This will be the first of several posts on Asta Funding, Inc.
Asta Funding, Inc is in the business of acquiring, managing, servicing, and recovering portfolios of consumer receivables, including credit card, auto deficiency, and telecom receivables. The company purchases receivables at steep discounts from the face values of the underlying claims (3.4-4.0% of face value over 2004-2008). Typically the receivables have been previously written off by the originator and collections have previously been attempted by one or more parties.
A few months back I posted a list of stocks that were trading below their NNWC value per share (as of 7/17/09). Let’s take a quick look to see how those stocks have performed over the last several months.
Benjamin Graham famously recommended looking at stocks that trade below their net-net working capital (NNWC) value per share (current assets – all liabilities). A lot of modern value investors have talked about this metric as a classic example of buying stocks with a large margin of safety, but also as a dated technique for the simple reason that few securities in recent history have met this criteria.
However, with the precipitous decline of stock markets at the end of 2008 many of these opportunities have reemerged, and it is worth taking a look at this strategy.