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American Capital Agency Corp. Message Board

donedealer 48 posts  |  Last Activity: 13 hours ago Member since: Jul 2, 1998
  • Reply to

    Pounding the Table Again, BUY

    by ribi1 May 16, 2014 4:10 PM
    donedealer donedealer May 16, 2014 4:52 PM Flag

    I wish ACAS management was following your advice. I get dismayed when I do a back of envelope computation for say 10 million shares bought at $14.64 per share for $146.4 million This is 31% gain to about $19,25 NAV for a gain of about 45.4 million or about 27 cents per share write up in NAV. This is an increase in NAV per share. Restructuring is not an increase in value. It is rearranging the deck chairs and may unlock value. Why not do both? My fear is that the volatility will increase to the downside with ACAS withdrawing from the market. Potential short sellers view this as an opportunity.

    Like you, I am a buyer on these price drops. I wish ACAS were also.

  • donedealer donedealer May 16, 2014 12:41 PM Flag

    I agree. See my post below on Kinder Morgan Consolidated v EPD.

  • I own Kinder Morgan Consolidated which is a combination of 1 share of KMI and 1/2 unit of KMR. This merges the two entities on a roughly equal capitalization basis. Using ValueLine"s 2014 estimates of cash
    flow.for KMI and KMR respectively of 3.45 and 6.05 gets me 6.48 for my consolidated share for a cash flow yield on current prices of 9.3%. Doing the same thing for estimated cash distributions of 1.69 and 5.52 for KMI and KMR respectively gets me 6.4% cash distribution yield for my consolidated share.

    Having combined the GP and LP interests of Kinder Morgan there is an apples to apples basis for comparison with EPD. ValueLine has 2014 estimates of 4.25 for EDP's cash flow for 2014 and 2.92 for their
    cash distributions for 2014. Based on current price of 73.42 this results in a cash flow yield of 5.8% and a cash distribution yield of 4.0%.

    Is it worth 2.4% less cash distribution yield by owning EPD v Kinider Morgan Consolidated. ValueLine estimated cash distribution growth of 8.5% for KMI and 7% for KMR. This results in a cash disribution growth of 7.75% for Kinder Morgan Consolidated v a 9.5% estimate for EPD by ValueLine. This is a growth advantage of EPD of 1.75% v its 2.4% disadvantage in cash distribution. Bottom line, I favor Kinder Morgan consolidated because it has a better cash flow yield (9.3% v 5.8%) and a bird in the hand is worth two in the bush.

  • Reply to

    Getting hammered over past 2 days

    by lenyw May 15, 2014 10:40 AM
    donedealer donedealer May 15, 2014 11:55 AM Flag

    I believe that the prevailing view on this board is that the restructuring plan is preferable to the stock buy backs and it will materially reduce the discount to NAV. Because the stock is not now reflecting this optimism it appears that these posters believe that the market doesn't understand the benefits of the restructuring. Yet, is it possible that the market does understand the restructuring and doubtst that it will achieve its goals? Time will tell.

  • Reply to

    Restructuring question

    by donedealer May 10, 2014 8:26 AM
    donedealer donedealer May 12, 2014 12:24 PM Flag

    With all due respect bg4value, if you need to rely on others to get financial information you are headed for trouble. You may even end up basing your investment decisions on the advice of brokers and financial analysts.

  • Reply to

    Restructuring question

    by donedealer May 10, 2014 8:26 AM
    donedealer donedealer May 10, 2014 11:18 AM Flag


    Thank you for your response. However, it appears that ACAS is now effectively at zero debt.
    Q1'14 shows about $600 million of debt net of cash and the subsequent sales appear to put them in a net cash position plus they have lines of credit.. I continue to be puzzled by this obsession with liquidity.

    Further, in this low interest rate environment I am troubled by this strategic focus on "unlocking shareholder value" rather than investing to "enhance shareholder value". The surest way to get a share price to NAV is to produce an ROE greater than 10% (over $2 per share annually) with NAV growing accordingly. If NAV were at $22 to $23 today the stock would be at least at that level.

  • donedealer by donedealer May 10, 2014 8:26 AM Flag

    ACAS has been raising cash by selling assets and has stated on the CC that it must continue to raise cash in order to have flexibility in a restructuring. It seems to me that a restructuring would not require additional cash but would probably be a source of cash. What restructuring scenario would require more cash?
    Is it possible that ACAS might be contemplating a tender off for a large percentage of its outstanding shares?

  • Reply to

    Blackrock SC 13G/A

    by sandy.criscione May 8, 2014 3:20 PM
    donedealer donedealer May 8, 2014 4:44 PM Flag


    Go to Yahoo Finance ACAS Major Holders. It shows Blackrock at 19,254,390 shares as of March 31, 2014.
    Apparently they were big buyers in April.

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