ECAS has gone private, into the hands of ACAS. This concludes a management-announced deal initiated last year. With the elimination of the ECAS below-NAV market discounts -- because there is no longer a market for ECAS shares, it being private -- and the retirement of over a million ACAS shares in the foreclosure of security posted for a company loan, ACAS' NAV will get a couple of automatic boosts even before the effect of improving comparables prices impacts ACAS' NAV.
I had been very concerned that the dramatic price action (into the toilet) of ACAS over the last quarter might have done something to the shareholders of ECAS and their willingness to consummate the deal. The fact this is done is good news indeed.
I more-than-doubled my position by adding shares at $1.80. My long term take on ACAS is that it continues to be able to more than service its debt, which means that it is not a candidate for being squashed by the sort of liquidity crisis I'd feared last year. The perspective offered by management on the last-quarter conference call in connection with the debt covenants is helpful in appreciating what the company faces in practice. ACAS' ability to benefit from cash generated by ACAS in Europe probaly improves with the ECAS transaction. (Since ECAS never trade above NAV in europe, it never became the vehicle management must have hopes for raising round after round of capital in Europe; thus, its loss as a public entity changes nothing for ACAS except its valuation methodology for ECAS assets.) The per-share price of AGNC, by contrast, has been volatile and seems to exceed last-published NAVs with a certain frequency; AGNC might be a vehicle through which to raise funds under management, and thus management fees.
On the other hand, the current market upswing is surely transitory; the problems facing the country are more significant than to be curable by media appearances or press conferences. As data continue to show suffering, prices in the markets will again reflect suffering. The future will be ugly and bloody, but ACAS will continue to be part of it -- and will continue for the benefit of shareholders to enter good deals on attractive companies.
Caveat emptor . . . .