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

To: Jurgis Bekepuris who wrote (52739)	4/28/2014 3:44:16 PM
From: MCsweet	Read Replies (3) \| Respond to of 78626

I have been buying ASFI (not AFSI), a debt collection company Reasons: 1. Stock trades at a significant discount to book value. 2. Earnings were down last year due to Q3 asset write-down of Great Seneca that could slowly reverse over time. I not expect that write-down to recur and there could be some write-up on that portfolio (see 3). 3. Related to Great Seneca, there was a debt restructuring securitizing Great Seneca with the Bank of Montreal that greatly lowers their interest expense and could lead to incremental income, as the company will earn a 70/30 split on income from Great Seneca once $15 million is paid back to Bank of Montreal on that portfolio. It looks about $2.6 million was paid to Bank of Montreal last quarter, so it will be awhile before cash starts to flow. 3. Company has about $100 million in cash. 4. Trading interest is low. Only one analyst covering and trading volume is low. 5. Seems like sentiment is so negative any good news could lead to a pop. Negatives: 1. A somewhat slimy business. 2. Portfolio size is down, making it hard to keep up earnings for the future. For example, they are having to expand into structured settlements, personal injury claims, and disability. 3. Legislation to restrict debt recover business is on tap (although competitors seem to be doing ok). 4. Why did the company stop its dividend and buyback -- buyback seems like a no brainer here unless I am missing something else. 5. There is a pending IRS audit that has not yet been resolved. 6. A bunch of positive seeking alpha articles have come out -- negating my item 4. I am hoping that people are just giving up on the stock and that I am not missing something big (such as insiders knowing some bad news that I don't). MC