I have posted on this board before, but have been out of ORCC for the last few months. Having a stock price at the same level it was 2+ years ago had become boring; however, the recent acquisition activity in the space has me looking again.
I must take exception to your post about the intrinsic value of ORCC. As I have stated before (and recently stated again on the S1 board), I firmly believe that the value of any company is determined by discounting the future cash flows at an appropriate rate. I know that is not earth shattering, but when I read the statement that ORCC is worth nearly $20 / share, I have to ask based on what. Obviously any cash flow projection is a guess so we all use metrics like EBITDA and growth rate projections as proxies. What metric are you seeing with ORCC that leads you to believe the company is worth $20 / share?
Even if I accept the crap that is their quarterly call, I cannot find that kind of value. When I factor in the crap that they want people who value their stock to exclude, I see even less value. I laugh when Matt Lawlor states that the acquisition with Princeton would be accretive if not for the finance costs associated with the acquisition. So acquiring a positive income stream for free would be accretive--no kidding!! If you factor in the current cost of the financing (both the interest on the debt and the impact of the preferred stock), their earnings stream to common shareholders starts to look pretty lousy. I understand why they want to exclude all of the "extra-ordinary" items, but eventually we need to get back to analyzing the cash flow and financing costs and dividends on the preferred stock impact the cash flow to common shareholders.
All of that being said, the recent run up in the stock after the CheckFree announcement indicates speculation that someone may acquire ORCC and be willing to pay a premium to induce a sale. I expected that, but I am not sure why the stock has quickly reversed unless people now think that ORCC will not be acquired. They do seem to be the one left standing without a prom date as most of the likely acquirers have gone in different directions. Fidelity has Certegy, Metavante has had their own solution for quite some time, and now Fiserv has CheckFree. With no pure plays (e.g. CheckFree) to acquire ORCC and fewer core processors in need, I am not sure why the original surge in stock price.
As always, I would like to understand another point of view if people think I am missing something that indicates more value than I do.