SOURCE: The Bedford Report

The Bedford Report

September 28, 2011 08:16 ET

American Capital Limited and Ares Capital Focus on Shareholder Return

The Bedford Report Provides Equity Research on American Capital Limited & Ares Capital Corporation

NEW YORK, NY--(Marketwire - Sep 28, 2011) - Recent measures taken by President Obama and Federal Reserve Chairman Ben Bernanke have been designed to strengthen the small business sector. Ben Bernanke's "Operation Twist" promotes small business lending, while Obama's $450 billion jobs plan targets small business growth. As the government targets small- to mid-size businesses as the foundation for job growth, the Business Development Company sector could play an important role in the revitalization of the American economy. The Bedford Report examines the outlook for companies in the Business Development Company (BDC) Industry and provides stock analysis on American Capital Ltd. (NASDAQ: ACAS) and Ares Capital Corporation (NASDAQ: ARCC). Access to the full company reports can be found at:

In its statement, the Fed noted that the economy is growing slowly, unemployment is high and housing remains in a prolonged slump. The central bank said in a statement that operation twist was aimed at reducing the cost of borrowing for businesses and consumers, including the cost of mortgage loans. It hopes that the lower rates will encourage companies to build new factories and hire more workers, and consumers to start spending again on homes and cars and clothes and vacations.

Several companies in the BDC sector have been raising capital and reducing leverage, giving them better operational flexibility moving forward through the year. The issuance of public debt has been one of the primary means by which the sector has sought to raise capital.

The Bedford Report releases investment research on the Business Development Company (BDC) Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Several BDCs pay sizable dividends. BDCs are usually taxed as regulated investment companies (RIC) under the Internal Revenue Code. As a pass-through tax structure, RICs must distribute at least 90 percent of taxable income as dividends to shareholders. Ares Capital Corp pays an annual dividend of $1.14 per share for a yield of around 10.5 percent.

Earlier this month American Capital Limited announced the buyback of its $75 million common stock in open market since early August. Common stock of 9.1 million shares has been repurchased at an average price of $8.21 per share. American Capital foresees additional stock purchases or dividend payments by the end of December 2012 and announced the program for the same. According to the company's plan, if the price of American Capital's common stock trade at a premium to the net asset value of shares, then the company will opt for dividend payments.

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