Craigla1's Comments

World Acceptance Has the Goods; Citron Doesn't

Thu, 24 Sep 2009 17:55:54 -0400

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.

>
> 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

Thu, 24 Sep 2009 13:29:58 -0400

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

Thu, 24 Sep 2009 13:28:08 -0400

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

Thu, 24 Sep 2009 12:26:23 -0400

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?

Fri, 26 Jun 2009 14:34:34 -0400

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

Tue, 16 Jun 2009 19:42:31 -0400

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

Wed, 07 Jan 2009 11:08:09 -0500

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

Fri, 21 Nov 2008 10:36:48 -0500

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

Mon, 10 Nov 2008 09:54:43 -0500

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

Mon, 10 Nov 2008 09:51:20 -0500

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

Sun, 17 Aug 2008 11:53:32 -0400

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

Sun, 17 Aug 2008 11:36:36 -0400

"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?

Fri, 15 Aug 2008 11:55:15 -0400

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

Fri, 15 Aug 2008 11:43:03 -0400

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?

Thu, 07 Aug 2008 10:43:54 -0400

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.

Redwood Trust: Ravaged by Credit Losses

Thu, 07 Aug 2008 10:41:42 -0400

Not only is the dividend in jeopardy, but valuation on a multiple of book is highly inflated. Consider the following:

First of all, this mortgage REIT is practically in runoff mode (despite the fact they managed to buy a few mortgage-backed securities last quarter). Real estate loans & securities have gone from $12.1bn a year ago to $7.6bn. Interest income has gone from $220mm to $127mm, Q2 2007 to Q2 2008. A veritable shrinking company, whose core business is gone (never to return).

In runoff mode, you can only value this based on book value, as an ongoing annuity from earnings cannot be expected.

Book is down to $17/share, from $31.50 a year ago - and declining.

That said, most of you realize Sequoia and Acacia's asset backed securities and loans offset each other - with no recourse to the parent (Redwood). So let's look at Redwood alone. The consolidating balance sheet shows $611mm of equity at the Redwood and Opportunity Fund levels. Yet you need mark down the parent's investment in the subs (as this is worthless). This adjusts the equity (apart from Sequoia and Acacia) down to $430mm, or $12.96/share.

Now, RWT is going out and investing in MBS (the only thing left to do, as the mortgage REIT business is terminably shut down). Do you trust these guys to create value buying these securities, in a housing market which continues to plummet?

If you answer "yes," I know a CFO at FRE and FNM who wants to talk to you about their upcoming equity offerings ...

How about a valuation of .99x book, like ANH? That would value this puppy at $12.83/share.

The Coming Commodity Correction: Hedge Your Downside Risk

Wed, 09 Apr 2008 11:28:30 -0400

This is a shallow argument. Whilst it's easy to see the link between the falling dollar and rising prices for commodities and precious metals denominated in dollars, this discussion gives short shrift to supply-demand factors. Gold supply is contracting, and production costs are soaring.

Another point the writer made which is just plain false: with volatility declining 35%, this suggests a market bottom. Simply wrong. Chart the VIX against the S&P. The recent decline in the VIX to below 23 indicates that the market has most likely hit a near-term top. Low volatility has been a clear sign that buyers have become way too complacent. If the last year is any indication, the VIX will rise from here, and the major indices will be under pressure.