An update about Sequoia Fund was out this week on www.dataroma.com
I've learned that the fund has initiated a position of about 2% in Credit acceptance corp (CACC). After a quick look at the numbers,
I've realized that, on almost every metric, CACC looks like a stock to own. It's a kind of Carfinco (car financing for consumers with a bad credit history), that stock which you surely heard about if you were active on the TSX, 3 or 4 years ago.
So, here's a quick look at CACC:
Current PE: 13
Performance last 5 years: 156%
Performance last 10 years: 726%
Annual sales growth last 5 years: 13%
Annual EPS growth last 5 years: 18%
Current ROE: 33
Average ROE last 5 years: 36
Dilution/Buyback last 3 years: they bought back about 10% of the float, which is huge
Current PE / average PE last 5 years: 1 (current price = fair)
Free cash flow: steady growth over the last 5 years (great cash flows)
It looks too good to be true.
Oh yeah. Because a lot of analysts seem to be bearish with the stock. Out of 10 analysts following the stock on Reuters, 4 go for a hold, 5 for an underperformance, and 1 for a sell.
I may sometimes think that I'm a free thinker, these analysts make me believe there's some big shit under the surface. Some crazy shit.
Plus, 76% of the shares held are short. That's fucking crazy. What's going on? Is there a bankrupcy in sight? A fraud? Something worse than that (I don't know what it could be)? I don't think I've ever saw such a high short interest.
What is fucking wrong with that great stock?