Not complaining, just reflecting.

        However, you can get tired of a particular soap-opera. I may be getting close to changing the channel.


        Respectfully, Mike

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