samedi 27 mai 2017

Credit acceptance corp (CACC)

An update about Sequoia Fund was out this week on

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)
Beta: 0,5
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?

7 commentaires:

  1. financing for consumers with a bad credit history//

    What could possibly go wrong?

  2. Turns out there is a 4,096 character limit so I can't post the entire segment from this letter to investors from a hf called Blue Tower.

    Here is the link:

    Your questions are addressed at the bottom of page 3 and onward.

  3. This Penetrator dude leaves me scratching my head. He owns the greatest finance stock in America. I'm talking about a regional bank that has compounded earnings per share by an average of 20% for 20 years. An article or blog on Bank of the Ozarks would be amazing. OZRK is a stock that can make you rich if you hold for the long term.

    I've read enough stories about companies that lend money to the people with the worst credit histories. You could make money with them...just like you can find a crust of bread in a garbage can. But if you want to sit at a fancy restaurant to eat, you're going to need stocks like OZRK for the long term.

    1. The track record of CACC is impressive. I'm not saying I'm buying it. I just believe that it's an interesting stock.

  4. Company too dependent on low interest rate for deadbeat to re-finance I guess. Can invest for macro experts. Macro is stockpickers' achilles heel.

    1. Perhaps. I've never put that much attention on macro-economics.