CCP - Credit Corp Group

[ROE]

VSntchr good stuff

I admire you guys for paying so much attention to details... I am the opposite ... I work on ball park figure, some part deliberate some part laziness

if stuff I have interest in fall within that ball park then I am a happy chappy

 

[hiddencow]

Hi HC

CCP and TGA have merged close enough together in their businesses that I don’t see any benefit in holding both. In choosing between the two I prefer TGA at the moment based on my perception of inherent risk and market pricing.

Cheers

Our opinions are very similar then. My stake in TGA is a lot more significant than CCP in which I have only recently taken a position.

Valuesnatcher - Can you please enlightnen me on the measurement of PDL turnover, it it simply collections/average PDLs?

The topic of the PDL market and CCP's competitive advantage in it is definitely an interesting one. Having mointoured TGA's results for a period time I once again make a comparison. TGA's PDL business is much smaller within their NCML division and they have made comments about the pricing of PDLs for the last couple of periods so I believe the issue has been around for a couple of years.

Despite this, it seems CCP has managed to achieve a record year of PDL acquisitions, perhaps due to one off events they mentioned. They are forecasting a much lower year of PDL acquisitions but I wouldn't be surprised and am hoping for them to beat that forecast.

I don't see the overall supply of debt decreasing so supply of PDLs shouldn't be affected unless the businesses are doing more of the collecting inhouse. Demand from new entrants to the market is the most likely reason for the rise in prices. Are these new entrants pricing the PDLs correctly or is it a case of CCP in the earlier years.

The price of PDLs were perhaps too cheap in the past and have adjusted upwards, perhaps too much based on comments by both CCP and TGA regarding their unwillingness to meet the prices and comprimise margins. The question is who is buying the higher priced PDLs then? Perhaps other companies who are more desperate and with less conservative practices who are not willing to wait.

 

[ROE]

The topic of the PDL market and CCP's competitive advantage in it is definitely an interesting one. Having mointoured TGA's results for a period time I once again make a comparison. TGA's PDL business is much smaller within their NCML division and they have made comments about the pricing of PDLs for the last couple of periods so I believe the issue has been around for a couple of years.

CCP competitive advantage is real, most people don't pay attention to it but they are one of the first few business that make use of this technology and I think they are way ahead of the pack...

if you get it right and I have no doubt CCP has perfect it the return is incredible ...look at all the business that has good data analytic system they perform well a head of their peers and it is repeatable and it is dependable, the more data you have and over a longer time frame the system get better

here is a recent report on what sort of thing you can do with data analytic system... Coles and Woolies has caught on and start using it big time

http://www.abc.net.au/7.30/content/2014/s4062642.htm

 

[VSntchr]

Valuesnatcher - Can you please enlightnen me on the measurement of PDL turnover, it it simply collections/average PDLs?

That is the numbers I used, yes.

 

[ROE]

who ever is accumulating in the past week, seller is disappearing they have to pay up for the privilege

 

[Faramir]

When ROE mentions buyers and sellers, does this picture help?

Am I reading too much into this?

Feel uncomfortable about buying now. I hardly know this business even though gut feeling tells me it is great. I am not buying from 'Fear of Missing Out'. I need more time to investigate and understand. Then wait for a dip? I love the gap after their announcement on 5 Aug.

Let me know if this is contributing anything to anyone. I need to learn.

PS: ROE is another great contributor that makes me sit up and listen. Just like so many others.

How come the post is showing the graph first? I thought it would show the graph last. What should I make out about the volume? Best time to buy was around late June/July when no one was interested?

 

[ROE]

I am generally uncomfortable talking about share price when to buy and sell at what price
I leave that up to individual I like to generally talk about the business.

FYI I bought another 4500 shares at $8.60 or some where around there in July for a quick trade
but after the result I change my mind for now and hold until I need the cash for something else.

 

[Faramir]

Sorry ROE, I wasn`t trying to ask anyone about future price movement. (Despite on commenting on the gap 5 Aug).

I was trying to support your post about lack of sellers. My pic showed 64 buyers vs 29 sellers. Although the quantities per seller or buyer was not shown.

As for the aspects of this company - I need to spend more time studying it before I can make a useful contribution.

 

[Ves]

Sorry ROE, I wasn`t trying to ask anyone about future price movement. (Despite on commenting on the gap 5 Aug).

I was trying to support your post about lack of sellers. My pic showed 64 buyers vs 29 sellers. Although the quantities per seller or buyer was not shown.

As for the aspects of this company - I need to spend more time studying it before I can make a useful contribution.

Personally, I'm a long term investor. I don't care about short term price action, and I don't look at charts (unless they *accidently* come up on my screen on the ASX website).

I also don't care about missing about because I don't understand. If I don't understand I probably won't miss out - because I'm more likely to have missed something important and get burnt in the long run. First rule: protect yourself by using your own judgment. The only way you can do this is to know the company and how to value it if you are holding for the long term.

When buying I businesses I think of it as swapping my capital for its future cash flow. If I believe that the future cash flow will give me X% return then I will consider buying it at Y price. If it doesn't then I don't buy it.

You need to consider what you will receive as a shareholder (dividends, share buybacks, return of capital) + the potential return from the profits that the company reinvests in its own operations (ie. increased dividends in the future). The only company that can add value by reinvesting its profits is a company with a competitive advantage. Profitablity is essential... if a business is reinvesting capital into the business and receiving a market rate return then they are not creating any shareholder value.

My reason for this is that if I plan on holding for as long as possible (preferably forever, unless the business deteriorates) then I won't remember how many buyers and sellers were in the market before I purchased.

Work out a value / price you'd like to pay and stick to it.

The only exception to this, and it may not even be an exception, is when my purchase would move the market price way above it's current price. This only happens in illiquid stocks. I think they refer to this as slippage.

However, if you do not intend to be a long term holder in the businesses that you purchase my comments may be irrelevant.

 

[Faramir]

Thank you Ves. I like to hold for the long term as well.

I love your contributions on the post: "Present Value of Future Cash Flows"
https://www.aussiestockforums.com/forums/showthread.php?t=23385

Although I am only part way through. You obviously used methods listed there to evaluate CCP and hence your contribution to this post is also very valuable.

 

[Ves]

Thank you Ves. I like to hold for the long term as well.

I love your contributions on the post: "Present Value of Future Cash Flows"
https://www.aussiestockforums.com/forums/showthread.php?t=23385

Although I am only part way through. You obviously used methods listed there to evaluate CCP and hence your contribution to this post is also very valuable.

Yes I do use some of those methods. That thread is a pretty good summary of my journey so far. There may be a few more methods that I have added to my arsenal, and I am experimenting with. It's all about finding a method that is most comfortable for you.... at the end of the day, if you are not comfortable, you lack belief, and if you lack belief you will be more likely to buy or sell based on emotion rather than your strategy.

 

[JTLP]

Torres Industries have been dropping a lot of shares lately...is this just a director buying a bigger house?

 

[ROE]

Torres Industries have been dropping a lot of shares lately...is this just a director buying a bigger house?

yeah I wouldn't be too concern, he still got a lot left...

I think there is a demand for the stock, he release some to create some liquidity and he doing it in

in multiple small parcel so its not a guy who want to jump ship in a hurry.

The founding member uncle Simon barely release any and he has stack load.

I put down to Uncle Don need a water front house in Sydney for all the hard work he put into CCP

(Tongue-in-cheek remark)

 

[JTLP]

yeah I wouldn't be too concern, he still got a lot left...

I think there is a demand for the stock, he release some to create some liquidity and he doing it in

in multiple small parcel so its not a guy who want to jump ship in a hurry.

The founding member uncle Simon barely release any and he has stack load.

I put down to Uncle Don need a water front house in Sydney for all the hard work he put into CCP

(Tongue-in-cheek remark)

Ha yes! Exactly what I thought. I'm still happy and picking up a healthy divvie doesn't bother me in the slightest

 

[VSntchr]

......picking up a healthy divvie doesn't bother me in the slightest

CCP is the first stock that has forced me to ponder the question: should I be looking at the yield on current market price, or instead on my purchase price.
The argument for market price stands as you can sell your current stock and put the entire proceeds into a bank account (or other investment) and earn interest on total balance, whereas only your original investment is earning the original purchase price yield.

The argument for original purchase yield is perhaps more of just an additional justification to hold...e.g. I shouldn't sell these because I'm getting 10%+ yield (or whatever figure).

 

[hiddencow]

I think purchase price is a sunk cost and only relevant for tax implications.

It's good for feeling good about yourself but doesn't help at all for your current decision making.
If anything, I try to ignore the emotional impact of how much I've made or lost on a share when making a decision on buying or selling it. We're only human though.

 

[Boggo]

Been having a good run with CCP in my SMSF.
CCP is one of a list about 480 StockDoctor stocks where weekly charts are getting results.
Fully franked dividend coming up on 24th.

Currently holding based on chart below.

(click to expand)

 

[herzy]

Sold out today because I needed the capital. Great company (and continues to improve). Will hopefully pick up some again if/when it drops back below $9.

 

[craft]

I’m probably nervous enough now to ignore the market if it takes CCP on a new upswing – at least until the loan book matures a bit. But that’s not saying I no longer like the company fullstop.

CCP and TGA have merged close enough together in their businesses that I don’t see any benefit in holding both. In choosing between the two I prefer TGA at the moment based on my perception of inherent risk and market pricing.

Cheers

Ps

I’m often wrong. (or at least early enough to be indistinguishable from wrong)

Just reviewing a good discussion that took place on CCP last time I was on ASF.





Any new thoughts? Is the divergence between TGA and CCP in the last month warranted or will it revert?

 

[hiddencow]

I've recently reduced my TGA which I was very heavily overweight in and increased my holding in CCP a little.
Most of the funds went elsewhere though.

I think CCP will do very well in the next couple of years provided their PDL business doesn't suffer majorly.
Accounting for loans on an expected loss model instead of incurred is very conservative compared to everyone else out there. Adjusted for this accounting policy choice, could have added a few million to the profit figure in the last year.

You are right though that we still have to wait and see what the actual loss will be on the loanbook but if it's comparable to CCV and TGA then they will do very well.