American Capital, Ltd. (NASDAQ:ACAS)

selling at 60% of book value with almost $5 per share in cashflow...so at this price, its margin of safety is pretty large

American Capital continues to buy dollar bills for 70 cents by repurchasing its own shares at a discount to tangible book. So long as the stock trades at a discount to NAV, the company will continue to create shareholder value through the repurchase; if and when the price catches up with NAV, the resumption of a dividend could act as a catalyst for the share price.

This company has consistently beat earnings projections for 5 quarters, has a solid chart, and an excellent valuation. What's not to like?

book value over 15, div coming back soon

This stock will go up, so it's a good pick unless you want to sell short.

very low P/B and P/E. They invest in corporate debt on a leveraged basis. They also manage AGNC and MTGE (total 11B market cap) and manage some private equity funds (total ~2B) and collect management fees from that. They also have a huge tax loss carryover.

They got burned really badly during the 2008 liquidity crisis and ever since then it's been trading at a major discount to book value. Too low, IMO. Ben's got my back. His hands are tied by the Taylor rule, which says that he can't raise rates unless inflation rises or unemployment goes down. Neither is likely to happen much, because of automation and Moore's law.

good small opportunities

American Capital is very undervalued right now and if they start paying out a dividend again, I expect them to to triple.

It is currently selling for about 1/2 of its net asset value.

there's free money right now thanks to the fed, and hopefully the economy is coming back.

ACAS, which historically traded at a premium to Net Asset Value, has been hated since it suspended its dividend and currently trades at about half its last-published NAV. This, despite management's recent NAV-increasing performance, solid and growing operating income, strong interest coverage, and ability to reinvest earnings without near-term tax impact due to a loss carryforward facilitated by its current tax status. Recent use of cash has graduated from paying down debt (so that it has no near-term principal obligation) to making 8-digit investments in new portfolio additions and in below-NAV (i.e., immediately accretive) share buybacks.

Public lack of sophistication with respect to ACAS and its operations, business, and prospects contribute to its underpricing. Discussion of ACAS is available at the Jaded Consumer:
http://jadedconsumer.blogspot.com/search/label/Ticker%3AACAS

Management has been growing its fee management income (AGNC, MTGE) nicely, but the real story is in the valuation of ACAS' diverse portfolio of investments, and the improvement of those companies' earnings as the macro-economic environment improves. Just as Buffett has made long-term investments in the macro-economic environment, so may we – and by using ACAS as an internally-diversified and internally-leveraged equity investment, we can use ACAS to obtain results that outstrip those of the S&P (look at the chart from 1Q2009 to the present, to show post-crash results).

Although ACAS is unlikely to pay a dividend for at least a year due to its tax status and the consumption of its loss carry forward (a BDC's dividend-payment requirement is based on taxable income, not quarterly results or SEC-reportable "earnings"), the eventual resumption of the dividend is likely to return ACAS to its historic trading price above NAV (just as its publicly-traded management client AGNC enjoys). Both ACAS' own internal growth and the conversion from NAV discount to NAV premium are independently good reasons to buy: together, it's long-run dynamite.

Stock price ~50% of NAV. ACAS had a rough go of it through the recession, having to deal with hostile creditors who threatened to force ACAS into bankruptcy & creating negative press. With those creditors no longer in the picture, and ACAS's portfolio on the upswing, NAV should continue to improve over the next few years to pre-recession levels.
Further, ACAS has been buying back shares (~2.5% of outstanding on last report), and plans to continue as long as the stock price is below NAV. While not currently paying out distributions (in order to maximize the use of prior year losses for tax writedowns), the buyback program contributes significantly to shareholder value. This company is returning to greatness; jump on board when share price is severely discounted to NAV.

The company has recently announced a share buyback and a possible dividend. Once the company finally starts paying the dividend this stock will go through the roof. The reason I know this is because the company has to pay out 90% of its net income in the form of dividends. This will attract a lot of investors which will cause the price per share to go up as well.

In the long run, when you include dividends and share appreciation, investors can make over 500% in profit from this stock.

Cheap.

Call me a sunny-eyed optimist, but this stock looks too good to pass up. Its renegotiated its debt covenants and been moved off the "going concern" deathwatch, but still trades at roughly .5 NAV, 1.8x earnings, and 1.5x cash flow. When they finally reinstate a dividend (likely sometime in 2012), the yield should be substantial, and I expect the stock to follow. A possible multi-bagger in the making.

9/18/11 Options Predictor Rank #72. P/C Ratio 0.203 and Call Sizzle 3.251.

MY FAVOITE ALL TIME STOCK.. LOOK FOR THE DIVIDEND TO RETURN WITHING THE NEXT 3 QUARTERS.. WILL MAKE INVESTORS MONEY AGAIN, VERY SOON.

Have to wait out re-instatement of the dividend, time frame is hard to predict, but if able to wait this is a strong bet.

While this stock was beaten up badly during the financial crisis, their debt has been refinanced and they have brought on some prominent investors to take a stake since the crash. As the economy picks up, I expect ACAS to be trading back at pre-crisis levels within 3-5 years. Even though the stock is trading at close to $10 up 31% year to date, I still think it is an attractive buying opportunity.

I would recommend getting into this stock before they reinstate a dividend. Once dividend payments resume, I believe that stock price appreciation will be greatly accelerated and you do not want to miss out.