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Prospect Capital Corporation Message Board

  • supranationalshanghai supranationalshanghai Nov 11, 2011 6:17 PM Flag

    Dividends and dilution

    Dear friends and hopefully fellow stockholders,

    I have been persuaded by responses to my previous posting that PSEC management charges are par for the course.

    The remaining issue is now dividends and dilution:

    A significant portion of dividends paid out are a return of capital. At the same time they are raising new capital in a dilutive manner.

    If they are paying out all their taxable income and then some, well, the answer is a dividend cut. If they persist in returning capital and simultaneously raising new capital below NAV I would suggest that disaster is the result for common stockholders.

    I am willing to be persuaded otherwise if anyone can tell me I am wrong... But I don't see how I can be.

    If you agree with me then I suggest we "get united" and let Daria Becker and the company know how we feel. I see no earthly reason how we common stockholders can benefit from this seemingly horrific state of affairs.

    Best wishes to all.

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    • What are you talking about? They earned $.37 per share last quarter and are paying out $.32. Looks like good coverage to me.

    • Supra your grasp of the business model of a BDC, is equal to your English. It demand an open mind.

    • Dear Jadelover,

      I do of course believe that they should cut their dividend because that's what I am asking them to do.

      However you erode your own credibility by posting erroneous information.

      Yes, of course, they need to do something re cash flow but that was not your original point. You said they only had $2m in cash which is totally wrong.

      Best wishes



      What interesting is the stock hasnt been hurt much at all. Its back over 10 today.

    • <However, why do you mention cash of less than $2m but forget about money market funds of almost $50m?

      Please do us all a favor and check your facts before posting!

      Your disinformation does us a disservice!>

      Probably because he is still smarting about his recommendation to sell PSEC at $8.20 not that long ago. The fact is this guy is a PSEC bashing spammer who often provides partial or embellished "facts" about PSEC. The other day he was saying BDC Reporter claimed PSEC was among the riskiest BDCs, when BDC reporter said nothing of the sort.

      Meanwhile, his favorite BDC, FSC, just cut their divvy, even as he was telling us all year FSC was terrific because of SBIC license, blah blah blah - And that PSEC would have to cut their divvy long before FSC because they are a loser BDC. Now PSEC divvy is good at least until next March while FSC had to cut. This guy sure knows how to pick em.

    • Yes there is a dilution, my calculation is a 29% additional shares. In this economy a financial company does not have many ways to increase capital, but by increasing the number of share outstanding. Larger number of share means lesser moving average and probably a stock with less volatility. To make my point study CVX and XOM, CVX has twice the outstanding shares out. CVX can move up or down twice that of XOM. I believe that when a large amount of shares is available to buy or sell, competition will move the stock slower. The moving average have increased in 2011 versus 2010. prices has not changes drastically it is around $9 to 10. Although it was in the $12 in early 2011. That matches may portfolio, which was higher around the same dates. The dividends are 25% of what they were in 2009 and 2010.
      Your observation is pertinent, thank you. The price over dividend is still a good number, it is 4.37% on a 3 month bases which is very good compare with others.

    • I have posted a pro forma letter which can be emailed.

      If you wish you may use it. I am not sure about whether you were being laconic or what. I am not American so maybe I don't understand very well.

      In any case, my best wishes go to you.

      Andrew Phillips

    • I am so sorry but does this mean you wish me to do it?

      It would just be a standard letter that could be emailed to PSEC by those who share the same opinions re the aforementioned issues.

    • >> Please would fellow stockholders let me know if you agree with me. If you do I will draft a proforma letter that you can send to the company. <<

      Is this guy a sport, or what?

    • <If they are paying out all their taxable income and then some, well, the answer is a dividend cut.>

      The board clogger JADELOVER has been spamming the board about a dividend cut for 9 months and longer - yet the company just slogs along raising the ever so slightly every three months or so as if they are tantilizing us. He has written books disguised as posts ranting about they cannot cover the divvy, a divvy cut is imminent, PSEC is a dog blah blah blah blah blah. Yet they slightly raised the divvy and just declared through Feb 2012. You do realize they've reiterated the divvy into March of next year correct??? If so, what divvy cut are you talking about? That's not an issue for another 4 months. I have problems keeping track of what's going to happen next month, much less worrying about what the divvy will be in 4 or 5 months.

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