Allied Capital tanks on default warning

Posted Jan 28th 2009 3:19PM by Zac Bissonnette
Filed under: Bad News

Shares of Allied Capital (NYSE: ALD) tanked today after the company announced that it might default on its revolving credit facility and its private notes. The company is in discussions with its creditors about possible amendments, but said that a default could have a material impact on its operations and prevent the company from paying its historically high dividends.

What makes watching the demise of Allied Capital so interesting is that the company's flawed business model was exposed in obsessive detail in a book by hedge fund manager David Einhorn.

In spite of the overwhelming evidence that Einhorn compiled, his criticisms were mostly dismissed by Wall Street analysts and regulators -- to the detriment of the company's investors.

Most followers of Allied Capital dismissed Einhorn as a disgruntled short seller with an agenda: If Allied Capital shares went down, he stood to make a lot of money. But the bottom line was that the evidence Einhorn presented mostly spoke for itself, and investors were only cheating themselves by dismissing him as a shortseller.

Tags: ALD, Allied Capital, AlliedCapital

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Reader Comments (Page 1 of 1)

2-19-2009 @ 2:42AM

alan earth said...

These pigs should be in jail!

3-30-2009 @ 8:36PM

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