Thursday, July 10, 2008

ACAS Touted As Turnaround Story

Seeking Alpo entertainingly confuses the recent 31¢ American Capital Agency (AGNC) stub-quarter dividend with the much larger dividend at American Capital Ltd. (ACAS) to gush about ACAS' lush 5% dividend, when the truth is over three times that. Nevertheless, the author recommendes buying ACAS shares and establishing a bullish call spread.

Imagine what they'd recommend if they actually knew something about the company? Getting basic information like current and historical dividends so dead wrong is ... well, alarming. But hey, it's a big for-profit site full of news. Why bother with facts or research? Just ... you know ... troll for clicks!

Given ACAS' historical dividend yield and the company's consistent history of raising dividends, a prediction of price correction to bring the yield in line with historical norms certainly seems to have some merit. Returning ACAS to a 9% dividend would involve approximately doubling ACAS' per-share price.

As Spock might say: fascinating.

No comments: