Its a knowledgeable investor that appears not to believe that there will be near term appreciation in ACAS.
Tony touches on a point - why isn't there more investor demand for the stock. Yes, the retail investor may be uninformed and leery of the stock but what about the institutions? They hold most of the stock, are aware of the plan to sell the company and should have an informed opinion as to the prospects for such sale.
This concerns me. I do not buy the argument that present institutional investors are already fully invested. There is no limit to greed.
Isn't the reported NAV's of most BDC a lot loser to true liquidation value than the market price of the BDC. A controlling owner would liquidate the assets but the existing management is more interested in preserving their jobs. There are many closed end equity investment companies with traded liquid stocks and the market price is 15% to 20% below NAV.
Elliott has expressed an opinion that the value is close to NAV. I hope they are correct. If Elliott realizes this value then I would expect to see Elliott and other activists descend on other BDCs.
According to the Calendar of Corporate Earning Releases it is scheduled for February 22nd.
Granted, this may change.
A recent Seeking Alpha analyses of BDC's (no mention of ACAS) shows 16 selling for less that 75% of NAV and 7 selling for less that 65% of NAV. I assume most are available to a buyer for a 10% point boost to NAV which would be about a 15% premium to market.
Buybacks and liquidation appear to be the best strategies for these companies.
I agree that it appears no one will pay close to NAV. The best strategy is to sell ACAM and liquidate other assets, using the proceeds to buy back stock and eventually have a liquidating dividend.
Reported NAV may be $19 or less factoring in stock options. True NAV could be lower. Look at the recent dismal market performances of peer companies: ARRC, AINV, PSEC.
My biggest fear is that no offer will materialize that would be acceptable and the business continues to muddle along.
I should have said that it appears inconsistent with the view that the business will be sold in the short term. Therefore, this appears to reflect management's belief that the business will not be sold in the near term and perhaps its desire that it not be sold.
A move designed to discourage potential buyers and reduce the value of the company. I thought the company was up for sale so why encumber the business with this contract?
It appears that the market doesn't believe that the NAV represents true value. It is possible that the market is correct that there will be no buyers at a reasonable price and the stock will remain at $14 or lower?
Where are the insider purchases at this level? The insiders must have serious doubts as well,
Follow up question, how low will it then fall as months go by seeking a buyer or buyers? Why isn't the market buying into Elliott's $20 ball park valuation? Is the buyback plan now suspended?
Regarding a possible sale, hasn't every prospective buyer known that it was for sale?
Hasn't ACAS been in a position to sell at the market any and all assets even including ACAM.? Alternatively, why not tender for 50 to 75 million shares at $15? I assume that the buyback plan is now suspended.
The buybacks are the tailwind for this stock. However, the headwind is the low NOI. Your computation assumes about $320M of NOI for 2016 or about $1.32 per share (using $241.9 million shares outstanding). This is about 6.2% of your $21.22 projected Q2-16 NAV. A reasonable investor would ask how can such a low return on assets support a market value equal to the NAV? If 10% ROA were used then the result would be about $13 per share. My hope is that synergies to a potential buyer (substantial elimination of S,G &A) would produce an NOI of at least $2 per share.
Thank you for that computation. Therefore, the $21.22 NAV at Q2-16 would be about $20.50 at Q4-15 after backing out the $160M of 2016 NOI and assuming all options are exercised. I continue to hope that the $1 billion in buybacks will be increased by the proceeds of option exercises.
What do you believe is the proforma 1015 YE NAV per share assuming all stock options are exercised (at some point)? This calculation would increase the shares outstanding by the options exercised and would increase NAV by the proceeds of such options exercised. Is $19 per share too low? The dilution effect of the assumption appears to be about $1.50 per share.
Your analysis is correct. However, if the market price increases then it will require more cash for each subsequent purchase. It appears reasonable to assume that the dollars spent per quarter will not increase and, therefore, the number of shares will decrease resulting in an unchanged percentage of shares outstanding. ,
I don't know what the pop in price will be but the history of these jumps in price is that they are short lived. Therefore, unless this time is different, the following week should give back at least half of any jump in price. It would appear that the market doesn't believe that these values will be realized.