Yes, I think you may be right about this, Sheik. Lucky Lenny, I do agree with your sentiments. I just don't know how much more it can all be baked into gold prices.
EZCorp: Very Cheap, But Read The Fine Print First [View article]
Igor, It is not necessary to be defensive. Your DCF analysis is stellar and correct. I was not trying to nit-pick, but rather to educate and inform both you and your readers. Your facts are wrong. And yes, they are facts, not matters of opinion. I should know -- I've been in the payday-pawn business for ten years.
These facts are important. They are important to readers, to policymakers, to investors, and to many people inside the industry. Too often the industry is misrepresented by opponents. The last thing they need is further misrepresentation by someone who is not educated on all aspects of the business.
Thus, it is important to reiterate these facts.
4) A typical payday loan averages $400 and is for a 14-16 day period, not $560 for 30 days. EZ’s average loans are $520 for 16 days. (EZ's information is in its 10-K. If you read other 10-K's, you will find smaller balances.) 5) All states, except Texas and a few unregulated states such as UT, do in fact specifically define fees and interest the lender may charge. These are codified by state statutes which are summarized here: http://bit.ly/K3Mjof 6) The typical fee in Texas is $22 per hundred per two weeks, not per month. It is closer to $15 in most other states. See above link for facts. 7) The borrower must also have a job, which you left out in your article. This is listed in every single description of payday loans in every single annual report, as well as on the websites of all payday lenders, public and private. 8) There is recourse for the lender. A delinquent customer can be sued in small claims or other municipal court for recovery. This is listed in every annual report. 9) Pawn interest rates vary widely by state, and are not all at the same rate as a payday loan. This is listed in every annual report. 10) There are VERY strict regulations concerning pawn operations in virtually every state that allows them. http://bit.ly/JkFySQ
Also, you also should go back and proofread your article. You do say "no debt". You say it right here, just below the second-to-last graphic:
"It has better gross and operating margin, no debt, higher growth rate, higher insider ownership, and small short interest compared to its publicly traded competitors..."
EZCorp: Very Cheap, But Read The Fine Print First [View article]
Igor, you have numerous glaring errors in your article, which I'd like to correct:
1) Advance America, not EZ, is the largest payday store chain in the nation by far. 2) Cash America has combined payday and pawn stores numbering 572 in the US. EZ has 433 pawn-only stores, so it is not the largest pawn chain in the US. 3) Mr. Cordray was never a district attorney. 4) A typical payday loan averages $400 and is for a 14-16 day period, not $560 for 30 days. EZ’s average loans are $520 for 16 days. 5) All states, except Texas and a few unregulated states such as UT, do in fact specifically define fees and interest the lender may charge. 6) The typical fee in Texas is $22 per hundred per two weeks, not per month. It is closer to $15 in most other states. 7) The borrower must also have a job, which you left out in your article. 8) There is recourse for the lender. A delinquent customer can be sued in small claims or other municipal court for recovery. 9) Pawn interest rates vary widely by state, and are not all at the same rate as a payday loan. 10) There are VERY strict regulations concerning pawn operations in virtually every state that allows them. 11) EZ is not debt-free. It carries approx.. $125 million in long term debt, much of that coming with the Crediamigo purchase. 12) Growth is partially organic. Same store sales increases continue in the mid to high single digits company wide. 13) $200K impairment per store is much too high. Legislative changes permit lease cancellations.
FYI, the Crediamigo purchase will be extremely profitable. That’s because the company is able to deduct principal and interest directly from paychecks, virtually eliminating default risk.
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
There are likely SEC issues associated with how they spend that cash, because it is not theirs. It belongs to shareholders. I don't disagree with you.
Take Ashford Hospitality Trust (NYSE: AHT), of which I am long. They just took $20MM of their liquidity to set up an internal hedge fund to buy the stocks of other hotel companies.
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
Most companies hold either cash or short term investments, meaning short-term corporate paper or possibly Treasuries. If you were on the board, you would seek to maximize a return on investing that capital. But here's the problem: what is the best investment of that capital at this time?
1) Return to shareholders? Nope. The economy is still struggling. In times like that, you want to hold onto cash. 2) Repurchase stock? Possibly, but only if you think the stock is undervalued and those companies with tons of cash generally are not. 3) Invest to grow the business further? They are all doing that to some extent. Look at the capital expenditures on the cash flow statement. But they are doing so gingerly because the economy is not really recovering completely. 4) Hire more people? See #3.
What is not listed in this article is what is going on with private equity, where I do most of my own business. There is tremendous amounts of capital sitting on the sidelines, because these funds invest in fast-growing companies in emerging industries, or in the "middle market" -- companies that have seen success and are ready for the next stage of growth. However, with regulatory uncertainty that could torpedo any initiative -- particularly those that are in any way regulated by the government -- there is too great a risk that the investment will be lost.
Check out the link on the words, "I have witnessed a capital strike".
What you don't hear from any of the detractors above is this: why do THEY think there's a capital strike?
The 3 Safest High-Yielding Investments You've Never Heard Of [View article]
dm, If I owned every single stock I wrote about or was bullish on, I'd be running a mutual fund with 600 holdings. Also, my own personal portfolio allocation shifts regularly, so while I may not hold a stock I write about at the time or initiate a position within 72 hours of writing, I may at a later date.
Payday Lenders Offer Big Upside, Despite Regulatory Hurdles [View article]
Brad, it appears this acquisition is of FirstAgain, which offers unsecured loans of $7500 to $100,000 to "super-prime borrowers". So they really aren't a payday lender. I doubt any bank would buy into a payday lender. In fact, I know they won't. As it is, I could only get one bank to provide a credit line to me for a 100% SECURED deal involving payday. They fear "reputation risk".
But this sort of unsecured credit line is pretty common and it makes good business sense.
The online model is completely and totally different from storefront. Once the gold rush ended, and the foolish lost everything, the survivors have made a very strong go of it, and have taken from 15-20% market share away from the storefronts. This, coupled with storefront saturation, is why you are seeing flat revenue across payday segments for both monoline and multiline operators.
The Bull Case For Sirius XM, And How To Buy It With Less Risk [View article]
You're welcome. I found your analysis to be exceptional. I've followed Liberty and Malone for a very long time. He is not a stupid man. The DTV deal had a purpose and everyone won. I believe the same will be true of SIRI.
The Bull Case For Sirius XM, And How To Buy It With Less Risk [View article]
Yes, I think you are on to something. SIRI has struggled for some time, but it seems like they've turned the corner, and once that happens, it is a very good business that generates solid cash.
2 Required Holdings For Any Fixed Income Portfolio [View article]
Is It Time To Short Gold? [View article]
Is It Time To Short Gold? [View article]
Your assessment is presented concisely and intelligently.
Is It Time To Short Gold? [View article]
EZCorp: Very Cheap, But Read The Fine Print First [View article]
It is not necessary to be defensive. Your DCF analysis is stellar and correct. I was not trying to nit-pick, but rather to educate and inform both you and your readers. Your facts are wrong. And yes, they are facts, not matters of opinion. I should know -- I've been in the payday-pawn business for ten years.
These facts are important. They are important to readers, to policymakers, to investors, and to many people inside the industry. Too often the industry is misrepresented by opponents. The last thing they need is further misrepresentation by someone who is not educated on all aspects of the business.
Thus, it is important to reiterate these facts.
4) A typical payday loan averages $400 and is for a 14-16 day period, not $560 for 30 days. EZ’s average loans are $520 for 16 days. (EZ's information is in its 10-K. If you read other 10-K's, you will find smaller balances.)
5) All states, except Texas and a few unregulated states such as UT, do in fact specifically define fees and interest the lender may charge. These are codified by state statutes which are summarized here: http://bit.ly/K3Mjof
6) The typical fee in Texas is $22 per hundred per two weeks, not per month. It is closer to $15 in most other states. See above link for facts.
7) The borrower must also have a job, which you left out in your article. This is listed in every single description of payday loans in every single annual report, as well as on the websites of all payday lenders, public and private.
8) There is recourse for the lender. A delinquent customer can be sued in small claims or other municipal court for recovery. This is listed in every annual report.
9) Pawn interest rates vary widely by state, and are not all at the same rate as a payday loan. This is listed in every annual report.
10) There are VERY strict regulations concerning pawn operations in virtually every state that allows them. http://bit.ly/JkFySQ
Also, you also should go back and proofread your article. You do say "no debt". You say it right here, just below the second-to-last graphic:
"It has better gross and operating margin, no debt, higher growth rate, higher insider ownership, and small short interest compared to its publicly traded competitors..."
EZCorp: Very Cheap, But Read The Fine Print First [View article]
1) Advance America, not EZ, is the largest payday store chain in the nation by far.
2) Cash America has combined payday and pawn stores numbering 572 in the US. EZ has 433 pawn-only stores, so it is not the largest pawn chain in the US.
3) Mr. Cordray was never a district attorney.
4) A typical payday loan averages $400 and is for a 14-16 day period, not $560 for 30 days. EZ’s average loans are $520 for 16 days.
5) All states, except Texas and a few unregulated states such as UT, do in fact specifically define fees and interest the lender may charge.
6) The typical fee in Texas is $22 per hundred per two weeks, not per month. It is closer to $15 in most other states.
7) The borrower must also have a job, which you left out in your article.
8) There is recourse for the lender. A delinquent customer can be sued in small claims or other municipal court for recovery.
9) Pawn interest rates vary widely by state, and are not all at the same rate as a payday loan.
10) There are VERY strict regulations concerning pawn operations in virtually every state that allows them.
11) EZ is not debt-free. It carries approx.. $125 million in long term debt, much of that coming with the Crediamigo purchase.
12) Growth is partially organic. Same store sales increases continue in the mid to high single digits company wide.
13) $200K impairment per store is much too high. Legislative changes permit lease cancellations.
FYI, the Crediamigo purchase will be extremely profitable. That’s because the company is able to deduct principal and interest directly from paychecks, virtually eliminating default risk.
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
Take Ashford Hospitality Trust (NYSE: AHT), of which I am long. They just took $20MM of their liquidity to set up an internal hedge fund to buy the stocks of other hotel companies.
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
1) Return to shareholders? Nope. The economy is still struggling. In times like that, you want to hold onto cash.
2) Repurchase stock? Possibly, but only if you think the stock is undervalued and those companies with tons of cash generally are not.
3) Invest to grow the business further? They are all doing that to some extent. Look at the capital expenditures on the cash flow statement. But they are doing so gingerly because the economy is not really recovering completely.
4) Hire more people? See #3.
What is not listed in this article is what is going on with private equity, where I do most of my own business. There is tremendous amounts of capital sitting on the sidelines, because these funds invest in fast-growing companies in emerging industries, or in the "middle market" -- companies that have seen success and are ready for the next stage of growth. However, with regulatory uncertainty that could torpedo any initiative -- particularly those that are in any way regulated by the government -- there is too great a risk that the investment will be lost.
Check out the link on the words, "I have witnessed a capital strike".
What you don't hear from any of the detractors above is this: why do THEY think there's a capital strike?
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
What Apple, And Everyone Else, Will Do With Their Cash Piles [View article]
The 3 Safest High-Yielding Investments You've Never Heard Of [View article]
If I owned every single stock I wrote about or was bullish on, I'd be running a mutual fund with 600 holdings. Also, my own personal portfolio allocation shifts regularly, so while I may not hold a stock I write about at the time or initiate a position within 72 hours of writing, I may at a later date.
Payday Lenders Offer Big Upside, Despite Regulatory Hurdles [View article]
But this sort of unsecured credit line is pretty common and it makes good business sense.
The online model is completely and totally different from storefront. Once the gold rush ended, and the foolish lost everything, the survivors have made a very strong go of it, and have taken from 15-20% market share away from the storefronts. This, coupled with storefront saturation, is why you are seeing flat revenue across payday segments for both monoline and multiline operators.
The Bull Case For Sirius XM, And How To Buy It With Less Risk [View article]
The Bull Case For Sirius XM, And How To Buy It With Less Risk [View article]