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International Business Machines Corporation Message Board

bjspokanimal 3 posts  |  Last Activity: Apr 1, 2014 4:46 PM Member since: Feb 11, 2002
  • bjspokanimal bjspokanimal Apr 1, 2014 4:46 PM Flag

    Doesn't matter. You didn't, so it's a moot point.

  • Reply to

    ACAS Has Addressed Possibility of Re-Org Before

    by bjspokanimal Mar 31, 2014 10:56 AM
    bjspokanimal bjspokanimal Apr 1, 2014 4:45 PM Flag

    In another thread, someone was querying as to whether or not ACAS would re-instate the buybacks once any "corporate restructuring" is completed.

    That probably depends on: 1) the nature of the restructuring and... 2) the resulting price-to-NAV following any restructuring.

    Still, the logic of doing buybacks in lieu of dividends remains following any restructuring, given that the stock continues to trade at a sizable discount, and the capital loss and operating loss carryovers remain in place.


  • Let's begin with the ongoing reality that a dividend makes no sense, given the current makeup of this company. ACAS dropped it's RIC designation and became a C-corp for a very good reason, so that it could use it's earnings to avoid paying a dividend, as a RIC is required to do, and buy back stock for 70 to 75 cents on the dollar (depending on whether you include internal discounts to NAV along with those pertaining to ACAS itself).

    As long as the company has plenty of capital loss and operating loss carryovers to avoid paying taxes as a C-corp, reverting to RIC status only adds unnecessary limitations on the company.

    From my own perspective, I believe that only a minority of this company's discount to NAV is applicable to the lack of a dividend. There are plenty more investors in this company who understand the logic of management's decision to add more value to the company via buybacks than it ever could with divvy's, than there are investors so hellbent on getting a dividend that they would ignore value.

    The company, today, is citing a new probe to "evaluate it's corporate structure" as the reason for suspending the share buybacks. In layman's terms, this means a re-organization of some kind. The company has discussed the possibility of doing this in previous, quarterly conference calls, and the concensus was that it was most likely to occur this year. Personally, it was my hope that I'd be able to pick up a final traunche of stock in ACAS below $14 before such an announcement. It looks like I'll just have to be happy with the 90% of targeted stock that I've already purchased.

    My view? A spin-off is likely, or less likely, but highly possible, is an offer to purchase ACAS by another private equity firm. This far below NAV, it's attractive to suitors, and there are plenty of BDC's buying into Europe currently, making ACAS's European investment arm quite attractive.


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