You'll get a 1099-DIV. (ARCC is a BDC, not a MLP). Whether or not this is "the best" buying opportunity is something that we won't know about until things are in the rear-view mirror. I hold my ARCC in an IRA and frankly I sleep well. You can check out some of the Web sites such as Seeking Alpha or the BDC Reporter for opinions. What you'll find is that unlike some of the other externally managed BDCs, ARCC's management gives a hoot about shareholders. They have a history and it is a good one.
One advantage of being externally managed, at least in this case, is that management has access to more resources, as well as long-term relationships. The recent merger agreement between ARES and Kayne Anderson should be seen as a positive for ARCC.
Buy now or wait? Or buy something else now or later? Nobody knows that today, but tomorrow everyone will tell you what you should have done today. LOL.
You could (should) do a Google Search to understand the difference between x-dividend date and record date. The rules for a cash dividend, which is what NYMT declared, say that x-dividend date is two business days before the record date. In this case, the record date is June 29 -- a Monday. So x-div date will be the Thursday before that.
There are other rules for dividends paid in stock or when the dividend is ~25% of the stock value.
New UNII is out with data as of May 31: distribution coverage is over 100% and UNII increased by 2 cents. It's on their Web site... And it is something that I keep track of.
Bottom line: Dividend is not in any danger. In this market anything can change quickly, but the UNII report looks decent and should add some level of confort.
FYI: The UNII is undated monthly at about this time. In fact, it was updated within the past 24 hours. (LIke I said, I monitor it and I was waiting for this one.)
Curious: Anyone know about FIG's options: (1) When and how did they they acquire these? (2) What is their price for purchasing NRZ? They could not have had these too long otherwise they would have been better exercising them, collecting dividends and then selling when convenient. Maybe these were "gifts" for the HLSS deal? (A relatively short time ago, but prior to the announcement of the HLSS deal NRZ was having a hard time staying about $12.)
Again, just curious... But right now I don't have time to search through SEC documents. If someone else does not check this, I'll get to it over the weekend...
Please do not pollute this board with that BS. Anyone interested in a good, long-term investment does not want anything to do with that management team. They have ripped off shareholders and they will do it again. Many people, myself included, learned the hard way -- after being in that for 5 years and after paying taxes on the dividends, I consider myself lucky to break even. :-(
I won't be posting here again. I sold and will move on. Good luck to those of you that continue to hold. As for the traders, I hope you lost every nickle you have.
Sure he did: Jordan Wathen has no position in any stocks mentioned.
He also post blogs for Motley Fool. Bias, maybe. But they are facts. His question is really somehting shareholders or potential shareholders need to ask themselves: Can this management be trusted?
I've been here since 2010. It has not been plesent but at least I am above water. Today I unloaded 1/2 of what I had remaining. I am strongly tempted to unload the other half and be done with PSEC. When you have to closely watch and "hope" that management does not rip you off... You have to ask yourself what kind of investment is that? There are plenty of quality CEFs and other things out there. They may not be trading at 25% discount, but their history is solid.
No you did not say "funny," but you did say that you wondered -- basically why two months? The simple answer is that dividends were declared already for August -- which is the first month of Q1, 2016. This is not the first time that they did this since paying monthly back in 2010. But to speculate that it's an omen for a dividend cut? You know better than to jump to conclusions like that.
On the other hand, keeping both eyes wide open is a must with this management team. The portfolio is good, but there is not much else here that is. They have shown their true colors time and time again. If it were not for laws, they would have sold the company to themselves for 1/10 of a penny on the dollar. No joke!
I have not had time to listen to the presentation, and I would sooner trust PSEC mgmt than a post on Yahoo... Not a single summary of the highlights? And you-know-who has destroyed the Investor Village board... I need to find something better. :-(
In all fairness you cannot simply compare the CLOs of one BDC to another. Each CLO pool has to be valued based on its expected cash flow, and of course the quality of the underlying loans. The expected cash flow is highest when a CLO is first created and slowly declines after that. Also the reinvestment period play an important factor since some loans may be refinanced. If the reinvestment period is over, then proceeds from refinancing cannot be used to purchase new loans.
Apparently PSEC invests in CLOs in such a way that they are the majority shareholder in the equity tranche. That gives them the right to "call" or collapse the CLO under certain conditions.
Basically if you cite a Seeking Alpha article that referenced PSEC valuations relative to the valuations of other BDCs then you likely won't be comparing apples to apples. Example: Joe owns an 8 unit apartment and he says it is worth 100% the same as a year ago; Bill also owns an 8 unit apartment building but says it is worth only 85% of what it was a year ago. Is Joe exaggerating? With real estate we all know that price depends on location, age and a few other things. Unless you know these things, you cannot compare the two valuations. Same thing with CLOs -- albeit the metrics are different.
FYI: Large banks are the major owners of CLOs. The market is huge and because of regulatory rules, banks are being forced to back off -- but in reality they aren't and they are fighting for extensions... So if someone tells you that all CLOs are overly risky then they don't know what they are talking about. No doubt some are, but as a blanket statement, that's simply wrong. (Feel free to Google Search CLOs and large banks. Trillions of dollars!!)
If they already announced dividends for August then SEPT and OCT will cover that up to the end of Q1 2016. There is nothing "funny" about that.
I did not listen to the presentation but since I do own PSEC that is something I'll need to check later -- at my convenience. The only real concern I have about the spin offs if the subscription price and whether or not they plan to sell assets that we own to a 3rd party for less than the "deal" that they are willing to offer shareholders. That is no small thing and they need to be respectful of shareholder's right -- that's is written in their code of ethics (available on their Web site under Corporate Governance): "directors and officers of the Corporation ... owe a fiduciary duty of care, loyalty, honesty and good faith to act in the best interests of the Corporation and its shareholders."
1. It it not just the 2/20 fee structure. Factor in the management willing to sell below NAV and that their valuations are often much higher than M2M -- which servers to do nothing more than increase their fees.
2. I have no clue what you mean about this being spearheaded by a competing BDC CEO. Consider the CLOs that they sold a few months ago. Prior to being sold they were marked as being worth at least as much as PSEC paid for them. Then weeks later they were sold for over 10% loss. Per PSEC's documents, the 3rd party valuation of its CLOs are supposed to be such that the values reflect the amount that PSEC could expect to get if they were sold. Go figure.
So if the CLOs are valued too high, and they want shareholders to pony up money for them, will we be forced to pay more than what they are worth? Further, if shareholders do not subscribe to the rights offering, will PSEC really sell to "anchor investors" at the same subscription price PLUS give those investors a fee (rebate)? Hmmm. You and I as shareholders own these. But somehow the BOD can sell these assets to their friends for a significant discount? Maybe that's a little extreme, but per recent SEC documents that is the threat that management is making -- shareholders buy it or we'll sell these for less to someone else.
Questions will be pre-screened and they will be too general and I doubt there will be any detail about the rights offerings. Those have not yet been approved by the SEC and there are probably confidential talks going on behind closed doors that prohibit disclosing details. But in reality, PSEC may not have worked out the details yet. The subscription price, for example, is probably not known to them yet. (That depends on market conditions and before the market can fairly access the value, we need to know what CLOs will be in PYLD. Any talk about subscription price, or Anchor investors for that matter, are definitely not in scope.)
The webinar is a presentation -- probably with many of the same slides that they have shown in the past few presentations. Grier is the only one who will be there to represent PSEC. If there were truly news-worthy, recent corporate developments, there would be a conference call.
Questions? They may not be "real" questions -- something like what you'd see in an advertisement...
So "how long before they hand up?" My answer is it won't be anything like the last CC. It will be a nice, friendly presentation, but in reality it is nothing more than PR thing.
Which sale are you referring to -- Harbortouch? They are selling about $750 million of loans yielding in the 5-7% range and plan to reinvest the money into higher-yielding loans -- their "portfolio optimization" plan.
I also beleive that they talked about selling some assets that have appreciated materially -- which would generate some nice capital gains. There are a few assets that could fall into this category, but Harbortouch comes to mind. I'm not sure about $500 million for all its various components (Harbortouch Payment, the holding company, etc.), but this one does have significant capital gains and falls into the category of low-yielding assets when you average all the loans. There are others but Harbortouch is the largest.
That is not exactly correct. If shorts hold their positions through the x-div date, they will become short in more than one security. Assuming PYLD is first and done by itself, shorts will then have short positions in PSEC (post-spin) and PYLD. They will not be forced to buy the rights offering. But they do take the risk that shares of PYLD may not be available for shorting -- and they would then have to buy those. Here is where you might find shorts interested in buying your rights offering -- to cover the PYLD that they would otherwise be short.
Obviously it does not appear that shorts are too worried.
Still holding my PSEC -- but I am not happy with the management team here. :-(
That's the $1 million question: What will the subscription price be? I can only guess that it will be near the same discount that we currently see in the pps. And at that price I suppose you would be able to sell your rights to someone else for something. As it looks right now, your best bet will be to exercise them. But tdetails are still lacking. Will PYLD hold ALL the CLOs or just a subset? Until little things like that are unknown, people will think what they want... and someone else will take advantage of weak hands. :-(
PSEC wants to sell them to someone and right now the "market" is saying that it needs a discount relative to what they have these on their books. And if the market is selling or buying PSEC at ~20% discount, then I seriously doubt "smart money" is going to pay more. So, PSEC has three options: (1) cancel the rights offering, (2) allow existing shareholders to buy them at about 20% discount, or (3) sell to "smart money" for more than 20% (maybe 30%?) discount.
It's a no brainer that their best option is sell to shareholders. Why not? Shareholders already own the stuff. But sell something belongs to shareholders to someone else for less money? There is no way they would win in court when faced with breach of fiduciary duty. (IMO: Using anchor investors as a back-stop might be okay. But you and I should be able to buy enough to not dilute what we already have. The management team comes out ahead regardless.)
The anchor investors is the term PSEC used; they are basically accredited investors (usually limited to no more than 35) that agree to buy PYLD in a private placement. I don't know if PSEC will actually do that but they did apply for an exemption to avoid registering securities with the SEC.
The rights offering as you described is how it is almost always done. Technically, however, shareholders do not have any preemption rights... :-(
This is currently PSEC's Q4 period and completing the spinoffs before their next fiscal year would be an ideal time from that perspective. However, I do not think they would be able to do all three spins that quickly, and PYLT may be the first. But for PYLT (the CLOs) to be successful they need to give shareholders the necessary details and possibly do something to get reasonable estimate of whether or not "anchor" investors are actually needed. Completing the PYLT spinoff before Q1 2016 is not worth the cost (extra discount) of anchor investors -- especially if existing shareholders (plus some that over suscribe) are willing to buy at least 75% of the PYLT.
In short, a good time would be before the end of July. But that may not be the best time when you factor in extra discounts if anchor investors are used. Further, I see some serious legal issues if they use anchor investors in such a way that existing shareholders were not allowed to at least preserve their relative proportion of stock in the post-PSEC companies. (Anchor investors are not needed and there is no way they can justify selling something that I own to someone else at say 75% discount and then claim that that is the best thing for shareholders. The idea of anchor investors seems to be relatively new, so that idea could just as easily be dropped in the next SEC update... In the worst case they could offer the subscription rights to the public -- but only after existing shareholders were allowed to fully exercise their rights, and possible any over subscriptions. Anything else will end up with legal law suits.)
You asked a simple question.... and you got a simple answer.