Its really annoying talking to you when you say things that are self evident like that. no **** provisions are high because charge offs are high. They both cycle.

And SC is levered 8 to 1 and looks like they may blow themselves up if the credit cycle gets bad enough. NICK has competed successfully against large players for a long time and they will continue to do so. Buying NICK for .8 book with leverage only 2-1 its easy to be patient.

It may be self evident, but then it is unclear why you thought the increase in provision was surprising. The provision also went up because the size of the book increased. Even if charge-off % was flat, the provision would need to increase. Despite the increase in the book, revs are flat.

The company is trading on a P/E basis, not a bv basis. BV is only important if they are liquidating. This business will continue to trade on a P/E basis as long as it operates, so a buyer would need to see a path to earnings growth. Given this may be the last large scale branch based auto lender in the US, I think that is a tough view because the competitive environment will make it difficult for businesses with high and largely fixed cost structures to compete.

SCUSA will continue to buy paper as long as they have access to the securitization market. They would need a securitization to blow up before they will pull back.

see this is what I mean about annoying. Im obviously talking about provisioning in percentage terms, not absolute terms. you make no inference into anything im saying when its obvious thats what im referencing. only a moron would discuss provisioning in absolute terms.

Why is that obvious? You say everything is obvious, and yet provision % is higher than charge-off %? I doubt you know why. Nice use of perjoratives to advance your argument. Good luck!

I think NICK has a decent moat that cannot really be scaled up? So the big guys cannot really compete that well with them. They sort of fill a niche.

Here is a good write up:
http://stock-notes.blogspot.nl/2007/...cial-nick.html

I think provisions go up if cycle gets worse. But on average provisions are probably around 12-14m$ per year? That gets you about 20m$ of net income on average full cycle.

There are precisely 0 barriers to entry in indirect subprime auto aside from capital. I could go originate auto paper tomorrow. Your provision number is light in my view.

That is why this is cyclical. They are very conservative and know their local market really well. That is where they get their edge. Leverage is pretty low as well.

You would have to see them more as sort of a fund in junk bonds. Any idiot with a pulse can invest in the market. But only a few get consistent high returns doing it. Or Geico. You have to believe this will continue though.

There was a lot of talk about NICK in desert cat's "my favorite stock NICK" thread though some of that info may be dated...

+1

Would also be interested in this

If you want to learn about valuation, start reading (Damadoran probably a good start?). Also start reviewing how ppl on Value Investor's Club think about modelling & upside/downside: http://www.valueinvestorsclub.com/ideas

When just starting its probably best to look at a lot of styles and see what you gravitate towards.

ya VIC is great, I have some stuff there. Im not going to post my models. They arent great cause I never did Ibanking but tbh you dont really need fanciness as long as you capture the important things and make sure you are thinging about the levers correctly.

quick thoughts on OP

DDS holding in but still dirt cheap

CF closed the deal and agrium had ok pricing in their N segment so this is getting silly now, people are using it as a proxy for china. I have them trading at 4x ebitda once they are done their expansion using 200 gp a ton which is what argium did in N. Obviously not completely analogous but close enough.

NICK cheap but the whole space is blowing up (SC and to a lesser extend CACC) so cant complain too much. Industry needs a good blowup anyways.

RYCEY they/airbus seem to be winning some helpful orders recently but that doesnt make the 2016 results any better. will help 2017 and beyond. still a long term play.

STRZA, this is just stupid. down 30% with no change to their business. trading on LGF on again off again takeout sentiment. WIll probably do 3$ in eps in 2017 when disney expires.

NTS, expected some press releases by now, getting annoyed but still expect good things.

IBG, trading great, up for the year, I love distressed debt

NAL, more binary now than ever. great way to play oil if youre a bull but real risk of bankruptcy if we stay down here for the next 18 months.

EFN, getting smacked with all other financials but previewed what looks like a great Q4. About 5.5x cash 2016 earnings guidance now.

ATH, monetized their Duvernay, completely derisked, up nicely. What can I say distressed debt plays are amazing.

Nick is not blowing up bc of industry pressures. This is the best time of the cycle to have consumer finance exposure. If you were to make a nick/finco model, drive it via balance sheet rather than income statement. Key assumptions for fincos are receivable balance, yield, and charge-offs. Rest flows logically.

Model templates aren't hard to find, just google them.

Ahnold seems to be mildly ******ed, so take any recommendations with grain of salt.

He never said NICK is blowing up

honestly can you even read? SC is blowing up, which is great for NICK.

No **** I drive it with receivables and charge offs. you're really obtuse arent you? Feel free to stay out of my threads.

Yeah I agree, the Donnie thing is getting a bit old.

http://forumserver.twoplustwo.com/pr...?do=ignorelist

Ahnuld how does RNF compare to CF industries. It looks cheaper than CF. And there will be a merger with UAN. You get 1.04 shares of UAN which is about 5.5$ at curent market price, 2.57$ in cash and their pasadena factory which they bought for 125m$ and has been a disaster. If you value that at 25m$ that could be another .70$. So that is 8.76$. VS current share price of about 7$.

we seem to disagree a bit (can't disagree with you more on OUTR) but I pulled the trigger on STRZA today, gl us. at least this one if things go wrong I'm just gonna remind myself to stop listening to other people.

Still think it's best as a takeover/merger, or selling its content to one of the bigger in the space; but I'm fine with the risk here even though I do think it's in big trouble if it tries to compete as a standalone. I think they're aware of that so let's go. very least it should have some value to somebody being content in a content starved place.

this is more merger arb than anything. im in CF long term.

outr's from the other thread. I just replied to people asking about it but this thread isnt meant for old picks. And the old thread outperformed the market. obviously if you post 10 picks some will be losers (although outr actually wasnt when the thread was closed).

I think strza COULD survive on its own but its obviously better to be bigger. but being part of malones empire on its own isnt the same as being completely alone.

On a earnings multiple it will be cheaper? for essentially 4$ you get a combined entity that did about 1$ in earnings not counting cost savings in LTM (not counting Q4)? With CF you pay 30$ for almost 5$ of earnings in last 12 months, or 6x. With same debt level.

If they can dump the pasadena thing for anywhere near where they bought it, which is a free option, then you could get it up to 2$ cheaper even and you could potentially only pay 2$ for 1$ in earnings.

Hey, I know it's from your old thread but, any comments on HOS?

you keep looking backwards when thats really not what matters.

as ive already stated, cf just got cashed up, and cf is finishing up a big capacity expansion. Prices for Urea have been getting hit hard. Luckily input costs for cf (gas) have also come down but not nearly as much for CVR (pet coke).

This is a new thread for new ideas so not going to spend time on last years list. However according to publicly available information, as of January 2nd, ahnuld still likes HOS and still owns it.