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Prospect Capital Corporation Message Board

  • catnippss catnippss Jan 19, 2012 1:00 PM Flag

    Why R Investors happy w/ price increase?

    Are you planning to sell a stock yielding 12%?

    Personally, I'd rather it stay between 8-10 while churning out dividends and improving the bottom line.

    Cmon PSEC, 10, 9.5, 9! How low can we go?

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    • Looked it up...Luminent Mortgage. IYIYI!

    • Your bad loser may have been Novastar Financial or New Century. Both went to $0 or close to it. I held neither.


    • Actually, I considered buying AGNC. It's my own past experience with mortgage REITs that made me a little hesitant.

      I owned two high yield REITs before the mortgage crisis. One was NLY and the other I can't remember the name, but I lost my capital in one and doubled my capital in the other. As great as AGNC yield is, their management never went through an adjustment for a mortgage crisis like NLY has. NLY's management anticipated the crisis and made adjustment to their business structure to account for it. That is why they survived while many other mortgage REITs haven't.

      Still own NLY and still happy, but don't wanna get burnt again.

      PSEC has less debt than AGNC and loans to energy companies who are a lot more reliable than mortgage owners of various credit risks.

      That said, AGNC may be worth the risk for you, even with the gov threatening to start a refi program that may cut their earnings.

      20% yield is very hard to ignore

    • I'm unhappy with the dilution threat and expect the price to drop in 2012 off today's 10.45 once they announce issuance and a div reduction. I will rebuy below 10. The divs are only cap security which is sad because they ought to be earnings and the cap ought to speak for itself. I'm only happy with the price increase so I can reduce my holdings. PSEC will not leave my consideration, but I won't let Mr. Barry dilute my tenspot to seven fity.

      • 1 Reply to fallguy1000
      • The dilution is a red hearing. This topic of dilution is not factual. Dilution occurs when more stock is out there and the value per share (either calculated as book value or against asset value). When PSEC has been doing secondary offerings they have put that new money to work. There maybe some dilution out there but it is not currently a problem. The problem is that new money coming in and going to work is not as effective as many people may like and therefore may ultimately MAY cause the stock to be diluted. When we put this new money to work we typically want to see synergy and effectiveness to reduce costs and therefore raise book value, it has not.

        I strongly disagree that the stock price is a direct indicator of true value or of diluted share. To me share price has some to do with book value and then forward PE ratio and then market opinion of the stock and the overall economic feeling. PSEC has not been able to get price power because economic forces have reduced buying of securities and have forced margin reductions which have increased selling.

        I do not think PSEC is a problem at this time. Moreover PSEC is in a business that is moving toward a peak cycle while banks cannot loan money as well as they used to, PSEC is there.

    • catnip:

      The only people "drinking their own Kool-Aid," is jadelover and jfnh1, who think that actually anyone on this message board actually believes a word of what they type, pertaining to "their trading," and "all of their profits." They must think that all of us came from Guyana when in reality, we all come from Missouri (The Show Me State), and they (jadelover and jfnh1) ain't shown anything but blah, blah, and blah. Kool-Aid anyone?

    • Marc Faber's opinion.

      Stock markets have already discounted "some very bad news" and there is no reason to fear stocks will sink, despite gloomy prospects for the global economy

    • I think the earnings this past quarter overall are nothing to rave about so far. I am of the opinion the market will have a correction within the next couple months. It may come early. The Euro mess is still with us with no real solution in sight other than a Bubble Gum
      fix. China's growth has slowed as to be expected with decreased demand for their products as many nations take on austerity with ever increasing unemployment. As far as another QE, from what I am reading if it comes it will be a concerted effort with the many nations. I doubt you will see it soon as we are broke and in debt enough as is.

      There is a lot of political pressure against QE-3 at this time as you well know. My feelings are we will be in a downturn shortly to what degree I have no idea but it will come.

      The Euro's are concerned about propping up the banks and having enough cash on hand to cover the mad rush to withdraw that could come. That leaves nothing to spur the economy at this time so at best we just struggle along.

      There will be haircuts for the Euro debt holders and I have my doubts the holders of Greek debt will voluntarily lose billions when a default occurs. They have insurance behind their holdings which they will collect unless they volunteer for a very expensive haircut. That leaves the insurance companies on the hook unless they too go belly up.

      I like cash right now. I can sit and wait it out until there is some direction. A haircut is one thing but a Buzz cut is another and it takes a long time to grow it back.

      It could be a little bump down or it could be a train wreck. Who knows for sure.

    • waynesonnen Jan 19, 2012 7:36 PM Flag


      Technically, Obama has no say in what the board of members on the Fed does. The Fed is expscted to buy more MBSs. They did that in QE1 as well. On the one hand, it does toss more money into the system, but the MBSs will sit on the Fed's books and will later be sold (and the "money" should be retired.) The immediate benefit will be added liquidity to the mortgage industry, as well as help push rates lower.

      Yes, gold & silver would rise, as will oil. However, some stocks (e.g. PSEC), may rise more.

      I added to my RSO position this morning. If stuff like NRF and RAS are moving upward, then RSO should too. RSO is good for it's 25 cents. (There is no reason for this to be under $6, and I think it will get there after their next earnings report in Feb.)

      There are still a few things that can make/break this bull market: IMF funding, Greek bond swaps, Italian bond yields, EFSM and the permanent ESF, etc.

      Short-term (next 4 weeks) does look good.

      FYI: If the Fed does go through with a massive MBS purchase, I'd avoid things like NLY. AGNC will be okay, as will some hybrid mREITs. (I own only TWO and a little IVR. Underwater on the IVR, but not by much.)

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