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American Capital, Ltd. Message Board

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  • anal.lyst anal.lyst Jan 29, 2012 8:13 PM Flag

    Motley Fool - Apt name

    "Motley Fool is the worst implementation and execution of any type of journalism, reporting, or opinion that exists in the financial world today."

    Surely not worst than Ferdiefor?



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    • For my part, I'm not unhappy to see Motley Fool articles like that one, and comments from Ferdie.

      When a stock sells for as much of a discount to NAV as ACAS does, it implies that many investors have a negative view.

      I want to know the reasons for that negative view, and then to understand whether the bearish crowd is justified.

      In the Motley Fool case, it appears that the author applied a set of statistical screening criteria to a number of stocks, without delving any deeper, and ACAS failed the screen. Perhaps that approach works for the author, when applied to a large enough population of stocks.

      For my part, I would rather understand the reasons for the negative sentiment, so that I can comfortably continue my ACAS investment, rather than having to wonder if there is something important and negative going on that other investors know about and I don't.

      At any given price, half the investors in the world disagree with us. Aren't you curious why?

      • 2 Replies to JMNov
      • Its_Not_My_Business_But Its_Not_My_Business_But Jan 31, 2012 11:13 AM Flag

        >> At any given price, half the investors in the world disagree with us. Aren't you curious why?

        My main theory on that is what I guess I would term "categorical blindness".

        1) ACAS is a BDC and is supposed to pay relatively high dividends but it's not and there are plenty of performing BDC's that currently are .. so that takes a big swath out. They are blind to ACAS's value-stock play, because ACAS isn't a value stock.

        2) ACAS just went through what was technically a loan default and what was almost a pre-packaged BK and is still financed under those restructuring loans. That scares the crap out of people.

        3) ACAS went from a RIC to a C-corp .. and people don't understand the difference between a RIC and a BDC and what that means.

        So .. it's no wonder that many people haven't flocked to ACAS yet ...

        ACAS .. a BDC that defaulted on its loans, threatened BK and restructured all its debts, doesn't pay dividends like the other BDC's out there and now who isn't even operating under the RIC rules.

        Cash talks, BS walks. Once ACAS refi's the restructuring loans, re-RIC's and resumes paying a dividend, it will look like the other stocks in it's category and once again make sense to the universe investors.

        For our part, our understanding that ACAS is like a 3-act play. We've already completed Act I, "Hitting Bottom and Stablization", where many of us have made a great deal of money.

        ActII - "Metamorphosis" - ACAS goes through various physical stages as it realigns its DNA to re-emerge as a BDC

        ActIII - "Reemergance" - We have our beautiful, dividend-paying, RIC/BDC butterfly once again :-).

        Most people are willing to just arrive at the beginning of ActIII.


      • Well, we all have access to large amounts of the same information, ACAS 10 Q comes to mind as well as the company site has a large volume of news release, CC's, filings etc. etc. at our finger tips dating back 10 years or so. When a opinion such as Rich Smith's "2 Stocks That Are Wasting Your Money" is linked to other public investor sites, one would assume a little knowledge was applied to his comments about stock buy backs.

        Here is a quote from Rich concerning the lack of a divvy:

        "Why? Because AmCap is a bit strapped for cash right now. Revenue has fallen for four years running, and while profitable today, it will be years before AmCap recovers from the massive, $4-billion-plus losses it recorded in 2008 and 2009."

        Hello Rich, ACAS has recovered from a decline in asset values and is applying the loss ( 500 million not billion) to offset profits.... a big miss there Rich. Hence the C corp status to take advantage of the loss. The buy back is done with real money Rich, not borrowed or leveraged, but a real cash flow that would be directed to a divvy.

        A negative view as why ACAS is trading at a 40% discount is well received by any curious investor. The void between share price and NAV has been present for over two years and and may of increased simply do to the buy back. With the slightest imagination, one can connect the absence of a divvy ( the main goal Bdc with RIC status) with the depress share price. So deploying soilid , real cash profits to buyback shares at such an exaggerated discount, like wise does not take much guess work there.

        This guy wrote shallow anti buy back rhetorical with out any substance to bolster is opinion. Poor form from Motly Fool for allowing this to leave their site. Their intention was to add "hits" to their site and not to critically inform an inquisitive person. But the is how the Motley Fool rolls.

        What I get from the MF is access to companies and industry's I would not even think of looking at, other than that they are in the constant "hunt" for hits to there site...... My opinion, they are trying hook potential buyers buy elevating membership.... yeah, capital baby! can not survive without it.

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