Barron's reported on subject conference where Pine River Capital had one sole recommendation of ACAS.
They said that income seeking investors had depressed the price of the stock and they expected that the buy bacxk program will double the price in about three years.
The level of buyback expenditures is targeted at the net income level. This 13.4 million shares cost 60 cents per share and should add about 50% or 30 cents more to NAV. It appears that they may be saying net income for Q3 was about 60 cents and NAV may be up by about 90 cents to over $20 per share.
I would not subtract the amount spent on the buyback shares. The amount spent on buybacks is targeted at the amount that would have spent on a dividend, which is about the net income per share. This means that the net income for Q3 may be in the vicinity of the $176 million, or 60 cents per share, spent on the buybacks. I believe the NAV may exceed $20 per share for Q3.
Zacks conveniently focused on operating results and failed to mention that ACAS had total gains, realized and unrealized, of $437 million for the trialing 4 quarters ended 2Q'13 which resulted from equity investments, which are the lion's share of their assets.
I am no fan of Hokey Boy but according to his Tweet he was shut out off the call. I agree with this action because he would have been disruptive with little real facts.
So you think the NAV of approximately $20 has value of only about $15.50 ($2 above current price). If I believed that I would sell. My view is that the value is close to the NAV and will be realized by either generating about $2.00 or EPS per share or restructuring (selling equities and investing in debt) to achieve $2.00 NOI per share.
The percentage should be based not on the market price but the net after tax proceeds and also one's age. I have an MLP which has returned in cash distributions about 67% of my purchase price while tripling in market value. My tax bill, including ordinary income recapture, would be about 25% of the current market price. I am elderly and can not see how I could get a replacement investment that would outperform my MLP by 33% (about the amount after tax to cover the 25% loss on sale)..
If held until death all income taxes are forgiven
The present $1.60 is projected by Kinder to increase by at least 10% a year for the next several years. In one year at $1.76 it would yield 5.2% on Jeffries' $34 target. Yet many analysts use a fair yield at about 4%. KMR gets $5.28 in distributions which are projected to increase by about 5% in a year to about $5.54 for a 6.9% yield on the $80 target. These targets and assumptions paint a very negative and risky view of Kinder Morgan. If I believed them I would sell.
If ACAS can get more dividend income from its equity investments it will improve NOI but have no effect on EPS or NAV because there will be an offset to the fair market values of the equitities. Substituting debt investments for equity investments will improve NOI but may have little to no effect on EPS or NAV because ACAS has stated that their equity investments have historically done better that their debt investments.
It appeared that a part of the critic was not the level of spending but the classification. Say $100 was spent and covered $50 maintenance and $50 expansion. However, KMP's analysis allocated only $25 to maintenance resulting in an overstatement of $25 for distributable cash flow.
I was referring to investments generally in a taxable account. Regarding Line, LINE is cheaper and, therefore, appears to be a better investment than LNCO.
LINE can be held in an IRA as it has no UBTI. It has, has had, and should continue to have very substantial Unrelated Business Taxable LOSSES.
I wish the Tea Party would stop trying to slow our march to bankruptcy. Keep those food stamps, disability Obamacare payments coming in. In America you longer have to work for a living - you vote for it.