ALD. A controversial company. Several shrewd investors have studied it and have bought. Others have said it's a Ponzi operation, and consequently there's a good-size short position on ALD. For still others, the complexity of the underlying assets and structure of ALD's deals are not clear enough to them to warrant making a decision. (A no-decision. Which means pass on it.)
I'm one who places weight on the company's multi-decades of very excellent performance (capital gains from the stock - calculating with dividends reinvested.) The belief among the vocal short community is that ALD must continually offer shares to raise funds to pay high dividends, because the dividends they do pay aren't sufficient or consistent enough to come from net operating income (NOI). I don't see management trying to extricate themselves from the shares they own though, and there's even some insider buying near current levels. Yahoo message boards can provide more detail and maybe better insight regarding the pro vs. con argument.
This stock's been mentioned here several times. (Grommit -or others - could you weigh in with an opinion that might help?) It seems to me some of the guys here who do really detailed dd and/or who are value oriented have passed on it.
Perhaps one might infer from that that there may be more risk to the stock than I suspect. One could also argue that the high dividend yield itself suggests the riskiness that might exist. Nevertheless, I have a full position in the stock, and I'm holding shares in an IRA and a regular account.
I like the Business Development Companies in general, and I've also got a very full position in ACAS and a lesser one in MCGC. Fwiw, I got some good feed back here on another BDC, AINV, a company that recently became public and is now looking to invest the cash it's received. I decided not to wait to see what management did, and I sold my few exploratory shares.
Hope this helps.
Paul Senior |
