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Prospect Capital Corporation Message Board

  • jadelover888888888 jadelover888888888 Mar 27, 2013 6:46 PM Flag

    Buy or not buy

    PSEC at its current price, around 10.94 at today's closing, which is just a bit above its recent NAV of 10.81.

    Goods: It appears PSEC may still be one of the better BDCs around and many large funds did start accumulating it. Right now it was selling with only a very small premium above its NAV.
    Also, it will not cut its dividend whatever the cost may be (include using return of capital to pay its dividends) and it will continue to increase 1/10 a penny on its monthly dividend to keep its bragging right. It does appear that it has kept on making more and more new investments by raising more and more capital through its AIM and from issuing more senior convertible notes.

    Bads: Its future earnings may not be as good as previous years. Its price now falls below both its 50-day and 200-day MA and therefore its price may continue to slide. The whole BDC sector has gone up a lot in 2012 and in this year, now it may be time for the whole sector to take a breather.
    Sooner or later, if it cannot keep making new investments it may have a hard time to continue to make its large dividend and note payments and its NAV may continue to drop. Nobody exactly how much their 1B notes cost them in interests semi-annually. Also, its NAV is very subjective and that is how many BDCs got into troubles from overstating their NAVs (like KCAP).

    Therefore, I absolutely have no idea whether right now would be the best time to buy. If you have a lot of money just sitting around, it may not be a bad idea just to buy some PSEC, wait to see what happen, then double down if its price drop. Of course, a 12% is nothing to snipe at but to lose 20% or more of your capital by next year is not a great feeling either. Look at the price history (last five years) of PSEC and study as hard about it as you can before making your decision. GLTA. J

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    • Just scooped up 4,339 shares @ 10.91. PSEC is trading in a tight range lately...

      • 1 Reply to ravensberg1666
      • Right, I got some at 10.89 the other day but am keeping funds available to buy more if it goes lower. Unless the general market goes into a major correction PSEC will prove to be a good buy on this pullback. My experience is that when a generally good stock gets a downgrade from only one firm like just happened with WFC the effects will be short lived and the stock almost always moves back up because people forget about the downgrade and inly have eyes for the huge, sustainable dividend.
        However, if the general market goes into a major correction then it is always best to sell everything. I use trend analysis to identify that type of event, and right now the general trend is still up............

8.10-0.02(-0.25%)Sep 30 4:00 PMEDT