Monday, June 30, 2014

American Capital Ltd. (NASDAQ: ACAS)

American Capital, Ltd. is a private equity and venture capital firm specializing in management and employee buyouts, subordinated debt, leveraged finance, mezzanine, acquisition, recapitalization, middle market, early venture, mature, industry consolidation, and growth capital investments. The firm seeks to invest in senior debt mezzanine, unitranche, and equity financing for buyouts of private equity firms and direct in private and public companies. It also invests in special situations and in government. In special situations, the firm invests in troubled situations and in distressed situations. The firm also considers smaller investments as add-on acquisitions for existing portfolio companies.
To review American’s stock, please take a look at the 1-year chart of ACAS (American Capital, Ltd.) below with my added notations:
1-year chart of ACAS (American Capital, Ltd.)
Over the last 5 or 6 months ACAS has traded mostly sideways, while forming a trend line of support (blue). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its relevance. As you can see, the market deems ACAS’ trendline to be very important. In addition, the stock also has a key level of resistance at $16 (red).

The Tale of the Tape: ACAS has a trend line support and a $16 resistance. A long position could be entered on a break above $16, or on a pullback to the trendline, with a stop placed below the level of entry. A short position could be entered if ACAS were to break below trendline or if the rally continues up to $16.
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