View Full Version : PSEC

12-13-2005, 09:15 AM
Reiterating my STRONG BUY. This BDC just raised it's divvy 40% and all but promised more to come. From http://biz.yahoo.com/iw/051212/0103789.html

Prospect Energy Corporation Increases Quarterly Dividend by 40% to $0.28 per Share
Monday December 12, 4:15 pm ET

NEW YORK, NY--(MARKET WIRE)--Dec 12, 2005 -- Prospect Energy Corporation (NasdaqNM:PSEC - News) ("Prospect") announced today that it has declared a second fiscal quarter (for the fiscal year ending June 30, 2006) dividend of $0.28 per share, payable on December 29, 2005, to shareholders of record as of December 22, 2005. The ex-dividend date is December 20, 2005. This dividend marks an increase of $0.08 or 40% from the prior quarter's dividend of $0.20 per share, and the fifth consecutive quarterly increase. Prospect's annualized dividend yield is now approximately 8% based on its September 30, 2005 net asset value.
Prospect estimates its net investment income in the current quarter will reach approximately $2.0 million, or approximately $0.28 per share. After eliminating non-recurring expenses and adding investment return on previously setaside cash into treasuries for the full quarter, both on a pro forma basis, Prospect estimates its net investment income in the current quarter would have reached approximately $2.3 million, or approximately $0.33 per share, equivalent to an annualized dividend yield of approximately 9%, based on its September 30, 2005 net asset value.

Dividend History

Dividend Per Share Quarter Ended
-------- --- ----- ------- -----
$0.28 December 31, 2005
$0.20 September 30, 2005
$0.15 June 30, 2005
$0.125 March 31, 2005
$0.10 December 31, 2004


My Nov 9th rating was as follows:


Raising PSEC from a HOLD to a STRONG BUY.

Earnings come out today after the close - http://biz.yahoo.com/iw/051028/099576.html

Insiders are buying . . . http://finance.yahoo.com/q/it?s=PSEC

Chart looks good . . . http://finance.yahoo.com/q/ta?s=PSEC&t=3m&l=on&z=m&q=c&p=m28,b&a=v

Divvys increasing . . . http://finance.yahoo.com/q/hp?s=PSEC&amp...;f=2005&g=v (http://finance.yahoo.com/q/hp?s=PSEC&a=06&b=27&c=2004&d=10&e=9&f=2005&g=v)

Still cheap relative to book value - from http://finance.yahoo.com/q/ks?s=PSEC
Book Value Per Share (mrq): 14.595

I got a 5.5% of my NAV bet that it will do well tomorrow.


My older rating was as follows:


Cutting PSEC from BUY to a HOLD. Stock is on a roll, and had a nice run lately, and is still a keeper, but I just feel less good about it, what with the lawsuit and all, than I did about six weeks ago.


My older rating from 9/16/05 was as follows:

I think PSEC is going to do well. From the latest earnings report at http://biz.yahoo.com/iw/050915/095472.html

NAV = 13.75 (currently selling at a (14.1% discount!)
Divvy = $0.20
Yield @ 11.81 = 6.77%

But now for the good stuff:

We estimate that the current first fiscal quarter results will include approximately $0.15 per share of non-recurring expense (see Supplemental Financial Information below). Without such expense, which we believe will decline significantly beginning in the second fiscal quarter of 2006, we estimate that Net Investment Income would have been approximately $0.35 per share in the present quarter and we would have been able to pay a larger dividend (and which would have increased the annualized dividend yield based on our September 15, 2005 closing price by as much as 5.0%). We are approximately 65% invested, in long-term investments, and will continue to target additional long-term investments that we expect will permit us to continue increasing our dividend. Our policy has been to pay our dividend solely from net investment income in each quarter, with the goal of building and maintaining a long-term track record of steadily increasing dividends from earnings, rather than paying dividends out of capital.

If they didn't have the non-recurring expense the divvy woulda been $0.35, and if they woulda been fully invested we are looking at a future divvy of $0.53 this time next year.

I think this stock could double in the next 12 months . . .


Additional info . . . it is interesting to compare PSEC with AINV. Both got off to a slow start - see the price and divvy history at http://finance.yahoo.com/q/hp?s=AINV&amp...;f=2005&g=m (http://finance.yahoo.com/q/hp?s=AINV&a=04&b=5&c=2004&d=08&e=16&f=2005&g=m) for AINV. Took 'em awhile to get most of their capital invested, and the stock price dropped well below the IPO price and book value, but when they got the capital mostly invested and started jacking up the divvys, the stock price took off.

I think PSEC is where AINV was about last December. AINV has a better management team, but PSEC is in a better sector.

See http://finance.yahoo.com/q/ta?s=AINV&t=2y&l=on&z=m&q=c&p=m28,m28,b&a=v&c=AINV for a chart of AINV . . .

See http://finance.yahoo.com/q/ta?s=PSEC&t=3m&l=on&z=m&q=c&p=m28,m28,b&a=v&c=PSEC for a chart of PSEC . . . from a technical standpoint, the stock is busting through the 28-DMA on nice volume, which should attract the attention of the mo-mo guys.

12-13-2005, 09:51 AM
FWIW I've owned some PSEC for awhile now. I bought it awhile back because I thought it was cheap. So far so good.