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American Capital, Ltd. Message Board

  • carnyplantman carnyplantman Jun 26, 2008 1:23 PM Flag

    The trouble with ACAS


    is that although they have a super dividend at this point being about 15%, there just is not enough transparency or understanding of how they will be able to maintain the dividend without just issuing more shares. Another couple of stocks paying large dividends but not in the financial sector are FRO and NAT. However, those two companies are very transparent, in that you can go every day and find fixtures for their vessels showing you at what rate the vessels are paid on each fixture, because nearly all their vessels are on open market. Rates for their tankers have been stellar for several months now, and this quarter will end in a few days. With the rates being what they are, FRO should have a $3 dividend for the quarter which translates to over 16% divvy at today's prices. NAT should have a great quarter also. It is much easier to see "behind the curtains" on those companies than it is to see whether the companies that ACAS has in their portfolios are in "good businesses" or bad ones, because you cannot track them very well with many of them being private. Knowing what a company owes, and what it is getting paid on a near daily basis gives an investor a much greater insight IMO.

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    • Apples and oranges. Totally different businesses. One could argue that ACAS's services will benefit from a deteriorating economy, and that NAT's will not , but thats about as far as you can go with the comparison. I hope NAT and dry shippers do well, but I wouldn't hedge one way or another between the two anymore than I would say buying bonds is 'safer' than buying stocks. If things melt down it doesn't matter at all, and if they don't it really doesn't matter much.

    • With all due respect, you don't know what you're talking about. The majority of publicly traded companies extend credit to businesses of all types and sizes, and shareholders know next to nothing about their customer bases. For example, could you provide me with a list of IBM's or Microsoft's top 200 customers? You couldn't? Well then there is no transparency, no way for us to "see behind the curtains" and determine if these two stellar tech companies are extending credit to "good businesses." It's ironic that no one really has these concerns about IBM and Microsoft but will worry themselves to death about ACAS, an outstanding company that lists and grades its customers and investments on a quarterly basis.

    • But that is not the majority of the real world.

      You can never get to that kind of transparancy in all things financial.

      I hope you are paying attention to how many new tankers will be coming onto the world scene over the next year. Those chinese shipyards working 24/7 to relieve bubble day rates in shipping by providing more supply of ships.

      All commodities will realize the same outcome that has occurred over the course of human history. Right now, we are in the shortage side of the cycle. Production will catchup and then surpass demand and prices will fall. Its only a matter of time.

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