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Prospect Capital Corporation Message Board

  • sixteamparlay sixteamparlay Feb 13, 2012 1:42 PM Flag

    $11.76

    If nav is 10.69, is this a $11.76/share stock? (110% of nav)?

    Your thoughts?

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    • "Also if it came to a battle of wits I would destroy you old man. I haven't made thousands of dollars in the stock market because I'm ignorant."


      What a retard....

    • Sixteam,

      I don't think your $11.76 estimate is out of line.

      One thing to consider is that because the announced sales prices of Gas Solutions and NRG are both higher than the FV marks in the Q411 10-Q, BV should be higher in the Q112 10-Q.

      Another thing to consider is that because the structuring and prepayment fees PSEC will collect on the sales of these investments will push this quarters NII well over the dividend payout, the excess NII over the dividend payout should drive BV higher also.

      So barring some unforeseen circumstance, PSEC should be reporting a BV over $11 by the end of this quarter.

      For those reasons alone I think your estimate is not out of line.

      The 10% premium to BV? I don't think it's unreasonable considering that in addition to the bump up in BV these two sales will result in, the sale of these two investments PSEC has resolved their lack of dividend coverage issue.

      BDC's that have good dividend coverage generally trade at higher multiples than BDC's with poor dividend coverage.

      A 10% premium for a BDC with good dividend coverage, good credit quality, low leverage, and plenty of liquidity, is not unreasonable IMO.

      ARCC is trading at a 7.4% premium, TCAP a 31% premium, and MAIN a whopping 56% premium.

      Some folks have gotten so used to BDC's trading at less than BV over the last few years, I think they believe that is the norm. It is not.

      Considering PSEC's BV should be higher when they report Q112's earnings and their dividend coverage looks pretty good now, that $11.76 price target looks reasonable to me.


      RC

    • Some people use the 8-5 rule for BDCs and CEFs.
      Buy when you're getting an 8% discount and sell when at 5% premium. Therefore, PSEC would be a sell at 11.22.

    • I used the standard deviation % of the Compound Annual Growth Rate (also adjusted for inflation) of the stock market from Jan 1st 2009 to Dec 31st 2011 which came out to 10.09%, then i rounded down to 10%.

      I know it is assumptious to apply the figures of the overall market to a specific stock, but what are your thoughts on this stock reaching $11.76?

      • 2 Replies to sixteamparlay
      • sixteam, I like your thought there, I think it is brilliant. As I said this cycle I did not think it would hit 11.76 and I am still sticking to this. (I am probably wrong.) But I think there will be a profit taking scenario along with some global issues which will create an atmosphere where capital preservation occurs. But don't worry this is an election year and money will be spread to loosen up markets again mid to late Q2 and I think you will see a number close to 11.76. But if you right and my thoughts are right you may see a number near $13 by the end of the year. Your 10% growth rate compounded with the premium of 10%(WAG) would make things very nice.

        Now the bad. If the global crisis gets out of hand we may change this. If we cannot think of a process to get us(THE US) out of the economic Chinese handcuffs we are in (that is to say we spend to keep the economy going but the economy is slipping because of the spending) the NAV on a large amount of investments will disappear. PSEC could have all great investments but because assets are mark to market they will change because of market valuation is comparitive and not rational(this should not effect us directly this year).

        All this can fall apart if the MYANs may have something to say about it too. :)

      • wiseinvesto and dsm:

        No problem being humble and self-deprecating. I certainly learn every day and hopefully, will continue to do so, every day of my life. Having said, using the "110 percent figure or $11.76/share," as a stock target for PSEC, or more specifically, the inquiring, (by myself) of why you used 110 percent or $11.76/share, when that figure has no standard basis, in the financial arena, of being a standard measure of full valuation or over-valuation, for closed end BDC stocks, was both elementary and and common sensical, in it's asking. There is no supporting documentation which uses 110 percent of a BDC's NAV, as a standard basis or measure, indicating that the stock price has reached full or over valuation. Therefore, you responding "haven't you ever heard of someone giving 110 percent," as a reply and response to my question of how you ever come with using the 110 percent figure for PSEC's stock price, is illogical and belies any more discussion, because your response speaks for itself.

    • I used the standard deviation % of the Compound Annual Growth Rate (also adjusted for inflation) of the stock market from Jan 1st 2009 to Dec 31st 2011 which came out to 10.09%, then i rounded down to 10%.

      I know it is assumptious to apply the figures of the overall market to a specific an individual stock, but what are your thoughts on this stock reaching $11.76

    • sixteam, I think that is a reasonable on a technical basis to get to 11.76. Many BDCs reach 100-110% occasionally if everything is running well a BDC may go 120% or better but then you should sell(my opinion). I however think we are due a correction and don't feel like long term these numbers are sustainable so I don't think we will get that during this cycle. I think we will go lower before we have a chance at going higher. If the build on your portfolio leads you to believe PSEC is a good fit at its dollar valuation then risk for the upside. IMHO.

      My buy in for PSEC is 8.55-9.62. I would buy a group at 9.62 and another group at 9.00 and another group at 8.55 if it gets there.

    • Hi, Mr. Kole:

      A smart man knows when to admit defeat and if he is humble enough to admit he was wrong, he may learn from others after all...

      It was apparent that you were no match for dm..

      You appeared to be the one who was both arrogant and rude, don't you think?

    • dsm: Your arrogant self-aggrandizing commentary and evaluation of your "investing skills and prowess," speaks for itself, and lets all readers know how unobjective you really are. You can't argue with ignorance and arrogance - so I won't. Let me know how making "thousands of dollar in the stock market using the 110 percent figure" works out for you. Any more questions?

    • I'm ignorant in not knowing how to respond to a question? You didn't even respond to the question posted earlier. Also are you too dumb to realize that you never even asked me a question? Plus your question wasn't originally why it was how, and he plain as day told you how he reached it. You just have to cover for yourself because you obviously didn't read his question very well.

      Also if it came to a battle of wits I would destroy you old man. I haven't made thousands of dollars in the stock market because I'm ignorant.

    • How did you come up with the figure "$11.76/share," versus any other number $12/share, $13/share,$11/share, etc... and why are you asking? Is this ($11.76/share) a price target that you an analyst gave to PSEC or something? Just wondering for the question.

 
PSEC
10.15+0.06(+0.59%)Sep 16 4:00 PMEDT

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