Insiders are buying these two unconventional high yielders
New article out today at Seeking Alpha find it under the headlines or go to Seeking Alpha.
Prospect Capital Corporation (PSEC) is a business development company. It is a private equity firm specializing in late venture, middle market, mature, mezzanine finance, buyouts, recapitalizations, acquisitions, growth capital, development, cash flow term loans, and bridge transactions.
4 reasons PSEC is a good income pick at $11 a share:
Several insiders have bought over 50,000 shares since Mid-November.
PSEC yields almost twelve percent (11.7%). It is also selling at just over 7x trailing earnings.
Consensus earnings estimates for both FY2012 and FY2013 have moved up over the last few months and the company has beat earnings estimates each of the last two quarters.
Prospect posted revenue growth of better than 50% in 2012 and analysts believe another 15% gain is in store for FY2013.
In 2008, a few months before the market crash, I was still dumb enough to use a stock broker and he called me and recommended me to buy BAC because according to him it was a no brainer and BAC was highly recommended by every investment analyst and expert. Well, if I listened to him I would experience the same fate like my 73 year old pastor who bought BAC at its high around that time, then sold it at its low (after the crash) and used the proceeds to buy bonds at their high. Why a 70 years old would buy BAC and many other stocks without buying any safer investments such as bonds or bond funds (at that time) was truly puzzling to me. (*Now bond funds especially long-term one had become quite risky) I had since fired my stock broker and took total controls of both the IRA accounts of my wife and myself. At least, I would have nobody to blame but myself if I lose money. Lately, I have started seeing more and more articles, more and more investment advisers/experts started recommending high dividend stocks such as REITs and BDCs, including PSEC, without fully explaining both the rewards and the risks of them to their clients. Recently, they said about 23B (or is it 18B?) NEW money had entered the equity funds, the strange part was in a survey given by Yahoo Finance, only 34% of the people being surveyed said they would start investing in stocks again. Therefore, it appears to me much of these NEW money that went into equity funds may very well come from large hedge funds who are now trying to continue to push the recent rally further. I also saw some new investors started investing in these high dividend stocks due to low yields from bond funds, without fully understanding that most BDCs are actually junk bonds in essence. Please understand that I am not saying PSEC is not a good stock or good long-term investments, I simply try to say that when everybody started buying something or told you that some stocks were terrific buys without doing any diligent researches themselves, it is time to be very weary or time to get out. I just asked the friend whose ROTH IRA account I helped managed to sell half of her PSEC shares to take profit. Of course, you have to be responsible for your own investment decisions because whether you make or lose your money, you should not blame anybody including me if you have no ideas of what you are doing and simply listen to others' advices. If most of these so called investment experts are so smart, how come not too many of them had predicted the last stock market crash?
"...had since fired my stock broker and took total controls of both the IRA accounts of my wife and myself. At least, I would have nobody to blame but myself if I lose money. " I never had a broker but decided if I wanted to retire, could not depend on stock market newsletters (that Mom subscribes to), my brothers ill-advised stock tips, or anyone else. If I lose money learn from it & move on. If I make money learn from it & make more.
Also decided that anyone advising me on how to invest was in it to get my money not help me - sorry investment advisors. Not to be downplayed - also got rid of Merrill Lynch as broker & moved to Schwab. Amazying folks at Schwab - actually friendly not mercernary like M-L.
Jaded Lover says " I just asked the friend whose ROTH IRA account I helped managed to sell half of her PSEC shares to take profit"
LOl, I would'nt let you walk my dog. You are funny. You are now managing accounts? Ha-ha!
You are naïve. You think others have not read the same articles or are not familiar with the market. I have been investing 34 years,
You say in the first of your post that the advisor is to blame for your pastor's decision. In the last you say each person is responsible for their own investment decisions. The later is the truth.
A few months back you were a proud owner of PSEC.
Now, you have a problem with investors owning it.
I know that many advisors have a poor record compared to the market indices. But, I have seen your record over the last two months and it is much worse.
So, the question to you is why should anyone listen to you? You have been dead wrong here at PSEC. Don't you agree?
PSEC is a part of my portfolio. It has given me capital gains and very high dividends. Unless they cut the distribution, I would be happy holding it forever.
You constantly harp about the price of PSEC (which has only risen) but never talk about the 12% yield.
Do you not understand about compound interest? There is an endless supply of people willing to buy a 12% yield. I am not concerned about PSEC running out of investors.