Right, thus board is full of whinners and chicken littles. Since I have started posting on this board PSEC has only fluctuated in a 6.5% range but every time it drops a few pennies people like Jade and company go insane. Geez, today one guy even sold in the low of the pre market at 10.77 because he was afraid.
Some people just do not get it, stocks do fluctuate.
Yes, I sold at the premarket low yesterday, but it was not because of fear. The facts did not agree with my investment thesis that NAV would rise and the earnings would be in the .31-.33 range. I was offered a price (10.77) that was above what I thought the stock was worth.
The problem with the cumulative NII covering the dividends is that the cumulative NII is already built into the NAV. That means that seven cents of the next quarter's dividends are going to reduce NAV.
The 12% dividend comes at a time when there are no loans in default. There is no room to improve earnings. When interest rates rise, the leveraged small companies that PSEC lends to will have a difficult time refinancing. There is no bad debt accrual fund. All bad debts reduce NAV. Loans won't default until the environment changes. Just because no loans have defaulted in five years does not mean that leveraging 12% loans is a safe investment. If NAV can't increase in the current environment, what is going to happen later.
Finally, there are those pesky management fees. 2% of AUM and 20% of performance mean management has gotten a significant raise due to the large increase in AUM caused by an increase in debt and shares outstanding. All the while, the NAV decreases. I was long until yesterday, but see the shareholder does not benefit from record originations into a "frothy market." Just to emphasis how much the fees are at PSEC, let's use the example in the 10K of an investment yielding 12%. The base fee is 2%, the incentive fee is 1.84% and the legal and other fees are 0.8% for a grand total of 4.64% That is straight from the 10K alternative #3. They are up front and honest about it. Good luck beating the market on a risk adjusted basis.
Monday's earnings changed my investment thesis that PSEC has a sustainable 12% dividend and deserved to trade at a premium to NAV. It now has a declining NAV and I think that it should trade at NAV or below. Those facts, not fear, logically led me to sell.
"He really can't help it. He was neglected as a child. He was doing OK for a while before they pulled Stuart Smally's affirmation hour off the air. Now he is forced to resort to posting his self affirmations online"
What better to describe yourself, using you own words, LOL.