American Capital Strategies (ACAS)

[Fredledingue]

The shares of this fund have been battered by recent wall street melt down and it's realy not deserved.

This fund, beside growing regularly in value in normal times, offers at current levels nearly 13% of dividend. And there is no catch: This divy is safe: They pay it regularly for yeas. They just rose it a few months ago. Their most recent results have been stellars + they are upbeat about future results.

2 weeks ago, looking at the low price of their shares, ACAS managers anounced a buy-back program of 500 millions (half a billion dollars).

Today the CEO bought 5000 shares...

- Strong Buy -

[EvaluatingStocks]

This is not the first time I've heard good stuff about these guys and I agree - I think the share price is probably suffering unduly at the hands of market fallout. The attractive thing about ACAS is that it isn't your typical LBO shop since they fund their own deals in the middle market space. That means a tight credit market doesn't impact them as much. Interesting pick - I'll look into this one a bit more for sure.

[Airelon]

One thing I learned in 2001?

Great stocks that never have anything wrong with them? Can get the ever loving snot beat out of them much longer than we think they should by the broad market.

[EvaluatingStocks]

That is true - there's no way to avoid the business cycle and broader markets will likely continue to pull back - good companies & bad will suffer (probably ACAS as well). That's just the way the market works.

However, I like this for a possible long term play because, on the surface, the value proposition appears compelling. Does that mean it is buy now? Absolutely not. However, I like to build and research a short list ahead of time so I can monitor the good companies that suffer in tough markets. Housing is a nightmare - and will continue to be for some time - but there are well managed companies out there that will be buys at some point.

[Fredledingue]

ACAS recent story has been just amazing.
The stock got battered down after an UBS analyst rated it a sell and forecast a big loss on write down due to new regulation. ACAS indeed posted an incredible loss of nearly one billion whilst their business couldn't have been better!

The write downs due to Fair Value Accounting is irrelevant since the assets will be kept until maturity and won't be sold on the open market under any circunstance.
The management made that abundantely clear in their report. They reiterated their upbeat guidance.
On top of that the board increased the dividend one more time. At current prices it yields 12.5%.

Finaly investors kept faith in ACAS: The stock moved from $29 after the UBS downgrade to 32.82.

[Fredledingue]

Ok, seriousely:
How much makes a 14.7% annual dividend per month?
Answer: 1.225% So every month I will get paid 1.2% for having dared buy ACAS today at $27.21! ...3 minutes before the close.

[Fredledingue]

Added a little @20.60. 20% dividend yield, safe well into 2009, no bad news, only good ones, as ar as ACAS is concerned.