Craigla1

World Acceptance Has the Goods; Citron Doesn't

Oh, Larry, I am not listening to a blogger (well, some of what you say is worth listening to, but not all of it). Let's see how their vaunted customers can generate the cash flows to repay these loans.

Happy you're in the industry, and hopefully doing well, as you come up with blanks on IMDB.

Ostensible is the wrong word


On Sep 24 04:03 PM Larry Meyers wrote:

> Craigla1:
> You may have been a banker, but that you ascribe the reasons you
> do for the stock's current valuation shows you know little about
> the stock market.
>
> There are many reasons why a stock is valued the way it is. For
> every joker who points to a low PE as being a value trap, there are
> plenty of people who have made ten-baggers.
>
> THe Loan Loss Reserve to Non Performing Asset ratio is right there
> in the 10-Q's. I'm not your research assistant. Look it up for
> yourself.
>
> You ask " how do you have any faith they are reporting non-performers
> accurately? If you look at EVERY bank or financial institution (on
> down to BSC and LEH) that runs into trouble, they ALWAYS are very
> liberal in their accounting for things like bad assets."
>
> As I am actually IN the short-term and installment loan business,
> I see that their numbers are in line with those of all other public
> and private companies that operate in this space.
>
> In addition, you have provided no evidence that shows the WRLD is
> like "every other financial institution". Just because you say the
> others are "liberal" does not mean that WRLD is. Until you can provide
> more than speculation, I prefer to deal with facts.
>
> "Note I am not saying this is a short due to pending federal legislation
> or regs which will limit their rate setting ability."
>
> Good. Because today's big headline is that the CFPA will not have
> oversight over non-banks. So half of Citron's report just went bust
> without my help.
>
> "And AGAIN, if you're not an employee or LONG THE STOCK, then WHY
> are you combing their K and Qs to make a 15 point rebuttal of Citron?"
>
>
> Ah, yes, the last resort of the debate loser. Attack the messenger.
>
>
> The obvious answer is that I'm in the industry, but not associated
> with WRLD. An attack on WRLD is an attack on the industry.
>
> But here's a little lesson in logical debate. What if I actually
> did work for the company -- which I don't -- or that I am the long
> the stock -- which I am not ?
>
> Does it change any of the ARGUMENTS?
>
> Look at the MESSAGE, Craig, not the messenger.
>
> Attacking the messenger only works if the messenger is lying. <br/>
>
> I'm not lying. All the information is right there for anyone to
> find.
>
> You have attacked exactly one aspect of my argument. I've provided
> a rebuttal.
>
> If you are truly concerned about the points I've raised, or take
> issue with them, then why even listen to me?
>
> Call the company. I'm amazed at how many people challenge various
> assertions of mine and expect me to be the final arbiter.
>
> If you question the company's practices, call them. Get it from
> the horse's mouth. Why listen to a blogger?

World Acceptance Has the Goods; Citron Doesn't

And AGAIN, if you're not an employee or LONG THE STOCK, then WHY are you combing their K and Qs to make a 15 point rebuttal of Citron?

Very curious ....

World Acceptance Has the Goods; Citron Doesn't

Under-informed? That's laughable. I was a banker for 20 years.

What is their ratio of LLR/NPA?

And (again), how do you have any faith they are reporting non-performers accurately? If you look at EVERY bank or financial institution (on down to BSC and LEH) that runs into trouble, they ALWAYS are very liberal in their accounting for things like bad assets.

Note I am not saying this is a short due to pending federal legislation or regs which will limit their rate setting ability.

World Acceptance Has the Goods; Citron Doesn't

Do you work for the company? Clearly, you do, or are LONG the stock (despite your "disclosure). Why else would you have such intimate knowledge of WRLD's operations?

He doth protest too much ...

Please tell me why you believe the claim WRLD is rolling over very little of their bad debts. HOW could this be logical? Their borrowers are the bottom of the barrel in terms of credit quality. Look at unemployment (nearing 10%), and U6 (nearing 17%; if you need a definition, I'll provide it).

WHY would the market value this puppy at such a low PE multiple? BECAUSE the MARKET does not trust the quality of their earnings. This is classic.

Don't be fooled by a low PE (it's called a value trap).

In other words, the market feels their loan loss provision should be MUCH higher, which would depress stated earnings and result in a much higher PE ratio.

How About Sears Holdings as a REIT?

Please be sure you look at enterprise value, and not just market cap. SHLD has an EV of roughly $10 billion right now (as the carry a fair amount of debt - a no-no for a retailer).

Payday Lender Stock Update

Larry: Re WRLD:

Citron has a phenomenal record. I have made a lot of money on their recommendations. That said, please justify the current price (let alone your $40 target) for WRLD, given:

1. It sells for more than book value

2. All lenders with a book of business in which charge-offs are very high sell for less than book (see COF), reflective of the Street's concern that assets haven't been adequately marked down.

Note, as well, the big ramp up in delinquencies at COF yesterday. I trust you don't think WRLD's customers have a greater ability to weather this economic storm. Unemployment continues to rise. U6 (which includes part-timers who want full-time work, plus discouraged workers) exceeds 16%. THESE are WRLD's customers!

Toyota: Undeniably Cheap Despite Industry Slump

This is a superficial analysis, with an emphasis on valuing TM based on earnings and sales multiples. The problem TM faces is the fact they - over the years - have taken on a ton of debt. With over $100 billion in debt, TM has an enterprise value of $213 billion. Before they announced their latest guidance of a loss for this year, they forecast a profit of $12 billion (this a couple of months ago, at prevailing exchange rates).

A company in a very challenged, cyclical and capital intensive industry with an enterprise value of $213 billion, relative to this level of profits, is extremely over-valued.

Basic Food Fund at Rock Bottom Prices

Mark: Why not load up on GAP's long dated (2039) bond, GAJ? $25 par value, $2.34 in annual coupon. Trading below $11. Now yielding well over 20%.

This looks to be a better play than buying the common.

Imperial Sugar's Turnaround Makes Slow Progress

Mark: Hate to post this here, but concerning GAP, the security GAJ is NOT a senior note, but a preferred. Am I wrong here? Thanks.

Great Atlantic and Pacific Tea Company: The Glass is Half Full

Mark: GAJ is not a senior note - I believe it's a preferred issue. Please correct me if I'm wrong here.

Thanks.

Why Downey Financial is Not IndyMac

One further comment:

"Indeed, even were the bank's capital wiped out by losses of say 2x current default rates, a remote possibility in our view, the loan portfolio would still be worth north of 60-70% of par. Right?"

If the portfolio were worth 70 cents on the dollar, consider this:

70% of $11.363 billion equals $7.954 billion. Or total write-downs of $3.409 billion.

Yet Downey currently has a total provision for loan losses, plus stockholders equity, of only $1.591 billion. In other words, if the loss rate contemplated by Mr. Whalen were to prevail, DSL would have to add over $1.8 billion to their loan loss provision!

Please make an effort to do the math here, Mr. Whalen! There is a very good reason the market puts a nearly insolvent value in DSL's common equity.

Why Downey Financial is Not IndyMac

"At a market cap of $61 million, DSL is trading at 6% of book. "

"...but the value of this collateral is not 6% of par, in our humble view."

It's pretty sloppy journalism when a blogger doesn't recognize the fact a market cap of 6% of book does NOT at all equate to assets being worth 6% of par. Remember a bank is highly leveraged. If assets depreciate 10%, and equity capital is 10% of assets, you basically have an insolvent institution, and market cap should be zero.

You don't need anywhere near a write-down of 94% of assets for insolvency to occur. Just a small fraction of this. And DSL has about the highest levels of non-performing assets of any financial institution in the country.

They are insolvent if proper mark-downs were to occur. And the re-sets of negative am loans is nowhere near done. Not even close. These re-sets continue unabated through 2009.

Is Harley-Davidson Losing Market Share On Purpose?

My question about HOG is this: How dependent are they on dealer financing provided by their credit subsidiary?

Perhaps the loss of market share is due to HOG's inability to package and sell receivables from their credit subsidiary. Given the dramatic slowdown in securitizations, shouldn't we be worried about HOG's near term future?

Thoughts?

BioScrip's Inept Management Continues to Blunder

Amit, your analysis & commentary is always welcomed. Very insightful. I just wonder where you've been on other names on which you provided analysis in the past (JAH being one).

Redwood Trust: From $30 to $4 by Year-End?

Greg, you owe us all a comment on their earnings. Not thet I disagree with your view, yet it would be helpful for you to put something out about their release yesterday.