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American Capital Agency Corp. Message Board

  • slegermark slegermark May 19, 2012 11:57 AM Flag

    R.Paradox, Q on ACAS

    And YBF can chime in here as well as others.

    I have been looking at ACAS and wondering why it trades at almost 50% below NAV.The last q10 was outstanding but downplayed on the blogs. Is this an opportunity for a doubler by January? If our two MREITS issue all of their shares in the next four Qs I should think acas management income from them will double.

    Is the portfolio of investments and contracts something that will weather a major storm?

    In my lassitude I thought I would ask you before I go looking for the last two annual reports.

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    • I've been long ACAS since Q3 '08 (I got some of those $0.60 shares) and have a tremendous amount of respect and faith in ACAS' management. It's seriously overweight in my holdings, and I follow it closely.

      IMO, no- no double by EOY. Wilkus and Co. like to describe themselves as "..a long-term, patient investor..." and they're setting up multiple moves that should easily double shareholder value, but not in your stated timeframe. In fact, I suspect that they'd prefer the share price *not* advance for a while, as they're busy spending millions of dollars per quarter buying.... ACAS.

      It's a pretty complicated story really; one facet I find particularly interesting is that they "lost" (on purpose!) their RIC (Registered Investment Company) status last year because doing so enabled greater loss carryforwards. It's now projected that these carryforwards will shield their income from taxes for at least another couple years. While they may, they are also currently under no obligation to pay dividends, which was of course one of their claims to fame prior to The Downturn.

      Having said that, let me reiterate my faith in managment. I still think the company will pop at some point; double, and possibly, beyond, but there are a lot of potential ways in which they can do so. Have a read of the ACAS board; 'It's Not My Business' has excellent analysis. Also check out JadedConsumer (initially on BlogSpot but on Seeking Alpha of late).

      Whether or not the shares are a good buy here is a matter of perspective. Are you bullish, or bearish on the market at large? Take that and combine it with ACAS' beta and make you choice. Personally, I'd hold off and consider layering in as the market declines. If it hits the mid 6's again, buy like crazy; they can survive without issue.


      • 2 Replies to feralcomprehension
      • "Although we would prefer to trade at a premium to our Book Value and pay dividends, it is better for most of
        our shareholders to repurchase shares when we are trading below our Book Value. During the second half of
        2011, we repurchased 17.6 million shares, or $134 million, of our shares at an average price of $7.61 per share.
        Though we would prefer that our shareholders hold onto their shares, we are happy to repurchase shares at such
        a substantial discount. These repurchases were $0.32 per share accretive to our year end Book Value per share."

        That statement says a lot about building value. Probably no dividend for at least another year, other than the internal dividend of book value.

      • thanks for the reply and opinion. A few on this board mentioned it and then when I went looking , ran into JadedConsumer's articles. The yahoo message board is messed up and I can't find any messages since mid april.

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