[C.C update on ACF] -- good read if you are interested. Sounds like it may have been a bit better than I thought.
Re: I hat to keep harping on this, but..
by: eccchan78 08/08/02 12:13 pm
Msg: 9815 of 9818
"I guess you advice them to use pro forma earnings and go against what the SEC hopes to see (as little use of pro forma earnings as possible).
Now how do you suppose management should go about telling people not to short the stock? Once its it sold, it is in investors hands not theirs.
Listen to the conference call. The beginning of it and near the end when the CEO DID defend the company. He also called many large institutional holders and asked them how to get rid of the 35% short interest. He personally owns a tonne of share and he said that he puts his money where his mouth is. He said that HE WILL sign the financial statements for its accuracy and compliance with GAAP. Management IS competent as shown historically and even to the latest quarterly release. Management is however caught between following SEC guidelines and not following SEC giudelines. It ain't so easy a decision. READ through the financial statements and you will find all the information you need. What more do you expect management to do? Someone mentioned share buy back. If YOU were management, you'd buyback share right now???? I think they'd rather keep cash just in case of uncertainties that may occur in the future. What is bad debts were slightly higher than their projections. Recall that the provision that they made was LESS than they had anticipated. Thus, they were anticipating more bad debts. What if this did happen next quarter? I think they should keep money in the Company. This is a good company and has years of experience and proven growth and earnings capability. What more do you want management to do???? In the conference call, CEO said that if the analyst OR anyone else for that matter that was on the conference call had any suggestions, he'd be glad to listen to it. The advice from large institutional holders to him was to keep managing and growing the comany like he has been doing. Sooner or later, correct valuations will result. That is why it fell to the teens the first time and shot back up to $46+. And yes, during the drop, many people and your wall street journal.com said the EXACT same things as they say now. Fundamentals will win at the end of the day. Thus the advice that large institutional holders is correct. It took about 2 months for the price to correct itself the last time. At these levels, it is too dangerous to short as at any moment, they never know when institutions are going to add to their holdings."
[EDIT -- just found this too; also worth reading; speaks to the risk side of the equation. So the question is, does the price now more than reflect this risk. I think it probably does but hard to say, isn't it?]
Re: njwlog
by: njwlog 08/08/02 12:19 pm
Msg: 9820 of 9823
"Up to this point, ACF's loss experience is within their expectations, the risk is a significant further increase in losses which could be projected by a double dip recession, higher unemployment, weaker/negative real income gains, etc. The company is extremely leveraged with >$12B of ABS outstanding off balance sheet. A 1% increase in loss rates on $12B could wipe out alot of those gain on sale earnings. The key thing to follow right now is the ABS master trust data released monthly which shows how the loans are performing relative to expectations. The company has no problem originating loans and can grow as fast as it wants to, the problem is their access to capital (ABS market) could dry up overnight like it did in 1998 if bond investors won't buy their paper or require ACF to over-collateralize their securities to the extent they are no longer profitable. At these levels I would consider this a flyer worthy of a small percentage of a portfolio on the expectations that we are not falling back into a recession. If loss rates rise significantly, this thing will go south like many others in this space have done." |
