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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (27717)	8/10/2007 4:28:20 PM
From: a128	Read Replies (1) \| Respond to of 78740

I looked at CRMT after it was mentioned here some time ago and/or I saw some insider buying. Im not confident that their model is sustainable. I believe their reserve for losses is too small and their customer is EXACTLY the kind of folks that have subprime mortgages...or worse. Probably worse. The buy here pay here car business does not work well as a chain. It needs the HANDS ON of an owner or family. Otherwise, too many people have a vested interest in getting people into cars without regard to their ability to pay for it. Also, corporate car buyers are often "on the take". The car auctions often have $100 or $200 CASH sales whereas whenever you buy one of their cars, they hand the buyer cash. That just means they overpaid for the car and the buyer stole money from the company but its a regular occurance on the auction scene. A long time ago, it was tried on a grand scale.... called Urcarco. They failed bigtime and later morphed itself into Americredit. And, suprisingly, it didnt do too bad. Apparently, they used their data from all their losses in the buy here pay here car business to construct a good model and then got into loaning only...to subprime borrowers. Did pretty well once they got the heck out of the car business and strickly into the paper business. Its at a 2 year low by the way.

To: Jurgis Bekepuris who wrote (27717)	8/10/2007 8:31:11 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78740

CRMT, I'm with you on that one. Sold; waited for drop to buy back; now that it's dropped back not so confident (and there are other opportunities for funds). I believe I'll pass. Nice summary by a128 on buy-here-pay-here business model. On the one hand--- the viability (growth) of that business just seems so iffy now. (And the people in it always have seemed that way ('iffy'-g-).) OTOH, the stock has been a profitable performer for those who bought when it was first mentioned here a few years ago (around $3/sh. if I recall correctly), and recently too as a trade. Also nice summary imo on Americredit (ACF), a128. I hold a few shares from back awhile. I'm not suggesting it as a buy now.