Steve Kuhn's American Capital Presentation at Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago 2013 is Steve Kuhn of Pine River Capital.  He pitched American Capital (ACAS).


Steve Kuhn's Presentation At Invest For Kids Chicago

•    American Capital (ACAS): a Fabulous Fish out of Water
•    BDC with three business lines
o    Debt & Equity in US companies
o    Debt & Equity in European companies
o    Asset management arm
•    Tax treatment similar to REITs yet pay out all earnings in dividends
•    Sector is slightly at a premium to book value
•    Dividend value of 9.8%
•    ACAS is trading at 0.73x but doesn’t have a dividend
•    In 2008 they had a giant NOL carryforward
•    But using NOL was a better strategy than paying out divided so they converted to a C-Corp and are using the NOLs
•    Repurchased 27% of stock in the last 2 years which added over $1.50 per share to book value since June 2011
•    Average price to book of repurchase is 0.66x
•    Going to buy back 15% of equity now
•    On the “naughty list “ of diluters such as Citi and BofA is 0.7x
•    Book value growth has been at a CAGR of 38%
•    Book value of the asset management business is $3 per share
•    AUM of 14 billion
•    3 CLO deals this year – plan for additional products and business lines
•    Company values business at $1 billion yet it makes $120 million per year (super conservative valuation – could be worth $500 million more)
•    By 2016 Book value could be a s high at $26 per share 
•    ACAS has 3 years of tax shield of three more years then probably reinstates a dividend
•    Think portfolio value could increase as well and could underpin a $28 per share valuation
•    Management has 250 million reasons (options) to make this happen – would increase to a value of $105 million
•    Book value of $19.28 and trading at $14.20 


Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

John Paulson Sells Some American Capital (ACAS)

John Paulson's hedge fund Paulson & Co just filed a Form 4 with the SEC regarding transactions in American Capital (ACAS). Per the filing, Paulson's various hedge funds sold a cumulative 4,350,342 shares of American Capital.

The majority of the sales came at prices of $7.74, $7.27, $7.09, and $6.11. Paulson's various hedge funds were selling as early as September 27th and as recently as October 4th. Shares currently trade around $6.51. While this seems like a lot, keep in mind that at the end of the second quarter, Paulson owned over 43 million shares of ACAS.

Paulson has had a rough year his Advantage Fund is -28% for the year as noted in our hedge fund performance numbers update.

Per Google Finance, American Capital is "an equity firm and global asset manager. It invests in private equity, private debt, private real estate securities and other investments, technology investments, special situation investments, alternative asset funds managed by it and structured finance investments. It invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by it (American Capital One-Stop Buyouts) or sponsored by other private equity funds (Private Equity Buyouts) and provide capital directly to early-stage and mature private and small public companies."

For some of our past coverage on this manager, head to Paulson on risk arbitrage.

Hedge Fund Paulson & Co Files 13G on American Capital (ACAS)

Due to activity on April 19th, 2010, John Paulson's hedge fund firm Paulson & Co has filed a 13G with the SEC regarding shares of American Capital (ACAS). John Paulson's fund has disclosed a 15.5% ownership stake in American Capital (ACAS) with 43,725,000 shares. The vast majority of shares are held in the firm's Recovery Fund and Advantage Plus Fund. Regular readers of Market Folly will already be aware of this position because we previously reported that Paulson would be acquiring a new ACAS stake. This is not new information, but it does confirm what we already knew.

Paulson added shares of ACAS via a $295 milion stock offering from the company where he paid $5.06 per share. ACAS now is trading and Paulson & Co appears to be the largest investor in American Capital. ACAS will use this much needed capital infusion to help restructure debt.

In other news relating to Paulson & Co, you of course know that they've been put in the spotlight as of late due to the accusations surrounding Goldman Sachs and the subprime mortgage trade. John Paulson set out to clear the air in his recent letter to investors. In terms of his hedge fund's recent execution, you can also view Paulson & Co's recent performance numbers here.

Taken from Google Finance, American Capital is "an equity firm and a global asset manager. The Company invests in private equity, private debt, private real estate investments, early and late-stage technology investments, special situation investments, alternative asset funds managed by the Company and structured finance investments."

For more on John Paulson's hedge fund, head to Paulson & Co's portfolio.

John Paulson Buys American Capital (ACAS) Stake

Shares of American Capital (ACAS) were up 5% yesterday after it was revealed that John Paulson's hedge fund Paulson & Co would be buying a 13% stake in the company. This capital will be used to help restructure ACAS' $2.4 billion of debt. They were in need of an infusion, and they certainly got it.

Paulson picked up shares in a $295 million stock offering that was priced at $5.06 per share, a slight discount to where shares ended last week. Paulson will scoop up the vast majority of the offering as his firm buys 43.7 million of the available 58.3 million shares. This should make John Paulson's hedge fund the largest shareholder in ACAS. In terms of other recent investments out of the hedge fund, we recently saw them buy shares of NovaGold Resources (NG) and you can always view the rest of Paulson's portfolio here.

Todd Sullivan over at ValuePlays.net has been long shares of ACAS even before Paulson and obviously can't complain when a prominent investor starts buying shares too. While Sullivan isn't managing $32 billion like Paulson, he recently started his own hedge fund, Pennant Fund LP along with Doug Estadt and they were up an impressive 48% for the first quarter of 2010. John Paulson's various hedge funds have had mixed performance thus far this year. His Advantage Plus fund was -1.18% for the year as of February, his Advantage fund -0.93%, his International fund up 0.47%, his Credit fund up 3.35%, and his Enhanced fund up 0.99%. All of these were noted in our first quarter 2010 hedge fund performance update.

Taken from Google Finance, American Capital is "an equity firm and a global asset manager. The Company invests in private equity, private debt, private real estate investments, early and late-stage technology investments, special situation investments, alternative asset funds managed by the Company and structured finance investments."

For more on John Paulson's hedge fund, head to Paulson & Co's portfolio and of course our in-depth look at their new gold fund.