We’ve own $ACAS since $2.95 and now having a NAV over $17 and a price of $12, there is still plenty of upside for us. The buybacks are immediately accretive to shareholders (the company is essentially buying $1 of assets for $.70). Additionally, the company has set a policy in which shares are bought in leu of dividends when the share price is below NAV and dividends are paid in cash when the share price above NAV.
It is one of the few wholly responsible dividend/buyback plans out there.
BETHESDA, Md., Dec. 27, 2012 /PRNewswire/ — American Capital, Ltd. (Nasdaq: ACAS) (“American Capital”) announced today that in the fourth quarter of 2012, it made open market purchases of approximately 8.8 million shares of American Capital (ACAS) common stock, or 2.8% of the Company’s outstanding shares as of September 30, 2012. The shares were purchased at an average price of $11.72 per share, totaling approximately $103 million.
Starting in the third quarter of 2011, American Capital has made open market purchases of 52.4 million shares, or 15.2% of the Company’s outstanding shares as of June 30, 2011, at an average price of $9.46 per share, totaling $495.3 million. Purchases starting in the third quarter of 2011 through September 2012 were $0.90 per share accretive to the Company’s $17.39 net asset value per share (“NAV”) as of September 30, 2012. Had these shares not been repurchased, American Capital would have had to earn an additional $278 million during that five quarter period to have produced the same NAV per share. Accretion from the purchases in the fourth quarter of 2012 will be disclosed in the Company’s fourth quarter earnings release.
These share purchases were completed in accordance with the Company’s Share Repurchase and Dividend Policy under which American Capital will consider quarterly setting an amount to be utilized for stock repurchases or dividends. Generally, the amount may be utilized for repurchases if the price of American Capital’s common stock represents a discount to NAV, and the amount may be utilized for the payment of cash dividends if the price of American Capital’s common stock represents a premium to NAV. In determining the quarterly amount for repurchases or dividends, the Company’s Board will be guided by the Company’s cumulative net cash provided by operating activities in the prior quarter and since the beginning of 2012, cumulative repurchases or dividends, cash on hand, debt service considerations, investment plans, forecasts of financial liquidity and economic conditions, operational issues and the then current trading price of American Capital stock.