What a greedy bunch of turds this thing has been a great dividend paying stock for the last 2 years why offer more shares? Is this secondary going to kill this thing?
Is anyone concerned about the "team"? In the priv equity biz it's all about the "team". Lately they've been running key people out the door, usually an indicator of some sort of disfunction. Or did your broker mention that?
In this closed-end thing, valuation is really fuzzy but currently there's a lot romance about because of all the $$ the mega-firms have made.
This outfit has only been around since 04 and is up 68% since then, did your broker tell you that?
Just how much lipstick have they put on this pig?????
Probably not! It will allow them to do more, bigger, and more profitable deals. They have shown they can manage money; they will more of it to manage; your earnings should get better. If the market takes it down it becomes a buying opportunity.
ACAS, AINV, etc. --periodically have secondaries--like clock work the price of the stock goes down temporarily and then always comes back higher to date. All they have to do is invest the new money in profit making ventures (that is where you are counting on smart people running the companies) and you end up with a higher dividend and an appreciation in capital.
It is called a buying opportunity if past history is any indicator of the future.
Heck yeah I wouldn't be in the game if I wasn't greedy. The buying op this creates means I can add some more to my position. The dividend is just too ripe not to put some more in my coffers. Not a growth plat by any means it is a great value play
You shouldn't own a BDC if you are unwilling to live with the results of periodic secondary offerings.
Of course AINV will deploy the money over time in a manner that becomes accretive. But for the time being the raising of monies is treated as dilutive.
ACAS is doing a secondary too. ACAS stock is down too.
A BDC that stops raising money is a dead BDC that would reach a theoretical limit on the amount of annual dividend income they could pay.
AINV is 1/5 the size of ACAS. AINV needs to grow itself and the only way is to raise proceeds from secondaries AND deploy the money accretively so that dividends can go higher.
Certainly you will be somewhat diluted, but think of it this way. The more capital they raise, the more they can put to work. In the end, that means better earnings, albeit spread across a greater number of shares. Keep in mind, that these secondary offerings are an expected dynamic of this business model and in the long run, should enhance shareholder value. This is not a pump and dump kind of stock. Hold for the long term and you may be well rewarded. Relax.
Depends on what they do with the proceeds. Assuming they have good investments to fund that return profits greater than the dividend currently being paid you should see a NAV and dividend increase as a result. Secondaries are accretive if issued at a price greater than NAV although your percentage interest in the company has been diluted. Since they have to pay out 90% of net income or 98% of net income and capital gains according to law the only way a BDC can grow is to raise additional capital through secondaries. No different than a REIT.
They are increasing the shares outstanding by approximately 19.5%. 16,000,000/82,000,000 currently outstanding. So your ownership interest in the company will decline by approximately 20%. To maintain your interest you will need to buy 20% more shares and any percent over that will increase your ownership interest. Weakness in the price is usually a good time to do it. As Jay Gould said, Money is made by sitting. Not by thinking.