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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (19589)8/24/2004 7:32:06 PM
From: E_K_S  Read Replies (2) of 78753
 
Hi Paul - I bought some ALD today and noticed from previous posts that you also own some shares in this company. What's your opinion of management? Do they manage their loan loss risk in a prudent manner?

ALD serves a need but from my view they are the lender of last resort. Their combined portfolio of loans return around 12% to 14% but I was unclear as to what they set aside for loan losses (ie loan loss reserve account) and if they were conservative in their estimates.

I also noted that they continue to take large quarterly charges for depreciation expenses but was not sure what type of assets they were depreciating.

Any opinion on this company would be helpful as my buy was based on current valuation, dividend yield which is covered by earnings (which is safe IMO) and their overall portfolio coverage (they recently purchased a company that finances capital asset lease back programs for small business which is very profitable!).

If the economy continues to muddle through and grows slowly with a positive bias, these "hard money" type of loans should continue to payoff with a low default rate. The key is if management can avoid any land mines from sour loans. This can only be accomplished by a seasoned management team that has a proven track record with internal procedures that nip potential bad loans quickly.

EKS
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