Although Cramer dismisses ACAS, which he previously criticized as opaque, as "way too risky for me" despite being well below NAV, he makes a bullish call on AINV (good dividend is safe, he says) despite commenting that "I wish I knew more of what they own" and "it has been too big of a run for me here." Of course, Cramer is also reported to say "don't buy AINV."
Given that Cramer doesn't know what either company owns, why does he analyze them differently? Cramer's analysis can't be explained simply by the dividend, because his point of view predates the companies' differing dividend policy. Both are opaque to the extent that one can't tell what individual portfolio companies are doing.
Although I own both – ACAS more than AINV, admittedly – I have more enthusiasm for ACAS because ACAS holds not just debt but equity, and has a chance at participating in the upside when a portfolio company really performs outstandingly well. AINV may have steady debt income, but the outsized equity returns aren't part of its apparent appeal.
The value of illiquid equities may not seem like much, but as portfolio companies succeed, equity provides a nice upside. ACAS' holdings in AGNC and MION are good examples. AGNC trades well above the $20 IPO price and pays a solid dividend; MION is expected to become publicly traded later in the year in a transaction that will repay all the debt owed ACAS and leave ACAS holding over 40% of the company's equity.
What does AINV offer other than – one hopes – the steady return of senior debt interest? Given what I've suffered after buying near $20, I'm not exactly sold on the security of that deal. The high-upside opportunity of ACAS (enhanced by its below-NAV share price) on the equity side of its investments offers me some consolation for the share price shock I've suffered.
I'd love to hear the details of Cramer's analysis, but there just doesn't seem to be any analysis on these companies. Is there any?