For the most part, I usually argue here against buying shares of investment companies, but there are exceptions, and American Capital Strategies is one.

American Capital Strategies (NASDAQ: ACAS) invests in middle-market companies through 12 offices in the United States and Europe. Typically, it invests up to $800 million to fund management and employee buyouts, private equity firm buyouts, acquisitions, and restructurings.

Analysts like ACAS's projected asset growth rate for 2008, including alternative assets managed through external funds.

Further, portfolio income should increase via the improved pricing of recent investments; fee income should also perform well, due to fund management business expansion. Analysts also like ACAS's very good track record of returning capital to shareholders. The Reuters F2008/F2009 EPS consensus estimates for ACAS are $3.31/$3.46.

The risks? Analysts are keeping an eye on possible, further write-downs associated with externally managed funds.

The First Call mean rating for ACAS is: Hold [19 firms]. Mean 2008 target: $37 [high: $50, low: $34].

Stock Analysis: American Capital Strategies is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from ACAS's shares. Sell/Stop Loss if you were to purchase shares in this company: $22.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

MAJOR PAPERS:

• The Wall Street Journal reported that the focus of reports of four deaths and 350 allergic reactions to Baxter International Inc's (NYSE: BAX) generic version of the blood thinner drug Heparin, and the ingredients supplied by a Chinese manufacturer, also includes Wisconsin-based Scientific Protein Laboratories, a co-owner of the Chinese manufacturing plant, and majority owned by American Capital Strategies Ltd (NASDAQ: ACAS), a Maryland buyout firm.
• Citigroup Incorporated (NYSE: C) has suspended investors at its CSO Partners hedge fund from withdrawing their money after they attempted to pull more than 30% of the fund's nearly $500M in assets, the Wall Street Journal reported.
• AT&T Inc (NYSE: T) is seeking more revenue from India as it tries to expand its consumer mobile phone operations outside the U.S, the Financial Times reported.

OTHER PAPERS:

• According to the New York Times, the FDA broke its own rules by approving for sale Baxter International's Heparin without first inspecting a Chinese plant where the drug's key ingredient is made.

Wall Street's equity market offers a modest plate this week, with three IPOs and four Secondaries on the docket.

Those deals tentatively scheduled to price include:

IPOs:

Tuesday

• Aldabra 2 Acquisition (ALL.U), a 30M-share IPO for this business finance company. Lazard is the lead manager. Filing price: $10.00
• Sterlite Industries (SLT), a 125M-share IPO for this India-based metals company. Merrill Lynch, Morgan Stanley and Citigroup are the lead managers. Filing price: $13.85.

Thursday

• Care Investment Trust (CRE), an 18.75M-share IPO for this business finance company. Credit Suisse and Merrill Lynch are the lead managers. Filing range: $15.00-$17.00.