Thanks for the correction. $2M per year is still not crazy high by Wall Street standards. PSEC has to compete for people, and money talks on The Street just like it does on this board.
I think this analysis is accurate, but comment if its not.
Total management fees = $50M per year
Total employees = 100
Average per person = $500,000 per year
That sounds like a lot to me, but, by Wall Street standards, it's a deal. It's easy to find guys making 100 times that or even a 1,000 times that.
I used to invest in AGNC [agency MREIT]. The price had been sinking for fear of a divy cut, and when the cut came, instead of going down, the PPS shot up about 10%. I guess the cut wasn't as bad as feared or something, but I learned a lesson there.
One reason is that PSEC, and all other BDC's, were removed from the Russell 2000 a few months ago. Many institutions simply buy the ETF's that tracks the Russell, or other indexes. So, BDC's get left out of those institutional portfolios. I don't know how big of a percentage that is, about 7% - 8%, I think, but it's part of it. And, as mentioned below, PSEC has very high insider ownership compared to other stocks.
As a U of Mich alumnus, I have to mention Austin Hatch, a freshman on the Mich basketball team.
In 2003, he was in a small plane crash in which his mother and both siblings were killed. Then, in 2011, he was in another small plane crash [both piloted by his father] in which his father and step-mother were killed. Twice he survived crashes in which everyone else died. He suffered severe injuries the second time, and Michigan could have pulled a promised basketball scholarship ... but they didn't. Last night, he scored his first point in a Mich uniform, and the house came down as everyone knew his story. He hugged his coach like he was his father, and his teammates like they were brothers.
We went to Jamaica in Sept, and met a woman who was currently a SMSgt in the USAF. She was responsible for scheduling maintenance on all the AF planes .... she had 180 helpers. I guess she doing a good job, and she looked good in that bikini also.
We had our reunion at Offutt in August. What was really cool was that we were able to take a tour of a current RC-135 with all the modern equipment ... things change just a little after 40+ years. Even cooler, at least 2 of the planes still in use were planes that I flew on back in the day - you can tell by the tail numbers that never change - I never thought I would ever see the inside again.
I flew intelligence flights from Okinawa to Viet Nam, Laos and the Gulf in RC-135's. Also, was stationed in Cam Ranh Bay TDY for about 6 months total flying RC-130's. Tour was from 1969 to 1971 [30 months]. I've been to Da Nang, and I've watched the gunships and helicopters rain bullets [tracers] on the Cam Ranh jungle at night when the enemy would try to sneak on base. We flew long flights so my 200+ flights were about 4,000 hours. I got 19 Air Medals and a Distinguished Flying Cross as souvenirs.
Hey Carl ...
I was in the USAF during the Viet Nam War, and flew over 200 combat missions. I had a reunion with about 50 of my flyer friends this past summer. Best Wishes to you.
DEFINITION OF 'RIGHTS OFFERING (ISSUE)'
An issue of rights to a company's existing shareholders that entitles them to buy additional shares directly from the company in proportion to their existing holdings, within a fixed time period. In a rights offering, the subscription price at which each share may be purchased in generally at a discount to the current market price. Rights are often transferable, allowing the holder to sell them on the open market.
For example, a company whose stock is trading at $20 may announce a rights offering whereby its shareholders will be granted one right for each share held by them, with four rights required to buy each new share at a subscription price of $19. The company will also specify that the rights expire on a certain date, which is usually anywhere from one to three months from the date of announcement of the rights offering.
Companies typically issue rights to give their existing shareholders the opportunity to buy additional shares before other buyers, and also to enable current shareholders to maintain their proportionate stake in the company.
In that case, the new companies would have to buy any assets they wanted from PSEC .... the assets won't be just handed over to a new company with the existing owners [us] getting nothing.
AFFO. GAAP includes things like unrealized gains and losses on assets [mark-to-market] which may never be realized. AFFO is much closer to cash basis which is the money available for divies.
"Through October 31, 2014, we have originated commitments of CRE loans totaling $641.7 million."
That means about $166M was added in October, or more than 3 times the rate of the first 9 months. The divy looks pretty safe to me.