Seeking Alpha

Shorts look to D.C. for help on World Acceptance

  • Deep under water on their shorts of installment-loan lender World Acceptance Corp. (WRLD), hedge funds are pressing for a D.C. bailout, reports Bloomberg, asking lawmakers, the CFPB, and consumer advocacy groups to investigate the firm. Among the hedge funds is Whitney Tilson's Kase Capital (is he still short Herbalife as well?).
  • Not exactly a payday lender, WRLD offers small loans to consumers who have no access to other forms of credit. They operate in 14 states, with the loans averaging about $1,200 and paid off in monthly installments.
  • The hedge funds' criticism of WRLD centers on its sales of credit insurance on loans which covers payments during an unforeseen event. Citron - also negative on the stock - notes Capital One and Discover have been fined over deceptive practices for similar add-on products.
  • "We are under constant attack from the self-serving short sellers," says CEO Alexander McLean.
  • Also in the industry: LEAF, ATLC, CSH, EZPW, DLLR.
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