BTW, I just stopped by to see how bad this board has become. Worst destruction of a one-time useful message board that I've ever seen.
Adios until March or April, my friends, and sorry to see that Tony has become such a destructive and out-of-control influence here.
Marti, a person living at the poverty line in the U.S. has a higher standard of living than anyone living at the poverty line in any other country on earth.
U.S. top corporate tax rates (the rate Apple pays on U.S. earnings) is the highest tax rate on earth.
The top individual income tax rate in the U.S. is the highest such rate outside of Europe.
When Apple chose to borrow money to pay it's dividend instead of repatriating Hundreds of $Billions of dollars of foreign earnings that it holds overseas, the reason was because of punative, U.S. taxes... and that is money that we need HERE, in the US, to build business and employ AMERICANS, Marti.
The more we raise taxes, the more we see investment capital flee overseas. The more we grow social programs, the more government-dependent the 47% of Americans who pay no federal income taxes becomes.
The WHOLE REASON for the big income disparity in the US is Obama-style socialism... yet the only answer they provide us to solve income disparity is higher taxes and increasingly bloated social welfare programs.
Welcome to the insidious decay of socialism, Marti, just like we've seen in EVERY OTHER society that has gone this path over the past 100 years.
I could see the concern over un-contracted rigs and dayrates for 2014 if Crude Oil were dropping to $80 or $90 a barrel, but it isn't. Brent is not only over $100, but it is showing stability at those prices for almost 3 years now, and that's EXACTLY what exploration companies want to see when they decide whether or not to drill.
Any decline in dayrates just makes drilling that much more feasible when Oil prices remain firm.
This stock is surprisingly cheap.
Very exciting, to see such a compelling, contrarian play amongst such an elevated, overall market.
It's a "stock pickers" market, as they say, and contrarian investors such as Buffett and Icahn usually pick 'em the best during such times.
ACAS has adopted a strategy that is more typical of AGNC and other m-REITs regarding share buybacks than is typically true of BDCs subject to RIC laws. ACAS's re-characterization as a C-corp gave them unique flexability for stock buybacks in lieu of paying a dividend.
Once ACAS uses up it's loss carryovers, they'll likely go back to being a RIC and the buybacks will be either greatly curtailed or eliminated altogether.
Blitz, if you need more discussion on that, shoot me an e-mail on freeforums.
Share buybacks are more common with m-REITS than they are with closed-ended funds and bdc's like ACAS.
The reason is that m-REITS are more in the business of "working the assets", whereas other entities focus more on optimizing business operations and the performance of investment capital.
Some would say that ACAS should focus more on the performance of it's operating companies and the buying and harvesting of them, rather than share buybacks... but ACAS stock has been selling at such a substantial discount to NAV that it's quite arguable that the better ROI comes from buy the company's own stock.
I also think that ACAS management is so in tune with the practice of buying and selling m-REIT stock at discounts and premiums respectively, that they are much more granular with such practices with ACAS as well... especially since ACAS looks more like a close-end fund than MOST BDC's
I concur with their strategy, but I lament that they havn't been as good as their BDC competition in managing their assets and portfolios, which is a big part of why the company sells at such a discount.
I'm still a holder of ACAS stock, but have not been a buyer since it went over $14. I've been anticipating a market pullback since my friend, Don Hay's psychology index went to "P6" (bearish near term), and I suspect that ACAS has at least one more disappointing quarter left in them before some of their most recent operational paradigm shifts takes hold and begins to impact results.
Still, gotta admire the climb to $16... I wonder who the big seller was 15 minutes ago, however.
I see that Tony is now telling this board to go out and shoot people.
Once up on a time, this board was a useful place to exchange intelligent information and discourse.
Now, it is a Tony-hussein-kindagay SEWER.
I pity anybody who bothers to post here.
For anyone who would like to discuss LVS on a really good message board, I highly recommend that they come over to LVS dott freeforums dott net. That board is even better than this board was many years ago before Tony completely ruined it.
See you there... I'll check back here in March sometime to see if Yahoo ever cleaned this cesspool of a message board up (eg: banned Tony).
The discount to NAV and the share buyback strategy, combined with their "potential" to advance NAV (lately, that's not the "reality") is what gets ACAS a seat at my investment table. Those attributes are the counter-balance to the fact that ACAS is more operationally challenged than it's competitors.
I will buy more ACAS if: 1) It's potential increases relative to the discount; 2) The realization of it's existing potential looks more likely relative to the discount; or... 3) The discount increases while the existing potential remains static.
None of that is happening right now, so I'm not expanding my existing ACAS position. If ACAS were to continue to rally without a corresponding improvement in it's prospects, I would begin to sell ACAS... probably at about the point where it's discount to NAV were below 18 to 20%... or it's fully-diluted discount to NAV (including the internal discount of the European portfolio to it's own NAV and a discounting of the tax loss carryovers against future gross income) is under 22 to 24%.
Hope this helps,
Thx, NMB. I appreciate the breakdown.
There is no shortage of articles discussing the difficulty that all BDCs are having in finding new operating companies to invest in lately. ACAS's difficulty in that regard is not unique.
Stock buybacks are actually quite startling across the ENTIRE US security universe, given that the S&P has spent the entire 2nd half of the year setting records, and BDCs have been active buyback entities as well...
... although ACAS is unique in the magnitude of "value" that it derives from share repurchases and it's safe to say that that is ACAS's #1 attraction these days.
My hesitation in buying additional shares of ACAS at it's current highs is borne out of the fact that there's no solid evidence that the company will significantly improve on the poor results it chalked up in Q3 in the just-ended Q4. While I appreciate the new efforts the company is now engaged in to boost NOI via carrying loans to operating companies, I think we will see more results from that effort in Q1 than in Q4 because Q4 was the transition quarter to the new paradigm, and transition quarters are typically challenging.
Thus, while I already own a significant position in ACAS, I don't see it as the value proposition that I need (at $15) to make this company one of my top 5 positions...
... I'm going to need a price correction to justify that.
Thx for your informative posts, NMB. Appreciate the discourse.
Almost 5 million fewer shares repurchased than in Q3.
I would say the company might have shied away from purchases as the stock rose toward it's 52 week high, but that would be counter to the fact that they waited until the 31st to announce it.
With the slowdown in re-purchases, all eyes will be on what they did with the money instead. We did know that carrying more lending paper on the books (in order to have greater control over dividend issuance by operating companies and thus shore up NOI) was a priority going into the autumn months, so the push to boost NOI may have come at the expense of more buybacks.
All in all, most BDCs are reporting big gains in portfolio operating companies. Because ACAS reported a decline in NAV after you remove the effects of the Q3 buybacks, it's fair to say that ACAS did not participate in the parade of portfolio gains during the first 9 months of 2013...
... so, hopefully, realized and mark-to-market gains in Q4 showed some improvement.
The company deserves credit for sticking with their most opportune investments, even in light of people showing up on their conference call and complaining about the lack of a dividend. By the same token, if they encounter good portfolio investment opportunities, I think you're correct that they would cut the size of their buyback to fund such investments. I certainly get the impression from the JP Morgan conference that they crank out an ROI on everything they consider, including the buybacks.
Last quarter's 13.4 million share buyback appeared to be as much a reflection of their portfolio investment opportunites as it was the discount to NAV on the shares. Investors appeared excited about the buyback, whereas I viewed it as just an optimization of the either/or, and barely moved the needle on my price target for additional share purchases.
The striking part about the entire US stock market right now is that overall stock buybacks by US corporations are at a 6 year high, even thought the S&P is setting consecutive record highs. I get a lot of queries as to why that is so, given that ACAS is one of the few bargains OUT there when it comes to the attractiveness of a company buying back it's own stock "cheaply".
The reason is reflected in the continued poor Capital Expenditure metrics for the US as a whole. While they have risen off the rock bottom numbers we saw earlier in the economic recovery, they remain mortibund for cap-ex on new ventures and/or commercial "expansion".
This is a reflection of slow US GDP growth, but it's even MORE a reflection of the hostile business climate in the US today. When people ask me why Apple Corp. is floating a bond issue to pay a dividend while simultaneously hoarding hundreds of billions in cash overseas...
... I can only point to the highest-in-the-world US corporate tax rate of 35% and suggest that they not replace Barack with Hillary in 2016 if they ever hope to turn US cap-ex around and spur growth.
There's no value in continuing to converse with you, as all you are here to do is call people names rather than conduct meaningful discourse.
GLTY, but just the same, I'm going to have to put you on ignore.
It was about this time of the month in September that ACAS announced their surprisingly large 13.4 million share buyback for Q3...
... the Christmas holiday notwithstanding, I'd say that a similar announcement is imminent for Q4.
That's true, zeit. I was once where awallejr is now, and I was pretty proud of what I had learned up to that point in my life as well.
If there is one lesson I've learned over the decades, it is that in the world of investing, knowledge can get you in trouble... up to a point. Let me explain:
As people learn about investing, they stop using accomplished fund managers and buy stocks on their own. The see success defined by good-looking charts and advancing earnings and revenues. Once they feel that a company is solid, doing well, and has lots of smart-sounding people advocating it on CNBC, they buy it... usually well into an economic recovery, and accompanying bull market.
These people, as they gain knowledge, idolize people like Warren Buffett, but when Buffett buys something... like Goldman during the economic meltdown, or Bank Of America when it's 50% of book and drowning in lawsuits, they ask...
... "why in the hell did he buy THAT?"
People are instinctively "momentum investors", who generally buy high, and sell low. That's why markets bottom amidst despair and pessimism, and they top out amidst optimism and euphoria.
ACAS is one of the rare, "contrarian" stocks out there right now, with it's problems and big discount to NAV, and that's why I'm posting on this board. I salute others who like ACAS for those reasons, because that says a lot about their investment accumen right there.
But I like deep, contrarian value. That's how I make money.
ACAS is today where the overall market was in late 2010, IMHO, and that's when I bought my first, large traunches of ACAS, while ACAS was still priced like it was 2009.
To buy more ACAS and make it one of my largest positions, I'm going to need a price... relative to the company's metrics... that is similar to what I was buying ACAS at years ago...
... and remember, I did say "relative to the company's metrics"... my world is expressed in ratios.
Calling me names and trying to put words in my mouth doesn't really make for useful communque'.
For example, you state that I think ACAS will go to $13.
I was pretty clear that I personally "value" acas at under $14 and I hope it will drop to my buy levels. If it doesn't, then other purchasing prospects hold sway and I'm happy with the ACAS position I already hold.
I don't view you as an arrogant, anonymous person beyond your propensity to call other people such names.
Again, you have your approach to investing, and I have mine, and I respect that, even though you don't.
Willie, I think I read that exact same verbage in the text of the JPMorgan dog and pony show by ACAS.
So, I agree with you, since your words are the CEO's words.
NOI sucks now, but it's noteworthy that the company is working on that by carrying the paper on loans to it's operating companies to: 1) capture the interest spread and; 2) legitimize issueing dividend. to itself.
Howerver, the caveat is that that means that their "growth" operating companies could grow less, if their capital is coming out of their respective balance sheets to the mother company when they may not have otherwise paid a divvy.
Personally, I think the NOI gambit is a stunt. In the end, it's execution that matters, whether we get our returns via better NAV appreciation from operating companies conserving their capital...
... or whether it's via more NOI because the operating companies are jettisoning their capital to the mother company via dividends.
A couple of educated guesses: One is the obvious... that ACAS is a high-beta stock which generally exaggerates the moves of the market in general.
I would also think that the fact that American Capital Agency dropped their divvy less than most expected they might could have had an impact. AGNC also bought back a ton of stock, and people may be guessing that that means that it's manager (ACAM unit of ACAS) may have also made another huge quarterly purchase of 12 million shares or more.
We should know the answer to that next week, if past practices regarding such announcements prevail.
If my contrarian style is "malarkey", as you say, then you would probably say the same thing about Warren Buffett's style, because my style is an emulation of his.
My style is mine, and yours is yours. I didn't refer to yours as "malarkey", but rather I indicated what I "prefer to do", contrary to your style. I see no point in belittling others.
It's also important to note that I did not "dismiss the use of puts" as you generally stated it. That comment, on your part, is a fabrication. There is a place for options in my strategies, although my sense is that my use of them is different from yours, as you are more of a "technician", given your nomanclature.
While it is true, and probably even "likely" that I will not add additional traunches of ACAS under $14, as I've stated, I'm fine with that, because ACAS is only 1 of many contrarian targets for people like me. I was once a more technical, momentum-oriented investor decades ago and always wondered why I never achieved what history's greatest have managed to do...
... so I chucked the technicals and the momentum pile-ons and have adhered to the lessons of people like Rothschild, Templeton, Lynch and Buffett ever since with great success.
There is a reason why when you look back through history, there ARE no technicians and momentum traders among history's most famous and successful investors...
... because they were ALL value-oriented, patient, contrarian investors... virtually every single one of them.
Glad to hear you've traded it well, jeffy.
I'm not a trader. 90% of my current position is an older, $6 position, and just 10% of it was the result of an add-on traunche I picked up this fall for $13.50.
I would sell ACAS given all that's known presently if it was trading at just a 15 to 20% discount to "true" NAV (including the euro discount), but "presently" is a moving target, and the upcoming stock re-purchase announcement from ACAS could result in an adjustment to my view.
For the record, ACAS usually announces it's quarter's re-purchases a week or so ahead of quarter's end.