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Market Stats BDCs at Yahoo BDCs at CNN BDCs at Excite MarketWatch BDCs at MSN BDCs at WSJ Factoids Jan Dec Nov |
Former ALD Exec Indicted for Fraud AP 1-11 Shares of Allied Capital Corp., which provides debt and equity financing, fell for a second day Thursday on news a former executive of one of Allied's subsidiaries was indicted on a fraud charge. The Office of the Inspector General of the Small Business Association, an independent unit of the federal government, along with the Department of Justice were investigating the lending activities of Business Loan Express LLC unit and its Detroit office. Earlier this week, according to media and Wall Street analyst reports, federal prosecutors indicted Patrick Harrington, the subsidiary's former executive officer, along with 18 others, for defrauding the Small Business Association out of almost $77 million in guaranteed loans. Merrill Lynch analyst Kenneth Bruce noted that investors are taking the news as a negative scenario, though the impact of the indictment is still actually unclear. He reiterated a "Neutral" rating, saying the market seems to have priced in the news. "Given the indictment involves only one former employee acting on his own, it seems premature to question all the lending practice in BLX and discount the company altogether," wrote Bruce. Hedge Fund Manager - Who Had Shorted ALD - Calls for Managements Removal - Shares Fall 6% Shares Sales Volume Over Five Times Normal - Other BDCs Vulnerable AP 1-22 Shares of debt and equity financing company Allied Capital Corp. plunged Monday after an open letter from a hedge fund manager called for the removal of the company's managers, and suggested the company knew about alleged fraud at its Business Loan Express LLC subsidiary for years. Greenlight Capital hedge fund founder and president David Einhorn in an open letter accused the unit of engaging in similar fraud in up to 17 other states, and said he had warned the company of fraud almost two years ago. "Specifically, the Board should exercise its duty of care by removing the present management team that had presided over the metastasizing fraud at BLX and Allied and by quickly moving to take remedial steps to end the dishonest culture perpetuated by current management," he wrote. A source familiar with the fund who declined to be named said the fund is short on Allied Capital shares, which means it could benefit if the stock price falls. Einhorn in the letter said he has shorted the stock in the past, due to his research into the company. Other BDCs Vulnerable? Factoids 1-22 Look at the short sales ratio of the BDCs. Specifically, looks at ARCC, GAIN, GLAD, NGPC, CSE and KFN. All have high 'short ratios'. If all it takes is an allogation to crash these shares, then I would say they are vulnerable. Heck if I know if David Einhorn has the street rep that added weight to this allegation. ALD was under a cloud of suspicion for some time - a cloud that does not appear to hang over the other BDCs with high short ratios. So this could be a buying oppertunity. OR - the sky could be falling. I am a newbie. Heck if I know. AINV Announces Public Offering PRNewswire 1-04 Apollo Investment Corporation announced that it plans to make a public offering of 16 million shares of its common stock. AINV currently has 84 million shares outstanding. Apollo Investment Corporation has also granted the underwriters an option to purchase up to an additional 2,400,000 shares of common stock to cover over-allotments, if any. The offering price of the shares will be determined by market conditions at the time of pricing in consultation with the underwriters of the offering. ACAS Announces Public Offering PRNewswire 1-03 American Capital Strategies announced it plans to make a public offering of 6 million shares of its common stock, 2 million shares of which are being offered by an affiliate of J.P. Morgan Securities Inc., an affiliate of Morgan Stanley & Co. Incorporated, and an affiliate of UBS Securities LLC (the "Counter-Parties" and each, a "Counter-Party") in connection with agreements to purchase common stock from American Capital at a future date, and 4 million shares of which are being offered directly by American Capital. ACAS has granted the underwriters an option to purchase up to an additional 900,000 shares to cover over-allotments. ACAS currently has 144 million shares outstanding. On 1-08 ACAS announced it had priced its public offering of 6.3 million shares of its common stock at $45.83 per share. Add a Parking Lot to Your Portfolio Tim Gray, NY Times 12-31 A parking lot near the Philadelphia International Airport offers a host of high-end services: valet assistance, online reservations, even a loyalty rewards program. But the niceties can’t hide an outback location. Tucked between Interstate 95 and a field of chemical storage tanks, it lies at the end of a boulevard lined with body shops and strip clubs. About a mile from the airport’s terminals, it’s an alternative to the more costly municipal parking choices there. The lot and dozens like it around the United States are owned by the Macquarie Infrastructure Company, an investment trust directed by the Macquarie Bank of Australia. The trust, which buys entire businesses, is among three Macquarie affiliates — the others are closed-end mutual funds — that trade on the New York Stock Exchange. This Aussie trio gives retail investors the chance to invest in infrastructure — a more formal term for workaday enterprises like parking lots, toll roads, bridges, airports and aviation services. This year, the Macquarie Infrastructure Company [MIC] returned 15.2%, compared with 13.6% for the Standard & Poor’s 500-stock index. Macquarie’s two closed-end funds in the United States are Macquarie Global Infrastructure Total Return [MGU], up 38.4% this year, and Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income [MFD], up 16.2%. (Macquarie Bank is the subadviser of the second fund for First Trust Portfolios of Lisle, Ill.) All three have been listed in the last three years, and neither of the closed-end funds can hold shares of the trust. All three are distinct from the Macquarie Infrastructure Group, which trades in Sydney and has made several high-profile investments in American highways, including the Indiana Toll Road, the Skyway in Chicago and the Dulles Greenway in Virginia. Macquarie Bank says parking lots and roadways are potentially as valuable as oil pipelines or electric companies. It views a private parking lot, for example, as operating much like a utility: throwing off lots of cash, increasing its rates as the economy grows and often chugging along with little direct competition. Macquarie Bank holds a dominant position in this fledgling niche. It invests worldwide through more than 30 listed and unlisted funds and manages more than $35 billion worth of infrastructure equity. Its success has spawned imitators: such well-known firms as Goldman Sachs and the Carlyle Group have been creating infrastructure funds, typically geared to institutional investors. Some analysts raise questions about the amount of debt sometimes carried by the Macquarie Infrastructure Company for acquisitions and the fees Macquarie Bank charges for the management and investment banking provided to its United States affiliates. Before a recent secondary stock offering, the Macquarie Infrastructure Company had a debt-to-equity ratio of 2.49, compared with 0.73 for the average company in the S.& P. 500, Reuters said. A higher ratio indicates potentially more risk for investors. And Macquarie Bank charges its affiliates handsomely for its services, as when the Macquarie Infrastructure Company hires the bank when acquiring assets. The fund also pays a flat management fee as well as a chunk of its profits to the bank. Ted Gardner, an analyst based in Houston for Raymond James Financial, compared the compensation arrangement to that of a private equity firm. 'They’re definitely taking care of themselves on the advisory fees,' he said. But the Macquarie Infrastructure Company has a longer investment horizon than private-equity competitors. 'They’re not trying to get out in five to seven years,' he said. Even a fan said that the bank receives a lot for what it gives. 'The fees are rich, but most of them are performance-based, and as a result, I think they earn what they get,' said Donald B. Gimbel, senior managing director at Carret Asset Management in New York. Macquarie defends the fees and its use of debt, pointing out that the fees depend largely on its performance and that its steady assets generate plenty of cash for debt repayment. No one questions Macquarie’s smarts in infrastructure. It was a pioneer in this area; Australia’s government was one of the first to privatize roads and airports, helping to create the niche. The company has grown into Australia's largest investment bank on the strength of its international expertise. 'They've got people looking at deal flows worldwide, and they're very good at locating deals,' said Babak Zenouzi, senior vice president and portfolio manager at Delaware Investments in Philadelphia. 'Then they've got 450 or so people who help manage the assets.' Macquarie executives say infrastructure is a new asset class, deserving a place in investors’ portfolios alongside the usual stocks, bonds, cash and real estate. According to this line of thinking, the durability and stability of the assets protect against the zigzags of stocks and bonds. In other words, London Bridge may fall down, but only long after Enron has crashed. Infrastructure can help to hedge a portfolio against inflation, said Martin A. Jaugietis, a senior consultant in the asset consulting group at Towers Perrin. 'When prices rise, infrastructure assets tend to be able to increase prices in concert,' he said. 'The cash flows are similar to the rent you’d get from a building.' But Alan J. Marcus, a finance professor at Boston College, questioned whether infrastructure assets were 'enough different that they warrant separate treatment” in a portfolio. 'I doubt that this would be the case for most investors,' he said. 'Gas versus electric utilities also are different, but would anyone make a case that they provide important opportunities for diversification?' Macquarie’s work with toll roads and airports tends to grab attention, but its American mutual funds also own hefty stakes in utilities and related businesses like gas pipelines. At the end of August, for example, about three-fourths of the money in the Macquarie Global Infrastructure fund was invested in utilities or pipelines. Although Macquarie says its closed-end funds belong to a unique asset class, some analysts see similarities to utility funds. 'An easy way to think about Macquarie is as a utility player,' said Norman Young, an analyst at Morningstar in Chicago. Jon Fitch, portfolio manager for Macquarie’s American closed-end funds, points out that utilities share a lot of characteristics with roads, bridges and airports. 'If you look at what infrastructure is, it’s really the hard assets that provide essential services to a community,' he said. “It includes energy infrastructure like pipelines and power transmission. What we typically avoid are competitive types of businesses” like unregulated power generation. Even the Macquarie Infrastructure Company trust, which collects much of its income from selling fuel for private aircraft, owns a natural-gas company in Hawaii. A trait of Macquarie's American offerings - and an attraction for income-oriented investors - is their high yield. Consider the Infrastructure trust. As a matter of policy, it pays out most of the cash its businesses generate, resulting in a yield of 6.2%. Each of the closed-end funds has a yield of more than 5%. Holding little cash leaves scant room for mistakes or economic shocks, but it also disciplines Macquarie Infrastructure, said Josh Peters, editor of Morningstar DividendInvestor. 'When they want to make acquisitions, they have to go to the capital markets, and that gives the market a veto,' he said. 'If the market doesn’t like what the management has done,' the market 'might be closed,' with investors unwilling to provide more money. So far, the market seems impressed. This fall, Macquarie Infrastructure was able to raise $291 million in a secondary stock offering. It will use the money to pay off debt from a recent spate of acquisitions. And it will continue to prowl for future deals. 'People in the United States are used to infrastructure assets being in public hands, but that’s changing,' said Peter R. Stokes, chief executive of Macquarie Infrastructure. 'Municipalities are challenged for tax revenues, and they’re evaluating what they’re spending money on.' A Little Bit Like BDCs - SPACs Zuckerman & MacDonald, WSJ 1-03-07 Courting the public is part of a growing shift by large hedge-fund and private-equity firms to become more "institutional" -- to look more like diverse investment banks -- in order to bring more stability and profits. In November, Fortress Investment Group, a $29 billion private-equity firm, announced plans to sell shares to the public. In December, a unit of Citadel Investment Group, a $13 billion hedge fund, privately sold $500 million of unsecured bonds. Nineteen private-equity and hedge-fund firms sold shares in 2006, raising $12.4 billion, up from 10 firms raising $1.7 billion in 2005, according to data tracker Dealogic. A number of major firms currently are examining ways to tap the public market, investment bankers say. There also is a growing group of publicly traded "special purpose acquisition companies," or SPACs, that use cash raised through IPOs to acquire private companies, often from private-equity firms. In 2006, 40 SPAC IPOs raised about $3.3 billion, compared with 29 raising $2 billion in 2005, according to Dealogic. For investors, these shares are a chance to move into alternative investments, an area that often generates returns that don't correlate with the overall stock and bond markets. Public offerings also enable investors to easily buy and sell their stakes, while avoiding the high minimum investments and net-worth requirements usually necessary to invest directly in these kinds of firms. The shares provide "cheap diversification" for investors, says Robert Discolo, managing director at AIG Global Investment Group, a unit of AIG that invests more than $7.5 billion in hedge funds. But there have been sizable bumps in the road for firms racing to the public markets. In May, Kohlberg Kravis Roberts & Co. listed a fund that raised a heady $5 billion through a share listing in Euronext Amsterdam. The KKR fund's shares quickly traded below their issue price, and now are more than 7% below the IPO price. The shares give investors fewer rights than the private-equity firm's limited-partner investors receive. Apollo Management LP raised $1.5 billion by floating its AP Alternative Assets LP fund, but raised $1 billion less than it originally intended. Soon after, some private-equity titans -- including Doughty Hanson -- said they would shelve plans to list funds. Swedish private-equity firm EQT Partners AB also set aside preliminary plans to list a fund, according to one person familiar with the matter. EQT didn't return calls. Because some of the biggest and most prominent private-equity and hedge-fund firms seem to have little trouble raising money outside the stock market, it may well be "some of the lesser names [that] make the move toward going public," predicts Michael Napoli, who runs Absolute Return Group, a Los Angeles-based hedge-fund advisory firm. Many hedge funds are reluctant to disclose details of their operations as others become more open. Securities filings in connection with Citadel's bond offering, for example, told investors that as of Aug. 31, the fund held borrowed money that amounted to a sizable 7.8 times the firm's assets. Citadel also provided details about recent hires. One worry for investors in these shares: so-called cash drag. Private-equity funds often need to wait before they see an opportunity to invest money, so cash raised from a public offering can sit around, often earning little more than interest, while the managers still collect fees. Hedge funds have had a better run of luck in public markets. Bankers say this is partly because hedge funds can invest proceeds more quickly, plowing the cash into stocks, bonds and derivative markets, if they wish. Still, these types of listings are considered too risky or hard to value by some investors. On 1-12 Banc of America Sec Upgraded ALD from Neutral to Buy. On 1-17 Credit Suisse Initiated coverage of HTGC at Neutral. On 1-19 AG Edwards Upgraded ALD from Hold to Buy. Gladstone Announces Dividends Businesswire 1-09 Gladstone Commercial Corp. [GOOD] declared dividends of $0.12 per common share for each of the months of January, February and March of 2007. Monthly dividends will be payable on January 31, 2007, February 28, 2007 and March 30, 2007, to shareholders of record for those dates on January 23, 2007, February 20, 2007 and March 22, 2007, respectively. Gladstone Capital Corp. [GLAD] declared dividends of $0.14 per common share for each of the months of January, February and March of 2007. Monthly dividends will be payable on January 31, 2007, February 28, 2007 and March 30, 2007 to those shareholders of record for those dates on January 23, 2007, February 20, 2007 and March 22, 2007, respectively. Gladstone Investment Corp. {GAIN] declared dividends of $0.075 per common share for each of the months of January, February and March of 2007. Monthly dividends will be payable on January 31, 2007, February 28, 2007 and March 30, 2007 to shareholders of record for those dates on January 23, 2007, February 20, 2007 and March 22, 2007, respectively. NOTE #1: This page is ment to be a supplement for those already getting monthly sector updates from another source. Data entry errors sporadically happen. There are other metrics not covered here that should not be ignored. |