CACC. Revenue and earnings growth every year past ten. What could be the implication of that (having earnings&rev growth through the great recession)? -- Maybe that their being in subprime lending is an overstated danger for shareholders.
Relatively low p/e, relatively high roe (Greenblatt model). Insiders control more than 50% of the company. Share buybacks reducing outstanding shares.
The logic on CACC one more time:
Clipped from Barron's 3/1/10. (Dated article, but afaik, the model's still the same.)
Wanted: "Great Business Models, Smart People"Bradley Purcell and Randall Heck, General Partners, Goodnow Investment Group ...Unlike most other lenders in the auto market and certainly in the subprime arena, Credit Acceptance has a truly unique and successful business model. They partner with used-car dealerships. Under this partnership, the dealer is willing to accept an advance payment from Credit Acceptance that is less than 50 cents on the dollar of the total loan. So Credit Acceptance gets the advance paid back in its entirety from the car buyer, at which point both the dealer and Credit Acceptance share the remaining payments on an 80/20 split. The model gives Credit Acceptance a large margin of error. But it also gives the dealer an opportunity to profitably sell a car that they would not otherwise sell.Credit Acceptance's management has done an excellent job navigating the recent financial crisis. Collections, which are the key statistics in this business, have been impressively stable -- which isn't a surprise to us at all. And that's because their customers are always in a recession, and the model is structured accordingly. The processes and discipline that management utilizes generate very steady results -- and really have stood the test of time...
I maintain a position. Not willing to add shares at current price. |
