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$22.44 -0.76 (-3.28%)
7/3/2008 1:00 PM

American Capital Strategies, Ltd. (ACAS)

CAPS Rating:
****

The Company is a business development company that also serves as publicly traded alternative asset manager.

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Avatar LemmingsRcoming (69.11) Submitted: 2/01/08 3:19 PM : Outperform Start Price: $33.26 ACAS Score: -23.84

My method for rating stocks is pretty simple. Since our definition of “The Market” is the S&P 500 Index, I have done an extensive analysis of these companies. I simply did a multiple regression comparing the per share data like dividend, book value, earnings, etc. compared to share price. Then using this regression, I can come up with what the market says a company’s share price should be, based on these fundamentals. But I don’t stop there. There are plenty of stocks either overpriced or under priced based on their prospects for the future. So I did a percentile rank of each of the rest of the fundamentals, like financial strength, management effectiveness, growth, profitability, etc.. I found that, most of the time, a company with a high percentile rank in these safety factors, was trading for more than the per share data says it should be worth. Conversely, companies with low ranks tend to trade below their calculated value. There are a few rare examples of companies that rank highly in safety factors AND trade below calculated value. These are the stocks I want to own. These are my out-perform picks.

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Avatar titotheman (70.57) Submitted: 2/02/08 12:22 PM

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I'm very new to the investing game, and by your review of ACAS it's sounds like you have a defined method to your investing. Do you have other out-perform stocks that you would like to share. I agree with you, I think ACAS is the best BDC in the space. I know it's fairly new, but what do you think about BKCC? I can't help but think with the backing of Blackrock - this will be a BDC to keep an eye on in the future.

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Avatar LemmingsRcoming (69.11) Submitted: 2/04/08 4:50 PM

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I calculate BKCC's value at $30.54 per share, but it's percentile rank in factors like financial strength, profitability, and management effectiveness is only .285. This means that BKCC is better than 28.5% of the S&P 500 companies in those areas. This is the pattern I normally see. You have a company trading below its value, but there may be good reason for that.

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Avatar DerektheDude (98.76) Submitted: 4/25/08 11:51 PM

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To jump in on Lemmings, after playing around in CAPS for awhile, everyone tends to fall into a method of investing that works for them. Mine is much less analytical/mathematical than Lemmings, but with that All-Star rating it sure seems like he found a system that works for him.

Play around with some different things on CAPS and find out what works for ya. The good thing about it is that you can dump a loser and not lose any "poundage" in your wallet. I've been pretty lucky and have a decent rating, but I'd be just as happy with a substantially lower one. The point is that I've used the community intelligence here to find something that works for me in the real world with real money. Before making a trade I always check CAPS to see what the stock is rated, how the All-Stars/Wall Streeters expect it to fare, and even read the last few weeks of pitches on the stock. My system makes sense to me and helps me sleep at night. As long as you've got that, I think you'll do just fine. Good luck! :-)

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