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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 |
MCG Capital Reports Q1 Results PRNewswire 4-19 MCG Capital Corporation report DNOI/share [Distributable net operating income] was $0.40/share in Q1-07 and Q1-06. NOI/share fell from $0.39/share in Q1-06 to $0.35 in Q1-07. EPS rose from $0.50 in Q1-06 to $0.52 in Q1-07 - a rise of 4%. Net asset value per common share at end Q1-07 was $12.79 compared to $12.83 at the end of Q4-06. MCG also announced a second quarter dividend of $0.44/share payable 7-30 to share holders of May 24th. For 2007, MCG currently estimates that dividends will be at least $1.76 per share. Private Equity's Foggy Forebears Mark DeCambre, TheStreet.com 4-05 Wall Street is abuzz with talk of private equity shops going public, but some investors are saying been there, done that. Talk is that big private-equity offerings will give mom and pop investors an opportunity to piggyback on the outsize gains that private equity firms have rung up over the past several decades. Last month, Blackstone Group filed for a $4 billion initial public offering. This week, chatter emerged that another titan of the private equity business, Leon Black's Apollo management, is considering an IPO. But Malon Wilkus, CEO of alternative asset management firm American Capital Strategies (ACAS) , says there's nothing novel about investment companies tapping the public markets for the purpose of taking over or investing in other companies. "The public markets provide a fabulous source of capital to fund buyout transactions," Wilkus says, though he adds, "It's a lot of work to be a public company." It can also be a lot of work being an investor in these companies, what with all their complex transactions and arcane strategies. Taking a look at American Capital offers some interesting insights into what might lie ahead with the private equity IPOs. Business development companies like American Capital invest in hundreds of small to midsize companies, at times taking controlling stakes. These entities operate as regulated investment companies and, similar to real estate investment trusts, must distribute at least 90% of their taxable income to shareholders every year. The company's debt must not exceed its equity, but the trade-off is that income generally isn't taxed. Such BDCs function in the same ways that venture capitalists and private equity shops such as Blackstone do. The difference is that being public, BDCs don't have to go on time-intensive capital-raising campaigns to build up a war chest. Wilkus founded American Capital, a buyout and mezzanine fund, out of his two-bedroom condominium in 1986 and took it public a little over a decade later. American Capital has invested in companies such as Gibson Guitar and baby products firm Evenflo. Last March, it helped Cottman Transmission acquire Aamco Transmissions. The combined entity, which will boast 1,100 stores nationwide, will keep the Aamco moniker. Its $6.8 billion market capitalization puts American Capital just behind $11.5 billion Fortress (FIG) , which earlier this year became the first hedge fund to offer shares to the public. Fortress' shares doubled in their first day of trading on the New York Stock Exchange. American Capital started more slowly but has grown steadily. It hit the market more than 10 years ago with a modest $155 million IPO led by Friedman Billings Ramsey, but it has since had 26 additional campaigns. American Capital, since going public, has raised some $15 billion in debt and equity, using a variety of underwriters including J.P. Morgan Chase, Citigroup and Wachovia. The universe of similar publicly traded alternative investment vehicles is small. Thus far, American Capital's performance has been stellar. It has generated internal rates of return of 24% since it was launched -- a number that compares favorably with PE shops and hedge funds, which usually aim for returns in the 15% to 20% neighborhood. "As an operating company, we're one of the best performing operating companies," boasts Wilkus. The company has drawn its share of scrutiny, though. The Securities and Exchange Commission conducted an inquiry of American Capital four years ago tied to short selling and valuations of the companies that it acquires. American declined to comment on specifics of that matter and since the investigation was informal, it's unclear if anything ever came of it. But part of the SEC scrutiny might be tied to the company's debt-to-equity ratio, which has meant the company has had to be mindful of its public offerings. American Capital regularly uses so-called equity forwards -- essentially agreements in which the underwriter shorts the issuing company's shares and distributes proceeds at a designated price as it needs funds and the issuing company covers any loss the underwriter incurs, explains an underwriter for American Capital at a Manhattan-based investment bank, who declined to be identified. The forward serves as a credit line for the company and allows it to maintain its regulated limits, Wilkus notes. "We're never going to play the market. We're just trying to fund our next investment," he says. "To the extent we've had a short position it's been entirely because of the equity short program." These BDCs also have been the target of short-sellers, mostly hedge funds who have sought to profit from borrowing shares and then trying to talk down the company's share price. About 70% of the American Capital's outstanding shares are owned by retail investors, notes Wilkus. He says short sellers "were basically saying that we weren't capable of producing the kind of returns that we have historically produced." He declined to elaborate further. The shareholder base appears supportive, however. "We've been big shareholders since the original IPO. ... These are high-quality long-term [investment managers] who have done a terrific job with their business. They're not high rollers, they're not flashy," says John Lewis, president of Chadds Ford, investment manager Gardner Lewis Asset Management, the largest American Capital shareholder. The BDC market is expected to grow, notes David Chiaverini, research analyst at BMO Capital Markets in New York, who tracks the BDCs. "Driving that is the underlying growth of M&A activity. We're seeing some $200 billion of money being raised by PE funds within the past couple of years ... that's going to drive deal flow for BDCs as well," he notes. Some of the most recent entrants include Kohlberg Capital (KCAP) , which back in December sold $216.5 million worth of shares via Lehman Brothers and Merrill Lynch, and GSC Investment (GNV) , which raised $109 million with lead underwriters Citi, J.P. Morgan and Wachovia. BMO also acted as co-managers on both offerings and is an active BDC underwriter. American Capital has its own growth plans in sight. It hopes to take its show international and has opened offices in Frankfurt, Germany as well as Paris. It also hopes to soon enter the Asian markets, Wilkus says. As its business has expanded, it also has become more sophisticated. American Capital plans on becoming a manager of collateralized loan obligations (a package of loans structured and sold off in pieces to investors), which will allow it to offload some of the debt it originates in its buyouts while also collecting management fees. Recently, it debuted a roughly $400 million CLO. Similarly, it has a number of investment funds, from which it collects management fees, Wilkus notes. Despite the expectation that a wave of private equity shops might be entering the public market, Chiaverini notes that firms such as Blackstone and KKR exist in another stratosphere, targeting much larger buyout prey. That means they are unlikely to be in direct competition. The next goal for the BDCs? Broader market billing. Lewis of Gardner Lewis is hoping that American Capital, as it grows, gets into the S&P 500. "We've committed new capital [in American Capital] over the last month," he says. GLAD Announces Dividends Businesswire 4-11 Gladstone Capital Corp. declared dividends of $0.14 per common share for each of the months of April, May and June of 2007. Monthly dividends will be payable on April 30, 2007, May 31, 2007 and June 29, 2007 to shareholders of record for those dates on April 20, 2007, May 22, 2007 and June 21, 2007, respectively. The dividends equate to a quarterly dividend of $0.42 and an annual dividend of $1.68 at the current rate. GAIN Announces Dividends Businesswire 4-11 Gladstone Investment Corp. declared dividends of $0.075 per common share for each of the months of April, May and June of 2007. Monthly dividends will be payable on April 30, 2007, May 31, 2007 and June 29, 2007 to shareholders of record for those dates on April 20, 2007, May 22, 2007 and June 21, 2007, respectively. On 4-05 Credit Suisse upgraded Macquarie Infrastructure [MIC], expecting better results from the fueling and aircraft storage company's liquid storage division. Analyst Sam Arnold raised Macquarie shares to "Outperform" from "Neutral," and lifted his price target to $45 from $40. He said the company is diverse and has little potential for cost overruns, and is a unique stock that may draw investor interest. "Although Macquarie Infrastructure would not be a bidder, we believe that the potential sale of the New Jersey Turnpike and the Pennsylvania Turnpike will garner investors' attention to the infrastructure space and thus Macquarie Infrastructure," he said. On 3-12 American Capital Strategies announced it plans to make a public offering of 9 million shares of its common stock, 6 million shares of which are being offered by Citigroup, Wachovia and Credit Suisse in connection with agreements to purchase common stock from American Capital at a future date, and 3 million shares of which are being offered directly by American Capital. On 3-08 UBS Initiated coverage of ACAS at Neutral. On 3-05 Banc of America Downgraded ALD from Buy to Neutral. On 3-14 Wachovia Upgraded GLAD from Underperform to Market Perform. On 3-06 AINV announced its fourth fiscal quarter dividend of $0.51 per share, payable 3-29 to shareholders of record of 3-22-07. On 3-14 PSEC declared a dividend of $0.3875 per share, payable on 3-30 to shareholders of record as of 3-23 or having an ex-dividend date of 3-21. This dividend marks the tenth consecutive quarterly increase and an increase of $0.0875 or 29% from the year-over-year prior quarter's dividend of $0.30 per share. 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. |