Interesting that many bullish posters have carefully analyzed every sale and CLo but have misjudged the larger picture. Many of these same posters continue to ignore the $1.95 per share dilution from exercising the in the money options and look the other way when the peer company prices are hitting new lows. I continue to be long but skeptical that the stock is worth more than 16 to 17 per share.
You appear to be in the ball park. I start with $19 NAV (after allowing for stock option dilution which most posters believe the market will ignore because it is stupid). $14.25 or 75% will be spun off and will sell at about $12 for a discount of about 15%. The asset manager hopefully will sell for at least the remaining NAV of $4.75. This gives a total value of $16.75. The wild card is the asset manager.
Can it sell at a premium and how much? With probably less than 50 cents per share EPS it appears that it may be limited to about $6 for a total of $18..
no matter how low the stock price falls. This telsl the market how little faith the employees have in the company. The market concludes why should the public buy what the employees won't touch?.
So a billion option shares outstanding at an exercise price of a penny per share would not bother you. You also have a very low opinion of the other participants in the market.
Discounts to NAV: ACAS 31.9% to $20.54 reported NAV, 24.7% to $18.59 NAV diluted by exercise of stock options, AGNC 16.3%, ACSF 18.5%. Is restructuring the equivalent of rearranging the deck chairs on the Titanic?. Does ACAS need an activist investor who could kick their butts into stock buybacks? Does anyone know Carl Icahn's phone number?
Granted it is trading at 17% discount to NAV. Yet this has to be weighed against the fact that the yield of 9.4% drops ti a proforma 8.4% without the fee reduction and this equates to a proforma 7% yield on NAV.
You are still assuming that the spin-offs is the right strategy. Yet based on comparisons to comparable companies today there appears to be little to no value added. Buying back at 14 per share against a 20 NAV makes 6 per share for a 43% gain.
Annual expenses, exclusive of interest expense, running 3.4% of stockholders' equity before management fee reduction of .8% (until 2016) to bring net expense to 2.6%. In contrast AGNC is running at 1.5% expense to equity.
If you could find a company with net worth of $1 million with 100,000 shares outstanding you would value the NAV at $10 per share. This despite the fact that there are 100 million option shares outstanding with an exercise price of a penny per share. .
My comparison to peer groups was not limited to BDC's but extended to to post spin off companies: including ACSF, FSAM, ARES, MDLY.
I am not doing anything about the value of the NAV per share and you are free to do ignore all outstanding options. But there are those in the market place that will not agree with you and they vote with their money.
The buybacks are suspended because it would cause stock options to exceed 10% of shares outstanding. This is another case of corporate greed. The management over leverages the company and tanks the stock. Then they reward everyone with stock options. I for one have little faith in this management..and I believe the other participants in the market share this view.
I agree with you but see a more tempered view of the discount. First off the 20.59 NAV does not reflect the dilution from option exercises which reduces the NAV to 18.59 per share.
Next the market is now discounting AGNC at 16.4% and ACSF at 17%. If one applies this 17% discount to the 80% of NAV attributable to the BDC spin-offs this amounts to 2.52 per share for a value of 16.07 per share. This values the asset manager at NAV and it is possible that this could sell at a premium but that is yet to be determined.
Per Yahoo schedule of dates for earnings releases.
I respectively disagree with you. Footnote 5 to the 2013 Form 10-K shown 54.1 million options outstanding at a weighted average price of $9.13 per share (with the highest at $13.68)..
All these options are in the money at an average appreciation of about $5 per share.for a potential dilution of about $270 million. If the stock were to appreciate to about $16 per share that would bring the total dilution in NAV to about $380 million or about $1.50 per share..
Granted, at that time (year-end 2013) only about 50% (26.7 million shares) were vested. However, as we have seen recent cut-backs resulted in employees becoming vested. I assume that nearly all of these shares will become vested and be exercised.
What am I, the Jaded Consumer and other analysts missing?.
Won't most these options be exercised and result in a dilution in NAV? Suppose the options outstanding were one billion at an exercise price of 1 cent per share. Would you continue to ignore the dilution?
For you non CPA's when earnings are debited for the estimated cost of option grants the offsetting credit is to Stockholders' Equity with zero effect to NAV. There is a reduction in that years earnings but no net effect on Stockholders' Equity. That reduction comes when the options are exercised.
The subject of stupid refers to the market not the posters.
Many posters believe that the market will ignore the dilution from options while no CFA would. And the posters may be right. The purpose of the post was to discuss the valuation. I started with $19 NAV. Others can start with $21.
See my earlier post today about latest article from Seeking Alpha. The analyst assumes spin=off could be the end of 2016.