Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Area51 who wrote (19105)	5/8/2004 2:28:38 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78673

Area51, re. AINV which you posted elsewhere on, I like it at the price $13+, and I started a small amount yesterday. As I see it: AINV will become a Business Development Company employing close to $900M which they raised in an IPO @$15/sh. Similar BDC's ALD and ACAS trade at prices above book value. Also these two pay a "dividend" of about 10%. recap for the thread: BDC's pay out their "earnings" directly to stockholders - they don't pay fed. income taxes. These companies loan money to other companies sometimes in complex transactions -taking warrants, fees, etc. They are controversial - shorters consider these BDC's Ponzi schemes because they continually issue new shares, the cash from which maybe ultimately winds up paying those "dividends". Further, these stocks are bought by "unsuspecting" people looking for high div. yields, and with BDC's a possible significant amount of "dividends" are from capital gains in the underlying companies' warrants or shares. These gains are arguably unsustainable and/or misleading because of the way capital losses in the portfolio of loans are treated or not treated (not recognized) by the BDC's management. I hold positions in both ALD and ACAS. I like ALD's more than 40 year history, and I hope its business is real, or at least as real as it has been those many past years. Things may be different now; there certainly seems to be more competition to loan money- to wit: AINV. I'm not sure yet exactly what I'm getting with AINV, so my position is small and exploratory only now. I am hoping that the company can deploy funds successfully and "earn" for stockholders a similar 10%, say $1.50 on $15 book value. Although I don't know the total outstanding shares so I only hope $15/sh is close to the book value that the total shares translate too. Getting the stock under the IPO price, seeing that ALD and ACAS trade now a bit over 1.5x their stated book value, and with some confidence (wrong though it may be) with these latter two companies, it's my opinion that AINV might be a decent investment for me. finance.yahoo.com