PSEC lists on their web site the NAV at 10.71 (same as what the 10Q from 05/06 lists), but then in the recent Wolf Energy Sale announcement they say it added .06 to the NAV. Does that mean the NAV is actually 10.77?
Also, it seems to me that the price is around the mid Nov range. Back then wasn't the NAV 10.88?
Back in Feb of 2012 the 10Q listed the NAV at 10.69. The price quickly moved up to those levels and above, with some dips that turned out to be buying opportunities.
It seems to me that expecting the price to decline much further is riskier than expecting it to rise back up to (or above) the NAV.
The price might drop closer to 10.00 as it did back in Nov '12 but if it does I would expect that to be the bottom. I don't see how it could drop back to the support level of around 9.50 as someone on this board mentioned.
Most BDCs use an independent 3rd party to evaluate the market value of their portfolio. Regardless of how PSEC does it, the NAV will change from quarter to quarter based on current and future economic conditions. As far as many businesses within PSEC's portfolio are concerned, I don't see much change from March 31. The US, as measured by macroeconimic metrics, is still in slow growth mode. I don't really know how things such as sequestration affect individual businesses within PSEC's portfolio.
The pps that the market is willing to pay for PSEC is a different story. Part of PSEC's business model is to take equity positions. The "market" often ignores this and looks only at NII.
it is hard for them to get much change in NAV as they pay out their income unless they hold on to it. All of it is suppose to be paid out. It is basically a high yield CD you get the income and when the time frame is up you get your money back or buy another CD. The stock fluctuation is basically emotions or what people are willing to pay for yield. Just as in bonds you can see them sell for more than face value when yields drop but they are subject to early payoff. This has no early payoff and will vacillate around NAV depending on how it goes up or down from paying too much or not all of their income IMO. The one thing I learned from penny one is to buy this below book and sell it above book, you pick the points above and below because it will fluctuate around that NAV value. It has other intrinsic value. It is a great place to park money for short term trades for me but not capital appreciation, that is for me for others the income is all they need and that makes it great for them. Each has his own needs to be met depending on where they are happy in life and should not be bashed for so. I thank those that have shared those thoughts on this board, the other bashers are worthless.
the numbers you give are accurate except you can not assume the NAV has not gone down from the last CC because if earnings are not sufficient to cover the dividend then NAV is reduced by the payment of the dividend over earnings. That is why it is important that earnings are over 34 cents per quarter. All the announcement said was that Wolf Energy added 6 cents to NAV but it did not say NAV increased by 6 cents there is a difference be it small but still accurate. I am currently long
Look, I do not want to exaggerate my criticism of PSEC. I think the management team is both honest and capable.
On the other hand, I am certainly not going to put all of my wealth into this one investment.
I am interested in investing in another bdc, ;perhaps FSC or SLRC. What I do not want to do is to put money into a bdc like TCPC which is trading at a 7 percent premium to last reported net asset value per share.
Thank you for a post about PSEC!
You make good points.
Also, you can not compare in the past beyond last December as the dividend was raised then. That gives a higher yield to support a higher floor.
Of course, if the whole market crashes, then all bets are off.
PSEC has a great track record of payments that transcended the recession in 2008 and 2009.
A steady divy that is dependable is the reason to buy and the current price is a very nice yield.