If "the market" doesn't like the prospects of a BDC, then the yield can stay high for a long time. A BDC has no actual "need" to raise additional capital, except for the greed of managers who wish to get additional fees. One way they do that is to sell additional stock below NAV, but when they do that too many times, "the market" demands a higher yield than that offered by a well-managed BDC, which sells at a lower yield, and can actually sell new shares above NAV. Some investors have actually tossed out managers who were too fee-hungry, so there is always hope to go with the high current yield.
Unless oil goes to over $90 by 2017, LNCO's income then will be lower than it is now. If you feel so sure that oil will be so much higher than futures prices indicate, why not just go long on 2016 & 2017 futures contracts?
PYLD will ALSO be paying a management fee to PSEC's managers, so total assets under their management will increase by 20% to 25%.
Rights to be issued on the basis of one right for each 5 PSEC shares held. Right to allow the purchase of a share in the new company at a price of $9.50. New shares to initially have a dividend of 10 cents per month. "Tax value" of the rights issuance estimated to be 50 cents per right, for an effective special dividend of 10 cents per PSEC share.
The above information was revealed to me in a dream last night.
Sentiment: Strong Buy
It went down primarily because of the greed of management that sold too many shares, too many times too far below book value. They have promised not to do that any more, and have discovered a better way to pump up assets under management by doing a series of spin-offs. I think there is a good chance that this will also support the commmon stock price, as the value of the rights dividends will add to the cash dividends, rather than replace them.
PSEC management has a huge stake in a successful spin-off, as it will bring a significant increase in management fees. (Since they will manage new cash brought into PSEC, plus manage the new company's assets.) To accomplish this, the spin-off has to be priced attractively, so the rights will have to have real market value. Since the rights have market value, PSEC gets to claim this value toward their dividend obligations. DO NOT LET YOUR RIGHTS EXPIRE! Either exercise them, or sell them. If you let them expire, you will suffer some financial loss. PSEC management is going to declare future dividends in the spun-off company when the rights are issued, to establish a market value for the new company's shares. Since they claim CLOs are earning economic returns in the 20% neighborhood, the dividend yield on the new shares may equal or exceed that paid by PSEC.
I guess the "investor" who bought the stock to support the rights offering dumped it yesterday at a slight profit.
"In addition, an institutional investor has committed to purchase approximately 214,000 shares in open market transactions over a seven-day period following the expiration date of the rights offering. Such investor has agreed to acquire the remainder of its committed shares in a private placement at $3.50 per share directly from the Company to the extent such shares are not purchased in open market transactions during such seven-day period."
The discount is not always the same, either in dollars or as a percent. Since the price changes daily, some variation may be due to the days ROYT happens to deliver. It is hard to believe that the quality differential adjustment would vary very much. Perhaps you are correct, that I should only try to predict to 3 decimal points instead of 4, but then my reporting error could be greater depending on how the rounding error impacts the difference.
Excluding Feb. (short month), the last three months of 31 day production from existing wells was Dec, 101,323, Jan. 97,418, and Mar. 95,008. Whether this decline was the result of normal decline, or a direct result of decreasing production costs is hard to determine. In times of low oil prices (now) an intelligent operator would reduce steam injection, reducing both production costs and volume. If prices increase, then the operator can turn up the heat again. If this production decline is simply typical of aging wells (also normal), then we'll never see daily production increase again, and can expect continuing declines.
Why does the dividend need to be increased? When the market believes the current dividend can be maintained, we should see a price above $6 / share. At that point you could wish for a dividend increase. To do it before RSO achieves credibility is just throwing away cash and hurting the NAV.
If you paid any tax on LNCO distributions (unless you already had a zero tax basis), then you better get a better tax professional to amend your return.
LNCO dividends are tax-free "return of capital" until LINE earns taxable income. At present, LINE offers investors deductible losses as well as tax-free distributions.
Report should be dated Apr. 1! Actual earnings will not be released before mid-May, and are expected to show a GAAP loss before "adjustments" to create positive AFFO.
Although nominally a suit against ARCP, this action could ultimately recover 1/2 billion or so for investors!
Marion Hugh Knight Jr, founder of Death Row Records
Marion Barry (Marion Shepilov Barry, Jr.), former mayor of Washington, D.C.
Marion Barber (disambiguation)
Marion Cox, former NASCAR car owner
Marion Motley, a Hall of Fame American football player
Marion Pugh, American football player
Marion Gordon Robertson, televangelist
Marion Michael Rounds, Governor of South Dakota
Marion Spielmann, journalist and art critic
John Wayne, born Marion Robert Morrison, an American film actor
Yesterday WTI was quoted on Yahoo @ $57.73, on an "oil price" site @ $55.74, and a May futures price of $56.14, but Shell was actually paying only $52.40 at the refinery gate.
It is my contention that actual producers sell actual production to actual customers at actual (posted) prices, although "hedged" producers such as LNCO may make more money at the settlement of the hedges than they do from actually selling actual production.
US refineries post an actual price that they will pay for various types of crude, and this changes at least daily, based on available supply and demand. I'm not convinced this has any actual relationship to "cash settled futures contracts", which do not allow for delivery. Some producers (such as the Saudi's) post a monthly discount from an index, depending on where the crude is going. Is the "price" of oil determined by supply and demand, or by some other mechanism, in which price is controlled by forces which have absolutely no relationship to actual production or consumption? With current production exceeding demand, and storage nearing capacity, is there a point where reality can overwhealm the shell game?
Saudi's increasing production. China recently exported oil it can't use or store. US stockpiles still increasing. US output declining only slightly. Crude price to be manipulated up or down from here?
I would welcome that, as I'ld invest every penny (and more) that I received from recent sales. (Been there, done that, twice.)