Mohnish Pabrai has recently been a heavy buyer of Delta Financial Corporation (DFC), a subprime mortgage lender. Mr. Pabrai's purchases usually garner my attention due to his fund's superb track record.
At first glance, any mention of subprime mortgages might have investors running for the exits, but Delta Financial is not your average subprime lender. With conservative accounting, an undervalued book value, and disciplined lending practices, Delta Financial appears to be an undervalued security. As I was conducting my research on the company, I found the following two sources of information helpful.
The first is a link to a write-up from valueinvestorblog.blogspot.com and the second is from ValueInvestorsClub.com. Both writeups are a few months old, but it appears that the company's story has not significantly changed.
Disclosure: I currently do not hold any shares in Delta Financial Corporation
DFC 1-yr chart