With folks fearful of the prospect of trading profits in a collapse, the reassurance of regular dividends gets some attention from folks looking for highly-rated companies with fat dividends, among which the authors listed American Capital (ACAS).
The downside of the article is lack of independent due diligence on the cited companies. The authors looked at firms who had both high dividends and a high ranking in S&P's Stock Appreciation Rating System. (Get it? STARS. Cute? Ugh.) No disclosure how a firm tops the list -- is it based on NAV? Chart momentum? Ouija boards?
My own question on ACAS is whether the jump from under 16 to over 20 this week was fueled by action from the company's $500m stock buyback authorization, or was simply a matter of shorts taking their profit after the collapse from 30. I suspect that the data I can access on short interest is delayed enough that I won't be able to tell what happened when just by taking a daily survey.
Meanwhile, ACAS announced it will report earnings August 5, and hold a conference call August 6th at 11AM Eastern Daylight Time. Analysts will certainly ask how much of ACAS' $500m buyback budget was deployed during the recent lunacy, and if ACAS hasn't spent the money it'll have trouble convincing people it believes in the shares' value, regardless the facts due diligence would unearth.
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