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

To: Elroy who wrote (54707)	1/4/2015 1:31:51 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78625

Actually, I disagree that being big is good for their shareholders. It's good for the management, since they can probably take bigger salaries from all the fees. However, for the shareholders BDC is similar to a mutual fund. It's better for you if your mutual fund is small and its manager invests your money in small set of great ideas (haha this is what we were just talking about). Same with BDC. If it's small, they can pick better loans, they don't need to spread out thin and possibly write bad loans. Sure, you can argue that a bigger BDC can write big loans that small BDC cannot. But big loans mean big companies which have access to much more possible sources of capital: banks, bond markets, etc. So the competition is harder. Anyway, you still might be right that PSEC is a good investment. I won't buy though. :)

To: Elroy who wrote (54707)	1/4/2015 9:12:04 AM
From: MCsweet	1 Recommendation Recommended By Jurgis Bekepuris Read Replies (1) \| Respond to of 78625

Elroy, I think that is was you who claimed that PSEC never did dilutive offerings. Look at these offerings that they did during the financial crisis. Look at how much lower the price is for the offerings in 2009 --> below NAV and dilutive to shareholders, money they will never get back. 3/27/08 1.15 million shares at 15.45 5/28/08 3.25 million shares at 14.9 4/22/09 3.2 million shares at 7.75 5/19,09 6.75 million shares at 8.25 6/30/09 4.5 million shares at 9 If you compare total returns between 1/2008 and 12/31/2014, ARCC returns 15.07% average annual while PSEC returns 4.47% average annually. That is why I prefer ARCC. It is so beat up, I actually bought PSEC for a year end bounce, but going to sell this after January effect has taken place. What could go wrong? CLOs underperform and keep getting marked down. NAV gets marked down. Another dividend cut. And, these guys feel the need to serially issue equity so they might have to do a rights offering if they can't do a secondary offering. That is what Wells Fargo analyst thinks will happen, a rights offering. Although a rights offering is "fairer," since it lets current shareholders participate, it is as dilutive and disastrous as a secondary offering. So yes I am long and I think that PSEC is cheap, great discount to NAV. But I don't trust these guys. I hope you appreciate the work I did for you ;) MC