Amit Chokshi

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  • Portfolio Recovery Associates: The Shorts Will Be Proven Wrong
    You can do fine shorting PRAA and other debt collectors. Shorts make the bulk of their money between quarterly reports, pathetically low volume and wide bid/asks and no uptick required make it very easy to bring these stocks down 5-10% very quickly.

    The short case on PRAA and all other debt collectors is the need to constantly reinvest cash into bigger portfolios in order to maintain EPS growth. On top of that, prices have been high in recent years (~4%) which could mute returns and resulting in impairments. And shorts as suspect of the legal track/judgements for collecting. Shorts that take that view look at PRAA like a manufacturing facility or "normal" business where as PRAA is no different than say a bank or financial institution, that must always reinvest gains into new assets.

    I'm a big fan of the industry, have owned ASFI for many years personally and own it for my fund now too. The short interest there has generally been around 40-50% for many years. ECPG I believe is held by Tom Brown of Second Curve and Peltz has owned it for many years (he may not now but last time I checked).
    Oct 30 08:57 am |Rating: 0 0 |Link to Comment |View article

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