The longer time they take is more opportunity for management to collect salaries and allow for options to vest.
This is fully diluted reflecting stock option exercises. Author states he asked management why they do not report NAV reflecting the stock option dilution. The rely, "because we don't have to". This speaks volumes about this management.
Or is ACAS going through the motions in order to placate Elliott but not putting their best foot forward?. Such as telling prospects things they would rather not hear. The market tends to rise in advance of good news when lots of bankers and lawyers are involved (unfortunate but largely true) and this is not happening.
Possibly, but that's before taking into account the dilution from stock option exercises which would bring NAV down over a dollar (depending on a bunch of assumptions).
As the buybacks continue to decrease the number of shares outstanding it increases the dilution from stock option exercises. Assuming end of Q1 NAV 20.50 with 220 million shares outstanding for total equity of $4.51 million. YE 2015 there were 28.4 million options outstanding at an average exercise price of $7.97 per share, excluding .8 million at $39.41 price and 3 million at 16.69. (5.8 million not vested then but assume they will be). After exercise there would be 248.8 million shares o/s with equity of $4.736 (including $226 million from exercises for an NAV p/s of $19.04 and a dilution p/s of $1.46.
If the end of Q2 results in NAV of $21 p/s with 200 million shares o/s. The option exercises will increase that to 228.4 million shares with $4.426 million of equity ($4.2 million plud $226 million from exercise).. This results in $19 38 NAV per share for a dilution p/s of $1.62.
ARCC stock valued at $15.19 last traded price but will be hit by at least 5% for a value of about $7.
This brings the total to about $17 with a closing, subject to approvals, by year end. Market appears to be pricing it at about $16.20 or about an 80 cent discount to the $17 apparent value..because of up to 6 months until closing and concerns about approval.
I am in the same ball park as you. I am hopeful that there will be more than $16 but I realize that it may not be. We don't know what the current NAV is. The 4Q $19.88 was inflated by up to $1.50 by not recognizing the dilution from stock options. So with a first quarter write up from income and stock buybacks the current NAV net of option dilution may not be greater than $20 A sale a a 20% discount would bring about $16. My best hope for more is by sale in the market place of most assets rather than bulk sale or sales to strategic buyers.
At least a month but generally not more than 2 months. I want a purchase price (put strike price less premium received) of under $13.50.
We are taking about a company not a division. Why isn't the stock price rising? There's got to be dozens of lawyers and bankers involved If there is good news ahead the market price should be moving up (sad but true)..
I agree with you that the best strategy is to wait. However, the question is for how long. Certainly going out 6 months or more would indicate a poor level of interest by prospective buyers and would run an increasing risk of a recession and/or a bear market.
Regarding these May 20 $17 call options. The size increases and the pricing remains firm despite the ticking of the clock. Clearly this is a bet on a pop in price as a result of the earnings release. It tells me there are some "knowledgeable" buyers who appear to believe that this will pop to over $17. If they were less "knowledgeable" they would probable settle for the $16 strike price.
"Pretty cheap insurance". Against what risk? Perhaps a 25% crash in the market?
Probably not because there are better ways to hedge that risk. This appears aimed at a possible decline in ACAS to about 12.50 or lower in the next 6 weeks. .This would require news of no interested buyers and a sharp downward adjustment to NAV. Hard to believe.
These ACAS options aren't for trading but are for holding until expiration because of the wide spreads between the bids and asks. Buyers and sellers have to have convictions.
This scenario works best when one trades out of the option on the pop in the price. The spreads on these options make this an unreasonable strategy. I have been an aggressive writer of $15 and $14 puts when the stock falls below $14 (all very profitable). But I held to expiration rather that give back substantial profits by buying back the puts at an unreasonable ask spread.
They options expired worthless or I accepted the put of the shares.
Bottom line: don't trade theses options: hold the position until expiration..
As I have posted, I doubt that ACAM would have been written down if there were indications pf interest north of the written down value. $18.50 is about the NAV for Q1 fully diluted. I see this as top value in a buyout. BDC's at 10% and more discount to NAV are a dime a dozen, Perhaps $17 is a realistic top for a buyout
I must admit that I am confused as to the present status of the assets and operations of ACAS and where this sale process is going and the timing. For example, you assume NOI of 30 cents per share. Yet, it would appear that this would be difficult given that earning assets are being sold and I assume there have been minimal layoffs. Further, what about expense of the sales process such as lawyers and bankers (and bonuses to employees)?
Thanks for your reply. If you are correct then this should have been mentioned in the presentation. I know that an exchange can be tax free with the cash portion "known as boot" being taxable. What I am rusty on is how much boot can be received and still be tax free.
I agree. I had hoped that ACAM might be sold for more than its value in NAV..Yet I doubt the write down in ACAM would have occurred if there were indications of interest from buyers at a higher value. So I am now looking at a little over $19 NAV net of deferred taxes. We have a bunch of BDC's selling at double digit discount to NAV. Why should ACAS be worth more than 90% of $19 or about $17?