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Prospect Capital Corporation Message Board

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  • catnippss catnippss Jan 19, 2012 4:36 PM Flag

    Why R Investors happy w/ price increase?

    @kole - you lucky son of a gun! Wish I knew about PSEC when it was that cheap.

    You make valid points too, often what most sensible investors grapple with.

    But here's my point - You're strategy for investing depends on why you purchase the stock. What I'm saying is, any stock that has a high yield (and here's the key) because it's a BARGAIN and not because it's possibly going BANKRUPT, your goal should be to buy as much as you can while it's extremely cheap, and hope it stays cheap as you accumulate. Why? Once you purchase the stock at that price, you essentially lock in the yield. That means as dividends stay the same or even increase, your yield stays the same or greater.

    PSEC's high yield makes it a bargain because it's not headed for bankruptcy, it's margins are outstanding, it's leverage is manageable, actually less risky compared to its BDC peers, and the payout ratio is in the green. PSEC having genius management means as long as they run the company, PSEC's success should be sustainable.

    Think about this - when you buy a CD - you like higher yields right? Why does this change in investors minds just because it's a stock?

    If you want to buy a stock for appreciation, buy Apple, Google, or some other high growth no dividend stock.

    Sometimes you can have your cake and eat it too....aka buy XIN and NM for appreciation and income *smile*.

    @jade - your point about buying stock on the cheap is valid, but kole is still making a solid purchase at 12 simply because PSEC is such a HUGE bargain. Even at $12, you get a 10% yield. Most financial advisors are using 8-10% return as what you could HOPE to get investing in the market for retirement. PSEC AUTOMATICALLY gives you this with dividends.
    I'm an owner of NLY. That's the perfect case study for benefitting when prices of quality high yield stock stay low.

    Also jade, my NBG purchase was on pure speculation using the "too big to fail" theory. Of course this was a bad purchase because I didn't account for the "not too big to reverse split 1:5" theory! Killed me. Lesson learned

 
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