The share repurchase program of American Capital, Ltd. ACAS gained traction as it announced the repurchase of around 6.5 million shares of common stock in open market during second-quarter 2015. The shares, reflecting 2.4% of its outstanding shares as of Mar 31, 2015, were purchased for around $92.6 million at an average price of $14.32 per share.
Maryland based-American Capital will disclose the accretion to its net asset value (NAV) from the purchases in its second quarter earnings release. The company repurchased shares pursuant to its share repurchase program that commenced in third-quarter 2011.
Notably, in Mar 2014, American Capital had suspended the share repurchase program for an indefinite period owing to evaluation of its possible capital requirements with respect to the spin-off. However, during the first quarter 2015, the company announced the resumption of its share repurchase program from the second quarter of 2015. The company's board of directors had reinstated the authorization on Feb 23.
Since the third-quarter of 2011 the company purchased 108.1 million shares for $1.3 billion at an average price of $11.90 per share. Notably, repurchases were $1.91 per share accretive to its $20.12 NAV per share as of Mar 31, 2015.
In accordance with its share repurchase and dividend program, American Capital will consider setting a quarterly amount for the purpose of share buybacks or dividend payments. The company may undertake repurchase in the event the price of its common stock reflects a discount to its NAV per share, while dividend payment will be made when the company’s common stock price represents a premium to its NAV per share.
We believe the latest capital deployment move by American Capital certainly boosts investors’ confidence in the stock.
American Capital currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the finance space include Garrison Capital Inc. GARS, Cash America International, Inc. CSH and Santander Consumer USA Holdings Inc. SC. All three stocks sport a Zacks Rank #1 (Strong Buy).
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