Eight Diamonds Advisors
Special situations, event-driven, contrarian, research analyst

Cash America: Spin-Off Of Its E-Commerce Business Should Unlock Substantial Value

Investment thesis

As an alternative financing company providing short-term loans to the non-banked consumer, Cash America International, Inc. (NYSE:CSH) operates in an industry with a certain negative stigma attached to it. However, focusing on the economics of the business reveals the sector to be historically characterized by high returns on investment and strong growth. Having said this, over the last two and a half years, CSH's traditional pawnshop business has struggled, hit by weak consumer confidence, the fall in gold prices and a series of one-off charges. We estimate its unadjusted net income for the six months ended June 30, 2014 dipped into negative territory.

As a group, CSH trades at a price earnings ratio of just 9.7x....

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