JP Morgan lowered its px target on acas to 19.50 from 21. Cites a lower valuation for ACAM. Additionally says that the restructuring wont take place to late in the year if not early the following.
JP was one of the biggest bulls in ACAS. The ACAM valuation is based off other publically traded comps. You really just cant compare NSAM (Northstar). MDLY FSAM and ARES are also comps and trade at depressed multiples.. As such JPM seems to be blending the multiple and reduces the ACAM valuation to me.
I agree with you. I am encouraged by the current holders...deep value/credit investors. I expect it to go back to mid to low 14's and with a mkt pullback to test high 13's again. Its too bad that Malon had the opportunity to spell out how he would definitely pull the trigger on a buyback...but that it would be complicated with a spinoff. He could have really put a floor on the stock just by being enthusiastic.
I am still in there with my core position that's years old...but buying ahead of an earnings call with ACAS has not been too fortuitous for me. That being said..lets me be clear. We could have a potential buy back and the spinoff is on the horizon. That is enough for me to add on significant weakness ...which I expect to occur during the next market pullback.
That was one confrontational conference call relative to others we have received in the past. Sorry to say as usual Malon doesn't present very well. Again the lack of clarity will make the shares of ACAS wallow additionally for the next quarter. I would not be surprised to see the shares test recent lows. No clarity of spinoff. A hands tied approach to a buy back. A large control credit facing operational issues..and finally and rather suprising.....the Wells Fargo analyst getting rebuffed by Malon concerning managements lack of aligned interest with shareholders. Wells has been behind ACAS for many years...this is the first time I have heard the analyst not happy with the ACAS fee structure to management.
Bottom line...this spinoff is VERY long in the tooth and only deep value buyers will be in this name. I expect any catalyst buyers to exit and the shares to go lower near term. UGHHHHH more of the same
NAV wont matter on this call unless its materially lower. All that matters in my mind is if they can give clarity on timing of breakup. Otherwise the discount will persist and could widen without the restructuring. Last quarter it ripped on the announcement and came in like a lead balloon. And here we are.
Nine board members....lordy.
I am not trying to read into the delay too much but I do hope that its because there is good news pending. Typically good news pending means its released EARLY not later.
I find the delay concerning and I hope we dont have something tangible out there that is negative
Well said regarding GAAP. The question remains...why are we at historic discounts to NAV across the ENTIRE ACAS complex. Is this a new paradigm?
Thanks for that look. Rates may not rise in the short term...but lets be real...portfolio managers are positioning for higher rates and related companies are being discount ahead of time in anticipation.
That being said..AGNC was downgraded today by JPM "while the q4 rally in rates likely drove book values higher than previously assumed......in our view it only forestalls the drag from rising rates on future book value"
Is it wrong to assume that the sensitivity to the ultimate higher rates we may expect will discount ACAS even further? AGNC and MTGE and ACSF are reaching bigger discounts then I expected. Again the entire complex has moved towards fixed income....and the sensitivity to higher rates/a stronger economy.....is hurting the shares.
Back in the day we would be excited about a stronger economy as they asset marks and sales would really help the shares....have they become too conservative with the new book of fixed income business?
Nomura came out today and said the rising interest rates will keep a lid on AGNC permanently. One must wonder if the ultimate rising rate environment will keep the entire ACAS complex discounted even WITH a spinoff and restructuring. The market is telling us something with this price action perhaps? I am getting wary more then i have been in a while....
ACAS is killing me and i havent #$%$ about this stock in 5 years.
Definitely not joking....a rising rate environment does not bode well for BDC names or mortgage reits or asset managers....
The transparency and evidence of this spinoff is out there. The question begs whether the spinoffs will still trade at a discount even with the competitive dividend.
Acas cant catch a bid on up days to get above $15......AGNC and MTGE cant catch a bid either. The economy is on fire....and private equity marks have risen dramatically. Am I wrong to say that ACAS now wont benefit as a Private Equity manager due to its recent moves towards being a fixed income asset manager? Are the prospects of rising rates keeping a lid on this name? The discount to NAV is considerable. I am leaning more and more towards the reorg not giving us the closure in the NAV discount......unless I am missing something?
Ha! No nothing on my end. Just concerns that this financial engineering they are trying to pull off is long in the tooth. The comparable companies we are valuing the spinoffs to concern me as they are slipping. A part of me wishes they stayed leveraged as a private equity firm. Valuations and exits are amazing. They took the pendulumn the other way to a large extent. Only our little ECAS trades close to NAV. They rest of the company is a much discounted great expectation. Anyways if I hear anything ill keep you posted.