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Prospect Capital Corporation Message Board

  • mackman18190 mackman18190 Feb 14, 2013 10:57 AM Flag

    Potential investor, should I wait it out until a SPO?

    I am looking to drop a huge sum of money on this. However, I will also be buying on cheap margin. I don't want to buy it and all of a sudden a SPO happens and shares tank.

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    • I would say there SPO's will be a thing of the past look for the atm's as the thing they use plus internote bonds.The ATM use is suppose to keep PSEC from tanking as much.We will see after they do their 1st one what happens.

    • You have cash. The market seems a little toppy to me. If I had cash and had an interest in PSEC, I'd check out other BDCs in the same neighborhood -- carefully doing DD on each one of them, including their NAV, does their NII cover their dividend, how frequently do they pay a dividend, etc. -- and then, depending on your investment and income needs -- see if you can wait for a secondary in one of the ones you have selected. All this is my opinion, based on my investment goals and profile, and will not necessarily be yours. A good long-term investment in a BDC is a good investment in a BDC before or after a SPO [it's even better after the SPO] -- SPOs just come with the territory and should not deter you from investing in a good company, if that investment meets your goals.

    • They recently filed a 497 form with the SEC for 45,000,000 ATM shares to be sold as needed.This won't have the same effect as the SPO they did last September. PPS dropped 10 cents when announced a week or so ago ,but has since recovered.Why would you take on the risk of margin? I wouldn't be able to sleep at night,anything could happen like our government could fail to iron out a budget by March 1,Israel could launch a rocket etc.

      • 1 Reply to whosejake1
      • Whosejake, margin is pretty safe, unless PSEC falls 60% I won't have any problems. With margins my dividend return is more than 20% than the 11% I would receive by just using cash. Margin is ridiculously cheap and if you leverage conservatively, you will make a lot of money. Thanks for the info about the ATM, do you have any idea when they plan on selling the shares.

    • You are correct. Spo risk with psec management is always high. I would recommend you buy below NAV. So below $10.80. Spo doesn't mean it bottoms there... Usually sells off more after spo.

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