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Prospect Capital Corporation Message Board

  • instantwinbutton instantwinbutton Mar 5, 2013 5:56 PM Flag

    PSEC NAV in 2007 June 30 quarter


    March 2008 quarter:

    $ 14.15

    PSEC NAV has been falling since inception. Large secondary offerings have happened between then and now have helped keep NAV up, or it would be even lower. Notice how there has been EPS at PSEC like 50+ cents and the NAV hasnt moved upwards even with a low payout ratio? Because the portfolio keeps depreciating. Sure the dividends make up for the losses.. but factor taxes on those dividends and look at a performance and the $4.24 of losses of book value since 2007. Looking at that.. The $4.24 of losses to book value and add back dividends of about $8.10 and you have a gain of $3.86 per share but you still owe tax on the dividends. So assume a 35% tax rate and you have $5.265 of dividends after tax and you had $4.24 of losses of book value for a net gain of $1.025 per share. So over a period of those 5 and 1/2 years you get $0.20 per year of dividends (NET). Divide that by say a cost basis of $15.04 (NAV in 2007) and you get a net return per year of 1.36%. Sure makes treasury bonds sound good, doesnt it?

    Now it comes down to... Prospects portfolio is larger today.. about 3x larger then 2007. They are heavy in secured debt today. I can't find the exact percent that was secured in 2007. The management team has been through the last crisis in 2008 and it will help with future crisis events to come. Many BDCs never came back to positive ROI for shareholders, PSEC is one of the few that has. So in a sense, PSEC is one of the best BDCs out there.

    But what If you wanted to buy PSEC and SPEND the dividends you get every month? What if you are a retired person looking to live off the income of PSEC? Can PSEC provide capital gains and dividend income? Sure, if you buy well below NAV you might get both.. but what about NAV as a function of itself? Can PSEC get the NAV to improve on a consistent basis going foward? Around 2010 was when the NAV just went off a cliff.. not 2008 when the crash happened.. Didnt want to mark to market?

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    • Are you on drugs?
      The float in 2007 was????

      At first I somewhat respected , followed your posts? This is ridiculous.

      from 2007 to 2008 NAV dropped due to the near 50% increase in the float.

      Your math is completely inaccurate, it is NONSENSE.

      Float in 2007 was 19.9M shares in 2008 it was 27M

      This Company has GROWN over 200 million shares and 3 BILLION in assets since. NAV has been steady.

      Depreciation has dropped NAV in 2012, thet took depreciation in the last q due to the 177% INCREASE IN EARNINGS.

      READ THE FINANCIALS, you obviously are attempting to skew this to the short side and it is dishonest.

      Here is my return in the stock since 2010 when I purchased vs SPY. PSEC beats and has provided a near 44% return.

      PSEC VS. SPY Growth of $10,000.00
      With Dividends Reinvested:

      Start date: 11/01/2010 11/01/2010
      End date: 03/05/2013 03/05/2013
      Start price/share: $10.01 $118.53
      End price/share: $11.11 $154.29
      Starting shares: 999.00 84.37
      Ending shares: 1,295.11 88.50
      Dividends reinvested/share: $2.76 $6.33
      Total return: 43.89% 36.55%
      Average Annual Total Return: 16.80% 14.22%
      Starting investment: $10,000.00 $10,000.00
      Ending investment: $14,387.41 $13,653.97
      Years: 2.34 2.34

      PSEC vs.SPY, Growth of $10,000.00
      Without Dividends Reinvested

      Start date: 11/01/2010 11/01/2010
      End date: 03/05/2013 03/05/2013
      Start price/share: $10.01 $118.53
      End price/share: $11.11 $154.29
      Dividends collected/share: $2.76 $6.33
      Total return: 38.57% 35.51%
      Average Annual Total Return: 14.94% 13.85%
      Starting investment: $10,000.00 $10,000.00
      Ending investment: $13,856.44 $13,550.59
      Years: 2.34 2.34

      Sentiment: Strong Buy

    • It really comes down to... the price you pay for something like this... The returns are going to be totally different for someone who pays market value today of $11.10 vs someone who picks up shares in the mid to low $10 range when the market pulls back. The trade would to start selling above $11 in blocks and Buy at prices below NAV in blocks... giving plenty of room on both sides of the trade to average up/down cost sell/buy averages.

8.33-0.10(-1.19%)4:00 PMEDT