Less Debt For Asta To Forgive
yahoo.businessweek.com.
When Congress passed the Bankruptcy Abuse Prevention law in April, Gary Stern was a happy camper. Asta Funding (ASFI ), of which he is CEO, buys distressed debt for a few pennies on the dollar. "This new law is a big win for us. It will boost our collection rate," says Stern, who owns nearly 10% of the stock. Steve DeLaney of investment firm Ryan Beck (it has done banking for Asta) agrees: The law lessens the highly risky debts Asta ends up buying. That's because it cuts rampant Chapter 7 bankruptcies, which let filers eliminate all unsecured debt -- accounting for 70% of filings. The remaining 30% is Chapter 13 cases, where part of the debt gets repaid in three to five years. The new law will increase Chapter 13 filings, DeLaney says, and with fewer Chapter 7 filers, credit-card issuers will have more viable debt to sell Asta. DeLaney rates Asta, now at 20.40, "outperform" and calls it "the most attractive of the pure-play debt buyers." He projects earnings of $1.88 a share in 2005 and $2.15 in 2006, vs. 2004's $1.57. Jed Gore of Sunova Capital, which owns 4%, says Asta's management, led by CEO Stern, is "trustworthy and effective." |
