I have for me what is real money in ACAS--$15k bought at just over $28. I bought it for the dividend and can live with some up and down in a reasonable range since I am dripping in an IRA with ACAS. Consequently there are no immediate tax consequences on the divy. when it goes down and the dividend purchases I feel good about the discount and when the share value goes up I feel good with how it looks in my portfolio. Around 5 years from now the share value price will become a lot more important to me. If it shold drop down to $28ish I will be tempted to buy a bit more, in the meantime holding and collecting is just fine.
I am reading this thread with the hope of garnering real information. It is disturbing that this thread has degenerated into so much name calling. Can we all try being just a bit more civil and stay on topic with real content. Thanks.
If you hang around this board long enough you will find out that ChazfakeCpa and a whole bunch of others regularly try to smear ACAS.
As one of the longs who has buying regularly since ACAS was in the $17 buck range I am at a double already colleecting good dividends along the way.
But Chazfakecpa and his cohorts can get under peoples skin sometimes and they lash back.
As for me I look at it as a time to buy again. Everytime Fakecpa shows up, I have bought more. And it has paid handsomely.
fakecpa is the perfect contrarian indicator and has never posted truthfully insofar as I can determine. I am equally amused by seemingly sophisticated investors who think themselves smart enough to trade in & out of this stock. That's fine for entertainment, but it's rarely a successful long term strategy to build wealth.
Have been looking for a reentry point on american for a while after selling at my last target price. took advantage of the $29.65 price when some fund dumped 148k shares a few minutes ago.
Have a longer term target price of 34 twelve months out. meanwhile its back to collecting a 10% yield on my money.
"If they do a good job the company will continue to grow and prosper as will the share holders. If they don't, major problems happen. "
Hardly unique to ACAS. AT&T and Kodak come to mind as "rock solid" companies where management drifted off course or ignored reality and growth & prosperity became history.
If you want to understand why wall st. thinks this stock is risky, look back and research a company called Sirrom Capital. It was a BDC, structured much like ACAS, that imploded on itself, as it made some very bad loans, then followed them up with with more bad loans to the same companies. (BTW, this is an argument that several of the shorts used against ACAS).
The inherent risk with ACAS is whether or not management can continually manage theinvestments and maintain acceptable loss rates combined with hitting lots of singles, doubles and the occaisional triple and home run. If they do a good job (as they have for the 5 years that I have owned them), the company will continue to grow and prosper as will the share holders. If they don't, major problems happen.
The answer to your question lies in the fact that ACAS is a Regulated Investment Company. Their holdings are not very transparent and subject to varying evaluations. Also, they have a varied and uncertain income streams.
Every thoughtful new investor (including me) asks a similar question and the board is generally very patient in explaining their business model.
The other question a thoughtful new investor usually asks is how they can pay dividends that are consistently greater than their earnings. In simple terms, they distribute some capital gains (on top of earnings) as the businesses in which they invest do well.
I am no expert here but that is what I thought the board explained when I showed up here. If I am wrong, I trust those better informed than I will correct the mistakes.
I am very comfortable with ACAS, their dividends and business model.
The market says it is risky because they invest in companies that are mostly privately held. You can't see their balance sheet or their income statement. Their valuation is established by outside experts as well as in-house staff.
Judge their performance by Net Investment Income and net cap gains.
ACAS differs from a bank in that they get to realize cap gains and substantial fee income. With a bank, it is all interest. Both have their winners and turkeys.