This is just for the sake of disscusion. These 3 other AC funds NAVs are up 3 cents each, and the 3 other funds are trading at a slight premium to NAV. Take a look at the portfolios of each. ACG being the 4th fund and the last. I do not own any ACG as of this time as I sold what I bought in Feb for $7.60 in april for $7.75. I needed the money for what I think will be a much better return but has 10 times the risk. The risk coming from the purchase of a tech stock. I find it odd that ACGs NAV is droping. I would like to know the true reason for it. If things keep going the way they are I am looking for ACG to go down to the $6.80ish level. And the only reason I am looking for this level is from looking at the charts and no other good reason. Here are the links to the portfolio's. http://biz.yahoo.com/prnews/020614/nyf052_1.html http://biz.yahoo.com/prnews/020614/nyf051_1.html http://biz.yahoo.com/prnews/020614/nyf049_1.html http://biz.yahoo.com/prnews/020614/nyf057_1.html
It's actually pretty simple. People are confused because the overcomplicate what's going on. Since acg is earning half what it pays out, every dividend reduces nav. What confuses people are the old 14% notes. They actually pay 5.5% because their rate is reflected in NAV. Since acg recapitalized in the worst possible market, showing extremely poor management, you could argue for a 15% discount to nav rather than the huge premium. Since they continue to pay out money they don't earn and continue to reduce nav, it probably isn't a strong buy until it get to $6.20 to 6.50
Let's see, ACG earned $.23 in first qtr. If they can continue for 4 quarters, that's $.92 for the year. How is that earning half of their dividend which is now $.99? Most gov't bonds in secondary market are selling for premium. Stands to reason, ACG which is mostly gov't bonds should be selling for premium.
Well it looks like I am going to agree with you on whats going on. The only question I have now is how low the share price will go. With interest rates so low it may trade at a premium for for longer than I think. But I do think unless they start earning money to pay the dividend the share price will go into the $6 level. Here is a link for those who need it. It should clear up any doubts about the earnings. http://biz.yahoo.com/prnews/020515/clw022_2.html
"I find it odd that ACGs NAV is droping. I would like to know the true reason for it."-oldgeez.
paying out substantialyy more than taking in reduces nav.......take it as fact until someone proves otherwise to you, for that is the way it is...tug
It looks at this time anyway I have to agree with you. I just can not see another reason for the drop. Also I think the only reason the share price is holding up is nothing more than the yield and need for greed. I would think the upcoming earnings report will be a real clue as to if a dividend cut is coming.
To make .92 in interest the fund would have to get 15% on it's nav. Remember, there are operating expenses. Since 22 year gov'ts and aaa corporates pay 6% (or less) they have to make 9% in gains, but those gains are already relected in nav. It's mathematically impossible.
What�s so funny is that high yield makes up for a world of confusion. For me anyway, I do not really put as much importance to the unrealized losses. They need 25 cents of earnings per quarter at this dividend rate. The Fund also announced a new schedule for its quarterly earnings releases. Under the new schedule, quarterly releases will be published 60 days after the Fund's fiscal quarter. The next quarterly earnings release will be published on August 29, 2002. We are not that far out till we see just what they will earn.
This will conclude my part of this discussion. The .638 cents in earnings generated last year do not take consideration the new money brought into ACG from the rights offering. Thus the projected earnings for ACG for this fiscal year could be .23 cents X 4 quarters = .92 cents. Good luck with your investing.
No confusion here. For the sake of disscusion lets cut to the chase and use one of our links. This link may explain why some are looking for $6 a share and have been for awhile. High yields tend to make people throw caution to the wind, and is also what create a premium in the share price. And that premium not only is related to the NAV but also is related to a need for high yield. This link is for full year to year eps that may help in the disscusion. http://yahoo.marketguide.com/MGI/mg.asp?target=%2Fstocks%2Fcompanyinformation%2F
So show me whats not factual. I know that the 33 for 4 quarters is 132 with a 33 cent profit for the year. But an average of 14 per quarter is 56 for the year with a 43 cent loss to make the dividend. Talk to me. As in a disscusion.
On Mar 31, they had income of 51 mill and unrealized losses of 67 mill. That means they lost money in the quarter. Remember, it's an income statement. Income is money they recognised. That's interest and gains. Unrealized losses are just that, unrealized.
Actually, the beauty of exchange rated funds is their simplicity. They're forced to declare unrealized losses which opens up their books for all to see.
IN a bond fund, take nav and multiply it by an interest rate applicable to the same quality and duration bond that are currently out there and you'll get the interest they WILL MAKE. Any gains from interest rate moves will be unrealized gains but remember, ANY BOND OF A SIMALAR QUALITY WILL GET THE SAME GAIN.
That's why you don't buy gov't funds at a premium! (Or corporates for that matter) Junk is different