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Non-Tech : Credit Acceptance (CACC) -- Ignore unavailable to you. Want to Upgrade?

To: Harry Anderson who wrote (84)	2/21/1998 2:55:00 PM
From: 5,17,37,5,101,...	Read Replies (1) \| Respond to of 103

The market is semistrong-efficient HA. Yesterday's accounting news points the way to today's value in CACC -- at least according to insiders and big money managers. Jackson +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ FEDERAL FILINGS 02/17 Curran On The News: Weighing The Risks ISSUER: FEDERAL FILINGS BUSINESS NEWS SYMBOL: X.FFI Weighing The Risks WASHINGTON (FFBN) -- A risky firm in a risky business with a decimated stock price ought to pose prohibitive investment risk for mostinvestors. Right? Maybe, and maybe not. The current state - both in stock price and shareholder list - of Credit Acceptance Corp., a Southfield, Mich.-based firm which writes high-risk automobile loans for buyers with shaky credit, as well as provides collection and other financial services to car dealers, may deserve a second look. To say that the last year has been a wild ride for Credit Acceptance and its stock price would be an understatement; from highs in the mid-$20 per share range to a crushing low of $2.50, the stock has been deeply disappointing and probably left some investors scarred for life. The stock closed on Friday at $7-11/16, still 70% off its 52-week high. Factors driving the demise of Credit Acceptance and its stock price are both macro and home-grown. First, the entire sub-prime finance sector was cast in doubt early last year by the spectacular flame-out of Mercury Finance (MFN), which saw its stock drop more than 80% in a single trading session when it was revealed that the firm had inflated earnings. Credit Acceptance's own problems surfaced in the third quarter of 1997 when the company increased its provision for credit losses by $60 million, and scaled back its business expansion. But now that the damage has been done and the company still looks like it can earn money, when does the stock become a good bargain? That's a hard question to answer, but FFBN senior analyst Miles Green notes in a recent report that the industry shakeout that began last year may ease up competitive pressures on Credit Acceptance and other survivors in this sector. In addition, Credit Acceptance generates good cash flow from operations, and has a relatively strong balance sheet. Two analysts reporting on the First Call system peg 1998 earnings estimates at $0.47 per share, although the stock is currently rated a "hold." Another indicator of confidence in the company's survival and appreciation potential of its stock price may be the attraction of two well-known investor groups to the shares at depressed levels. The first, well-known value manager Tweedy Browne Co., picked up a 1.1 million share position (2.4% of outstanding common stock ) in Credit Acceptance during the fourth quarter of 1997, when prices were at rock bottom. In addition, value investors Thomas Smith and Thomas Tryforos hold a 9.5% stake in Credit Acceptance common stock, up from 5.4% in August when the stock was going for $12 to $14 per share, and 6.8% in December, when the buys were in the $6 per share range. And while corporate insiders have been known to lose bets on their own stock, Credit Acceptance insiders were active buyers last October and November. So while there remains plenty of scare factor in a stock that has come as near to complete implosion as possible without disappearing, risk-tolerant investors might find it worthwhile to give the stock a second look as a survivor drawing back into its orbit some respectable value-oriented buyside interest. -- John Curran Executive Editor john.curran@fedfil.com /FEDERAL FILINGS CONTACTS: (202) 393-7856 FOR EDITORIAL, (800) 487-6162 FOR DOCUMENT SALES, (202) 628-8990 FOR NEWSWIRE SALES, (888) FED-FILE FOR TECHNICAL SUPPORT, & fedfil.com // (END) FEDERAL FILINGS-DOW JONES NEWS 02-17-98 08:20