Comments for Value Investor Blog

Comment on Asta Funding Update by The Finance Cooler | Blog | Asta Funding Inc: Follow-up

The Finance Cooler | Blog | Asta Funding Inc: Follow-up — Wed, 12 Jan 2011 01:20:27 +0000

[...] Part 2 [...]

Comment on Asta Funding by The Finance Cooler | Blog | Asta Funding Inc: Follow-up

The Finance Cooler | Blog | Asta Funding Inc: Follow-up — Wed, 12 Jan 2011 01:20:23 +0000

[...] Part 1 [...]

Comment on Asta Funding – Part 3 by tOM

tOM — Tue, 26 Jan 2010 00:13:13 +0000

keep up the good work! I am also a big believer in Asta

Comment on Asta Funding – Part 3 by shaun noll, CFA

shaun noll, CFA — Thu, 07 Jan 2010 16:23:06 +0000

verrrry interesting, thanks for the write up! this one certainly seems to have some potential. I will be very interested to hear your thoughts on the negatives of this one. great work!

Comment on Asta Funding Update by Protection From High Debt | Finance Blog

Protection From High Debt | Finance Blog — Thu, 07 Jan 2010 06:21:33 +0000

[...] debt is non-recourse. Aaron Stackhouse discusses the company’s situation in further detail here, for those interested in further analyzing this company. Looking at a company’s balance [...]

Comment on Asta Funding Update by Hot Sauce

Hot Sauce — Wed, 06 Jan 2010 20:36:45 +0000

Why are you being so territorial, Jim? Do you personally know Stacks?

Comment on Net-Net Working Capital by Jae Jun

Jae Jun — Wed, 06 Jan 2010 15:59:15 +0000

I love NNWC as well and I have a free spreadsheet you can use to calculate it.

http://www.oldschoolvalue.com/investment-tools/free-graham-nnwc-cheap-stocks-valuation-spreadsheet/

Comment on Asta Funding by PlanMaestro

PlanMaestro — Wed, 06 Jan 2010 14:48:22 +0000

Thanks for the compliments and hope to read more of you in the future. Asfi’s posts are great.

Tax Refund: VI’s point (Jim I suppose) on the tax refund seems like a very valid one.

Ridiculous provisions: ASFI’s situation is not unique. CCRT has been basically in run-off buying up their CDO notes and convertibles, even though they have been generating substantial cash flow. Now they are spinning off some of their businesses I imagine to solve this.

Credit Lines: some creditors in particular banks do not want to be near close subprime credit cards and “predatory” lending for the potential PR issues. Not something that they want given the need for TARP and regulations coming their way. CCRT has been suffering from this issue as they stated in a recent release.

Comment on Asta Funding by Value Investor

Value Investor — Wed, 06 Jan 2010 00:17:42 +0000

I believe the $80 – $85 Million is a high estimate. One reasons being is that the company states that $47 Million of that comes by way of a tax refund. When the company released its 10-K, they also stated that they couldn’t be certain of when they would receive the tax refund because IRS regulations allow for the individual corporate tax case to be under review for up to 3 years. Secondly, there was no guarantee that the IRS wouldn’t dispute the refund amount. So, the tax refund, although hopeful is still at the speculative stage. What the company does have a high degree of certainty is that they’ll be able to generate approximately $35 Million in annual Revenue. That, by its own merits, is a good margin of safety.

Comment on Asta Funding by aaronstackhouse

aaronstackhouse — Tue, 05 Jan 2010 23:59:29 +0000

Thank you PM!

I think you make a great point about the upside. The company’s acquisitions have dramatically tapered off and a run off situation would eat away at that margin of safety pretty quickly.

Despite this, on the most recent conference call the CEO indicated that the company expects $80-85 million to be available for acquisitions of new portfolios in 2010 just out of cash flow. At first glance, and with at least SOME possibility of receiving a new credit line, this should be enough to avoid a run down situation. But you make a great point and I plan to dig a little deeper in the next couple weeks to look at this from a cash flow perspective instead of just focusing on the balance sheet.

A bit puzzling that they weren’t able (or chose not to?) secure a new credit line going into 2010. They also extended a subordinated loan to a related entity (related to management) and increased the interest rate significantly from 6.5 to 10%, which doesn’t make much sense especially since they have paid down almost all of the debt senior to it in 2009.

The Bank of Montreal loan matures in April 2011 – and at this rate they will need to refinance or extend to avoid further defaults. A lot will come down to working it out with B of M. The good news there is that the parent only has limited exposure (8 mil) that can’t be collected on until 2014 under likely conditions. In my analysis I really had just assumed that whole subsidiary was worth a net liability of $8 million so any news on that would be good news.

By the way, I saw your blog – you’ve got some awesome stuff on there!