Insider Purchases & Buybacks: ACAS

A stock buyback often serves as a good indicator of the value in a company's shares. However, in turbulent times such as these, we should also look for stocks that are coping well and providing value against a difficult industry and/or economic backdrop. One such company is American Capital Strategies (ACAS - commentary - Cramer's Take). (On Stockpickr, you can see the rest of the insider trades and buybacks.)

American Capital Strategies' board has approved a share-buyback plan of up to $500 million, representing almost 9% of the company's outstanding shares. In addition to the company's buyback plan, the shares have also found favor with some insiders. Director John Koskinen bought 5,000 shares of the company earlier this month at a price of $32.22. In November, CEO Malon Wilkus purchased 3,000 shares within a range of $36.80 and $37.11, while Director Kenneth Peterson bought 15,000 shares for between $34.83 and $36.50.

ACAS reported 34% year-over-year growth in operating income for the third quarter ended Sept. 30. The company's net operating income rose by 5% to 82 cents per share. Earnings plummeted 84% to $21 million in the quarter due to a surge in net depreciation.

The company raised the bottom end of its fourth-quarter guidance for net operating income, revising it from between 79 and 84 cents a share to between 81 and 84 cents. ACAS estimates its alternative assets under management as of Dec. 31 at between $17 billion and $19 billion.

Despite the credit market crisis, the company was able to raise $1.7 billion in the third quarter. ACAS upped its regular dividend to $1.00 a share, 4 cents higher than its guidance, while changing its dividend policy for net long-term capital gains. With these capital gains being made available for dividend payments, the company should be able to sustain its dividend growth, even with uncertainty surrounding the U.S. economy.

---

At the time of publication, Raznick had no positions in the stocks mentioned, although positions may change at any time.

Jason Raznick is president of Easy Stock Alerts and has been involved with the capital markets for several years. He has worked for Merrill Lynch, Dynamis and Tricap Holdings, a joint venture with Fortress Investment Group. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Raznick appreciates your feedback; click here to send him an email.