Intangible Valuation
Value, contrarian, coat tail rider, idiosyncratic research

Consumer Portfolio Services: An Example From The Subprime Auto Securitization Market

Consumer Portfolio Services, Inc. (NASDAQ:CPSS) is a subprime auto loan asset-backed securities ("ABS") originator. As such, they arrange the financing for subprime borrowers. As of the last quarter, they had over 100 marketing representatives and were actively receiving auto loan applications from more than 12,000 dealers in 47 states. The important mechanics of the business are its relationships with dealers, its credit facilities, and its ability to sell securitized subprime auto loans.

We are looking at Consumer Portfolio Services for a few reasons: (1) the subprime auto loan segment of the market is undergoing increased scrutiny, (2) the company's recent profitability, and (3) the growing importance of the securitization industry generally.

For our part, CPSS is not an...

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