Replies to post #104 on American Capital LTD (ACAS)

[pappi]

I put in a series of buys circa 2000, just as ACAS got slammed in a short sell effort. my ACPS is 12.73, and I've been in a DRIP from the outset. i'll never sell this lovely puppy and only rejoice when the irrational un-zuberance of the market coincides with the dividend reinvestment day.

so i don't need to put in more money - it just grows all by itself.

> check out GLAD and the other funds in that group, as they pay a monthly dividend - great DRIP play.

long and very patient.
pappi

[Tex]

too good to be true?

Cramer's "too good to be true" comment seems to have been made without any reference to ACAS' businesses or business model. The arguments I like on ACAS have been summed up here:
http://jadedconsumer.blogspot.com/search/label/Ticker%3AACAS

Basically, financials are all hammered. If the current pricing were a result of financials being genuinely surprised by subprime or other "shockers" and being punished with justification, ACAS' newly-launched fund AGNC, which got off the ground in May and paid a 31¢/sh dividend for its first 27 days invested, would not be affected. After all, AGNC bought its assets after current pricing environment was known. Thus, everything in the portfolio is fully discounted at purchase.

Yet? AGNC, which launched at $20, was for sale earlier today under $16. Assuming the full quarter has a dividend better than three times its 27-day dividend, its dividend is as high as ACAS' even after paying ACAS its management fee.

Of course, since ACAS owns half of AGNC, the fat dividend is a great benefit to ACAS' operating earnings, and will help ACAS keep its dividend growing. Folks worried about ACAS' ability to make profitable exits haven't been paying attention: ACAS exits pretty big volume every quarter, and has been rolling profit forward undistributed to shareholders. ACAS' dividend isn't evidence the management is eating the seed corn, it's evidence ACAS' management is farming the banks of the Nile (before it was dammed) and gets two crops a year to most folks' one.

I'm in ACAS big-time and not looking to exit. In fact, I'm looking for places to raise more money to invest in ACAS. The businesses are just too diverse, and the management too good, to let a deal like this pass.

Sure, the price can get crazier -- but that's part of what we learn from the likes of Buffett is a superior profit opportunity, right? Be greedy when others are fearful ....

Take care,
--Tex.

[Trinityz1]

wow....not only did you say a mouthful, but you took the words literally right out of my mouth on all counts

I've been seeing dividends drop with SP on a few of my nice dividend payers, but they're holding their own....I just don't like breaking even because SP has dropped and the dividends cover over time.

That waiting for the other shoe to drop is a pain....
on some it doesn't.....but others it does.