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American Capital, Ltd. Message Board

  • do_foellinger do_foellinger May 1, 2013 5:17 PM Flag

    ACAS vs PSEC

    I will start by saying I own both ACAS and PSEC, for different reasons. As to the earlier post stating poor management and no dividend, I would put forth the following:

    On 5/1/12. PSEC's price was $10.88. On 5/1/13, it was $10.86, down $.02. It paid $1.16 in dividends during the year. It produced an annual return of approximately 10.5%.

    On 5/1/12, ACAS's price was $9.68, On 5/1/13, it was $14.11, down $1.00 for the day but up $4.43 for the year. It paid no dividend. It produced an annual return of approximately 45.7%.

    I would say you own these two stocks for different reasons. I like the steady dividends from PSEC but I love the total return from ACAS.

    Sentiment: Buy

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    • I have bought and sold PSEC catching the dividend most times and made more than just the dividend.Long ago I got out of ACAS while they were still giving dividends. I just do not see them growing as fast as PSEC with the deals PSEC has done compared to ACAS.PSEC revenues are do to pop.Buying back shares and not investing like ACAS is not as good as most investors think 98 million invested in ACAS.PSEC had 800 million invested last quarter. There's more grow in PSEC.

    • I agree with all that you said. To clarify, though, I would add the following to your slice of one year:

      PSEC's annual return is a realized return subject to tax likely at least 15% and possibly up to 23.8%. Though my PSEC stock value is essentially flat, if I pay as little as 15% on my $1.16 in dividends my real return is under $1, or around 9%.

      I like dividend stocks. I love well-paying dividend reinvestment plans. Perhaps the best of this PSEC/ACAS duel would be to reinvest (unfortunately, after tax) PSEC dividends into ACAS stock. Then, at a time when income is needed, sell long-term ACAS.

      If I'm not making too much sense it may be because I'm a bit giddy about picking up some more ACAS shares before they giddy-up and go. I don't see any red, rose, or pink colored flags on the horizon. All things considered, I firmly believe that at this time next year the NAV of ACAS will be north of 23 and the share price at 80%-85% NAV will be knocking on Andrew Jackson's door... Discounting today's confusion, that represents a forward annual return of 33%.

      Sentiment: Buy

    • Same with me. I also own ARCC and recently bought AINV with proceeds from selling MPW. I also sold a bunch of 2015 $15 ACAS puts which I expect to expire without being put to me. Plenty of ways to set up one's portfolio.

      Sentiment: Strong Buy

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