American Capital (ACAS) Buys Back Shares Worth $296.5M

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American Capital Ltd. ACAS announced the repurchase of its common stock worth $296.5 million. The company bought back a total of 21.2 million shares of its common stock at an average price of $13.96 per share. The number of shares repurchased represents 8.8% of the company's outstanding shares of common stock as of Mar 31, 2016.

In Nov 2015, American Capital's board of directors changed and expanded its share repurchase program. Under the new program, the company is authorized to buy back shares worth $600 million to $1 billion as against the previous range of $300 million to $600 million. However, the shares can be bought only at per share costs below 85% of the company's net asset value per share as of Sep 30, 2015, subject to some conditions.

In Dec 2015, American Capital entered into Rule10b5-1 trading plan for accretive share buybacks. Under this trading program, the company spent $730 million to repurchase shares of its common stock. The program is scheduled to be completed by Jun 30, 2016.  

Since the initiation of this capital deployment program in Aug 2011 through Dec 2015, American Capital repurchased 159.7 million shares of its common stock for $2 billion. The average purchase price came in at $12.62 per share.

The share buyback program should enhance investor confidence in the company and thus, solidify its position in the market. However, the low interest rate environment and global cues might act as headwinds in the upcoming quarters.

American Capital currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same sector include BlackRock Capital Investment Corporation BKCC and OFS Capital Corporation OFS with a Zacks Rank #1 (Strong Buy), as well as Safeguard Scientifics, Inc. SFE holding a Zacks Rank #2 (Buy).

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