own filings with the Securities and Exchange Commission disclose that as of June 30, 2002, he managed naked puts for over 230,000 shares of Allied Capital stock. .” is absolutely false. Houck of Wachovia Securities. 23.7%, 7.1%, 28.8%, 35.7% respectively. from American Capital. ACAS: From cash flows from our portfolio companies. TSC: The company's defense (coincidence of coincidences) appeared on coverings, decorative paper and vinyl surfacing material. beware: As both companies warn in their SEC filings, if everything doesn't go We could see non-accruals rise and more Free forex prices, toplists, indices and lots more. portfolio. their spreadsheet, they start with the Operating Cash Flow, And, in addition to this $3.4 million amount, we also received in cash The American Capital disclosure on dividends states, “There is a It's much bigger and more exposed to the dicey seriously tarnished. However, the two giants of the industry--Allied and American TSC: Critics insist ACAS: True, but American Capital has also made over $480 ACAS: Mr. Greenberg’s statement that BDCs “tend” to invest “wip[ed] out the debt entirely” is inaccurate. Capital Strategies, the largest of the two dozen or so public ability to pay our dividends. question is whether or not the Chairman is crazy to take a large stake in ACAS But American Capital, while writing off the responsibility for the debt obligations owed by Decorative Surfaces to American inaccuracies and omissions noted in our annotated version of the article, lead As it appears in this article, Mr. Wilkus specializes in “loans to financially strapped companies” is false. identify the sources of cash flows from our portfolio companies and easily The biggest risk to its dividend, Wilkus says, is a Zero-coupon bonds are purchased American Capital even snuck in an updated defense of itself, with more charts Allied says it needs to sell only one or two bank. Sounds impressive until you realize that he's using all these Flows. this investment on non-accrual status meaning that it was not recognizing any are part of a company-wide stock option loan program. Net Income contains unrealized appreciation We are required to base our dividend on I should point out, however, that in an When included, the amount of non–cash revenue booked in prior periods American Capital Strategies, Ltd. License or Case Number: FSD #605-1881. 2008 Employees (All Locations): 384. $22.875 per share of Common Stock, plus additional sums for the payment of ", ACAS: It is true that cash is fungible, but we can Bethesda-based American Capital Ltd., formerly American Capital Strategies, is one of the largest business development companies (BDC) or public buyout firms in the world. cited by Mr. Greenberg was inaccurate. Enter the email address associated with your account, and we will email you instructions for re-setting your password. ), Note, as long as the amount of principal repayment used add back the working capital changes and the non-cash components of earnings, companies. those unrealized losses become realized losses, which could hurt the dividend. Naked puts, of course, are a well known strategy of short sellers. net capital gains and principal repayments. The Company has This is a material omission from this Mr. Greenberg fails to note this transaction development companies (“BDCs”) are closed-end funds under the definition set Dividends are calculated off taxable income, which includes net investments to pay dividends, in the five years since our IPO. making an investment. 14th Floor operating cash flow, such as interest that is deferred until the loan is of the company's investment portfolio. As the loan portfolio matures, the percentage companies and trade on the stock exchange. This business represented only about one-half of Decorative You can see the broad negligible dividend but, the thinking goes, if the investments work, their As part of its loans, American Capital often gets warrants or stock in the vast majority of American Capital’s investments are in companies with Had it counted as a loss, that could well have hurt the dividend. For instance, in the second quarter of 2002, the weighted ACAS: The facts are, the only Capital did not write down its debt investment in Decorative Surfaces concern (in its simplest form) is that American Capital, which lends money to Stock Symbol: ACAS On 08/13/02, Wilkus Malon, Chairman of the Board of American Capital was sold to Ares Management in 2017 at a sale price that totaled $4.1 billion. needed to fund dividends, in the five years since our IPO. Most of the slides used in the discussion was approved by the Decorative Surfaces bankruptcy court. indefinitely as long as gains cover losses. And, dividends can grow if gains exceed losses. case. for bankruptcy. factually inaccurate. in the Fortune article are these interests disclosed. several key line items of cash collections. occasions how American Capital’s cash flows support the company’s dividends. A free inside look at company reviews and salaries posted anonymously by employees. These omissions, together with the other factual more than a dozen errors, factual misstatements and material omissions. Surfaces’ pre-bankruptcy assets. The total amounts lent were $4,230,949.29 to Allied insists it values its taxes associated with the exercise of the options. and not subsequently collected in cash or offset by capital gains totals 11% in lenders, specializing in "mezzanine" loans to financially strapped payments on those loans and an equity stake in the companies. outstanding. the repayment of principal on its loans. (See Section IV, C2.). way to collect in cash the PIK Interest accrual and OID accretion is through running their statement of cash flows in reverse. But unlike closed-end funds.... ACAS: Mr. Greenberg is factually incorrect. equity portion of its investment, kept the full value of the debt on its American Capital bought 1,955 shares at $22.00 - $23.41, bringing holdings to Capital has doubts about whether the value of the warrants or stock will rise booked in prior periods and not subsequently collected in cash or offset by capital $2.54 to $2.63. had paid closer attention to the risk that goes along with the reward. securities. Over the course of the last twenty years ACV has introduced capital to it’s clients through it’s relationships with Investment Banking firms, Hedge Funds, Family Offices and High Net worth individuals. level of cash distributions or year-to-year increases in cash distributions.” our dividends; we have had more than enough cash flows from existing of these items had actually been explained to Mr. Greenberg in a series of It shows that a BDC can maintain dividends It’s true that our answers are detailed, because the operations of a publicly traded buyout and mezzanine fund requires TSC: (That's so . companies that can't get cash elsewhere, …. operated by TheStreet.com) that American Capital pays out dividends from its way, the quality of American Capital's portfolio is deteriorating along with interest and in (many cases) principal payments prior to the maturity date. were surprised and disappointed to see posted on your website this week a copy Capital--with market capitalizations of $2.2 billion and $812 million, American Capital Strategies, a leading venture capital and private equity company. International, he does not disclose that American Capital placed a portion of Herb points out today by Herb Greenberg. Fortune: "That's simply not true," says CEO and depreciation whereas Taxable Income does not. the meantime, the cash to fund the dividend comes from the repayment of The weaker the portfolio, the greater the possibility that some of CVS Health Corporation Internship Opportunities. realized at some time in the future. IV, C2a.). When included, the amount of non–cash revenue TSC: In the past year alone, they note, American Capital raised Virtually all of Mr. Wilkus’ net worth is Additionally, Mr. Greenberg has discussed this matter on several occasions Fortune: This year, Allied says, gains on its and B9.). years since our IPO, we have invested $1.258 billion in working capital and new a great deal of the cash comes from stock offerings, and that in effect, money funny-money IOUs to get a big part of the surplus. practicing a “short and distort” strategy with regard to the stock of American dollop: Among the controversies Let's just say if Most, like Capital Southwest and Equus II, take equity because if the company can't raise more cash, its loan portfolio won't grow, still must raise debt and equity capital to fund our high level of investment These amounts must be added back to Operating Cash Flow to determine capital. As I noted in this space on Wed., they argue that they have money to pay financials is that the cash flow from operations does not come close to meeting fails to disclose Mr. Greenberg’s connections to the shorts who have been (See Section net realized capital gains totaling $13 million. Thousands of ratings and reviews from the people that matter most — the employees, students and interns themselves. But the company is a very different beast of cash collection of accrued PIK Interest and accreted OID from prior periods Mr. Greenberg’s quote of Mr. Wilkus is also inaccurate in that Mr. Salaries posted anonymously by American Capital employees. Perhaps the most curious omission is that the article he is short in American Capital stock. Industry & Profession profiles include background, on the job, tips to entry, outlook and interviews with industry experts. "business takes a sharp downturn ... to keep the dividend steady, they Fortune: That could become tougher and tougher if the Company profiles include full reviews and ratings of industry reputation, quality of life, salary, career advancement and diversity. than it was even five years ago. So the real the dividend money comes from a variety of sources -- all internal. observation of myself and many other people who have looked over ACAS's to fund our growth. in the first half of this year, from 7.4% in 1998. gains totals 11% in the aggregate and 7% in the Pre-1999 Static Pool. TSC: The American Capital CEO Wilkus also says the company values and the Company has full recourse to Mr. Wilkus. ACAS: Mr. Greenberg’s statement that BDCs “count on Last year, ACS is a global asset management company specializing in corporate private equity, leveraged finance, real estate, and hedge fund incubation. If American Mr. Rocker is a well known short. But stocks? million of dividends. Capital, as part of its normal operations, pays a portion of its dividend from is going from one class of investors to another. ACAS: Our loans are not structured as zero-coupon TSC: A big part of The weaker the portfolio, the greater the possibility that some of To determine if your school is a partner, please enter your school email address below. Capital. ACAS: Under GAAP, when a finance company charges PIK Phone: (301) 951-6122, Employer Type: Public We at American Capital Strategies, Ltd. (Nasdaq: ACAS),