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Prospect Capital Corporation Message Board

  • achilles197474 achilles197474 Feb 8, 2013 12:20 AM Flag

    Stock issues

    OK, NAV $10.81 when stock issues have been well above $11. That is not a good sign, especially considering next Q NII will be $.31 and divided $0.44.

    Sentiment: Hold

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    • That is a very "GOOD" sign. Issuing stock above book is fantastic. PSEC is the most liquid BDC.
      That .33 can be covered for YEARS AND YEARS. January was a slow month and business has seen a uptick in FEB. There is a SIGNIFICANT deal that required the ATM use. It has not closed yet but the pipe stands at 400 million which is the amount needed to bring NII back up to pay dividend 100%.

      433 million is sitting waiting to be deployed an additional 740 million waiting to be deployed after that.

      The 400 million in asset reduction caused book to stay in the 10.81 range still up 12 cents YOY. More importantly there is a tremendous cushion in cash to pay that .11 we have so much work to do to deploy this cash.

      Stock issuance above book is GREAT! we are very lucky, look at other BDC companies they trade at MUCH HIGHER PREMIUMS, less liquid and much higher leverage.

      Sentiment: Strong Buy

    • Meant to say dividend of $0.33 per quarter

      Sentiment: Hold

    • Any company (BDC public company) looks to raise capital (issue shares) at prices that are above the NAV, when they can do so. You may say to yourself "well why would I buy additional shares at prices above NAV if PSEC management team does an equity offering." I think the answer would be because even if an investor is paying for PSEC stock at prices above NAV, those "above NAV prices/stock shares" that the investor is paying for, are/would be yielding over 11 percent monthly interest and therefore, the expectation is that in time, those purchase of PSEC stock at above NAV prices, will in time, accumulate monthly dividends and if held for long periods of time, will allow the company to continue to grow the company's NAV, so at some point in time, the PSEC shares are worth more than the NAV. Simply put, anyone can question why they are paying prices for stocks that are higher than their respective book value (NAV) and the short answer is "Because they expect the value of the company and the value of the shares to be worth more in the market, than they are presently selling for - growth, when the respective investor is ready to sell."

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