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Amigo Holdings Just Got Even More Crazily Fun

Mar. 09, 2020 1:53 PM ETAmigo Holdings PLC (AMHLF)
Tim Worstall profile picture
Tim Worstall


  • The founder and majority shareholder of Amigo Holdings is a willing seller as we've known for a few weeks now.
  • It gets better - his current insistence is that the company should all three of cease lending, recoup all advances and sue the regulator.
  • It's hard to see where, in the absence of a Hail Mary bid, this doesn't go to zero.

The basic Amigo Holdings (TCPK:AMHLF) problem

As I said a few months back the basic problem for Amigo is that there's a significant risk of their business model being regulated out of existence. For those who don't think this is even possible we should recall that this is what happened to Wonga, exactly what has happened to payday lending itself in a number of US states. Interest caps and other regulations mean the business simply cannot exist.

How likely this is to happen is the risk to the stock?

The intervention

The founder of the business got himself re-elected to the board and then said that, as the majority (over 60%) shareholder, he was open to being bought out. This is not known as a great upside for a stock.

The latest

That founding and majority shareholder has now come back again with his full point, something that has led to another drop in the stock:

Amigo(Amigo Holdings share price from London Stock Exchange)

The core of his argument is here from him in a Medium post.

To paraphrase. The company lent money on certain conditions and making certain checks on ability to repay. They thought these met the regulations of the time. The regulator is now stating that this isn't good enough. And if the regulator says that about all future lending then that's fine, the regulator is correct.

However, the claim is at least that the regulator is demanding that all previous lending be retrospectively changed.

This has horrible implications for the company:

In spring 2019, the FOS had a meeting with senior Amigo executives and informed them that they had changed their stance on irresponsible lending, and that Amigo should too. Previously, a commitment to a feasible budget plan based on a combination of verified and self certified data was sufficient. Now, irrespective

This article was written by

Tim Worstall profile picture
Tim Worstall is a wholesaler of rare earth metals and one of the global experts in the metal scandium. He is also a Fellow at the Adam Smith Inst in London and an writer for a number of media outlets, including The Times (London), Telegraph, The Register and even, very occasionally indeed, for the WSJ. This account is linked with that of Mohamad Machine-Chian: https://seekingalpha.com/user/52914142/comments

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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