ACAS Proposes Buying Back 16% – 27% of Shares by June

Elliot Capital seems to have gotten the attention of management…..it’s hard to find anything to complain about with this….

The Release:

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Berkshire Hathaway Warren BuffettWarren Buffett has never detailed the process he uses to value the businesses he acquires for Berkshire Hathaway. However, over the years, he has provided some limited insight into his methods. Q3 2020 hedge fund letters, conferences and more Based on these comments, it is widely assumed that Buffett uses a discount cash flow model Read More


American Capital Announces Strategic Review of Alternatives Seeking to Maximize Shareholder Value, Expands Existing Stock Buyback Program, Now to Acquire $600 Million to $1 Billion
BETHESDA, Md., Nov. 25, 2015 /PRNewswire/ — American Capital, Ltd. (Nasdaq: ACAS) (“American Capital” or the “Company”) announced today that its Board of Directors has instructed the Company to undertake a full strategic review of all alternatives with Goldman Sachs & Co. and Credit Suisse Securities (USA) LLC as its financial advisors to assist in this review. The strategic review will consider all alternatives for maximizing shareholder value, including a sale of the Company or its various business lines in whole or in part. The strategic review will be run by an independent committee of the Board consisting of Neil Hahl,Kristen Manos, Kenneth Peterson and David Richards and will be chaired by Mr. Hahl.

“The Strategic Review Committee looks forward to a full independent review with the sole goal of maximizing value for shareholders,” said Mr. Hahl. The Company’s previously announced plan to spin off to its shareholders a new business development company will be evaluated as part of the review.

“We have generated a 16% annualized growth rate in both our book value and price per share over the five years ended September 30, 2015,” said Malon Wilkus, Chair and Chief Executive Officer of the Company. “Nonetheless, we continue to trade at a meaningful discount to our book value, even as we progress with our plans for the spin off, which is intended to unlock shareholder value. Therefore, I am fully supportive of this strategic review, which will allow us to realize the optimal value for our shareholders.”

The Company also announced that its Board of Directors has revised and expanded its current stock buyback program, which began in the third quarter of 2015, by increasing it to a range of $600 million to $1 billion from the prior range of $300 million to $600 million. Under the program, purchases will only be made at per share prices below 85% of the Company’s net asset value per share as of September 30, 2015. The Company expects to enter into a Rule10b5-1 trading plan to undertake accretive share repurchases on a non-discretionary basis up to the $1 billion limit. The Company expects to complete the upsized program byJune 30, 2016.

“We consider our stock to be a terrific bargain,” added Mr. Wilkus. “Having already purchased shares representing 34% of our shares outstanding when the program started, we intend to purchase additional significant amounts as long as we continue to trade at a significant discount to our book value. During the course of our strategic review we will continue to be prudent managing our balance sheet and cost structure.”

Since American Capital began stock buybacks in August 2011 through September 30, 2015, American Capital made open market purchases of 117.8 million shares, for an aggregate of $1.4 billion, of American Capital common stock at an average price of $12.05 per share.

American Capital expects to disclose publicly the initial results of its strategic review no later than January 31, 2016.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.