CCP - Credit Corp Group

[peter2]

Thanks @galumay for your comments on CCP. I thought you might be licking your lips over the discounted price.

I've taken a few minutes to look over the price movements after the yearly results were released in previous years. I've gone back to 2014 and marked the news day with an arrow. The thin violet line is the XAO so you can see what was happening in the general market at the time. In the top panel I've shown the relative strength of CCP to the XAO.

In every year (except 2014) the price of CCP acts stronger than the XAO after the yearly update is released. In 2014 the market fell and CCP followed.

I should mention that CCP is quite a volatile stock and short term traders should manage their risk carefully. eg. The recent BO-HR failed but we wouldn't start a short term trade three days before earnings would we.

 

[galumay]

Hey Peter2, the drop wasnt enough to tempt me to add to my position, CCP trades a fair way above my calculated range of value, so even down 7% its still above its IV range.

The management team continue to execute so well that I am comfortable continuing to hold, and if there was a really significant drawdown I would happily add more to my position.

I sold half some years ago to reduce the position size and deploy the capital elsewhere, in hindsight I would have done better to leave it all in CCP!

 

[JTLP]

Their EPS was below analyst consensus but their profit beat [emoji2369]. Anyway won’t be selling, they continue to provide a solid dividend so can’t complain.

 

[tinhat]

I think this is a sad business. Debt collecting and pay-day lending. It may be good money but it's not for me. Not the way disadvantage and disenfranchisement is being peddled around the place currently.

 

[JTLP]

I think this is a sad business. Debt collecting and pay-day lending. It may be good money but it's not for me. Not the way disadvantage and disenfranchisement is being peddled around the place currently.

I’m not a fan of pay-day lending either, but how can you dispute debt collecting? Are companies meant to let people walk away from their obligations?

 

[galumay]

I think this is a sad business.

I totally respect that view, I guess its the point of ethical investing, we all have things we would choose not to invest in based on our ethics.

I have no problem with CCP, debt collecting doesnt offend my ethics, and they are not a payday lender.

In my case I wont buy shares in APT for ethical reasons, I believe the business model is debt by stealth for young people and I hate the business model that makes people that don't use a service, share in the cost of it. I go so far as boycotting any store that uses APT unless they give me a discount of 4%.

 

[omac]

Seemed to be getting expensive anyway. Steady as she goes, as usual. Good to see scale being reached in the US and is now profitable, has been a measured approach to that market and good to see the progress. could be a good contributor to profits over the next 5-10 yrs.

@galumay I did a similar thing and halved my holdings, its good to diversify. On the other hand, when you find these compounders, you should hold for as long as possible, it's a catch-22, haha. Plus being late credit cycle this might be cheaper in 12 months.

 

[galumay]

Well you had to be quick to take advantage of Mr Market's irrationality! Straight back up again today.

 

[JTLP]

CCP in a trading halt pending an acquisition. Collection House and Pioneer are trading, so perhaps it’s a US company?

 

[Faramir]

Credit Corp acquires Baycorp
447k0xkbr6fpxg.pdf

What you think of this Guidance Update?

I know what I think! I didn't buy enough shares back in Oct 2015 and I definitely didn't apply for enough shares in this year's Capital Raising PLUS last year, I didn't buy anything when that stupid report as published!!!! I feel like a non-holder that missed the boat. My holding is small, I may as well have those feelings.

Why do I hesitate on stocks like CCP but go in guns blazing on my poorer decisions???

 

[galumay]

So it was Baycorp, great buy, nice fit and an immediate flow through to the bottom line and increased guidance for the year ahead. CCP executing with expertise again. Boom, up 13% on the ann. Makes that CR look even sweeter in

 

[galumay]

Why do I hesitate on stocks like CCP but go in guns blazing on my poorer decisions???

I guess thats the learning curve mate, I have made similar poor decisions, including when I sold half my CCP a couple of years back, and the returns where I put the capital have been significantly lower than if I had just left the money in CCP.

Psychologically I find it harder to pay more as a business executes, I now try to keep reminding myself that if the business is executing, and its getting more expensive, the averaging effect means I am still increasing my position at a lower overall price than the current market price. (i did that today, I had been resisting adding to a strong conviction position because my initial buy was at 13c and it had been hovering around 14-16c and I had an order in at 13c that was never going to get filled! So i let go of the anchoring bias, bought a second parcel at 16c and my average is 14.5c - suddenly 16c looks like good buying!)

Averaging down into falling prices has always been easier for me, and while it can be one of the most powerful accelerators of capital when you get it right, its also very destructive when you are wrong!

I found that writing a decision journal is one of the things that really helped my discipline and overcoming my biases. In the case of CCP my initial reaction had been not to participate in the CR, but by writing about it I came to realise that it was silly not to apply for as many as possible, and although I got many less than I applied for, it was well worth it in hindsight.

 

[JTLP]

How bloody great is CCP. Such astute purchasers. It’s straight to the bottom line. I was thinking they may have run out of steam but [emoji1362]

 

[Knobby22]

How bloody great is CCP. Such astute purchasers. It’s straight to the bottom line. I was thinking they may have run out of steam but [emoji1362]

Yes, they manage the company to a very high level.

 

[Value Hunter]

My feeling is even the upgraded guidance will turn out to be conservative. I think there is a reasonable chance of seeing a profit upgrade at the AGM.

The implied price to earnings multiple on the Baycorp acquisition seems to be around 11 times as they paid $65 million for Baycorp and the earnings guidance increase was $6 million (from top end of guidance to top end of new guidance).

But keep in mind that is based on existing Baycorp earnings. It does not take into account any synergy/scale benefits or the fact that Baycorp is an inferior company with inferior management and Credit Corp will no doubt be able to improve the productivity and performance of Baycorp. Also I think in general conditions are strong for the consumer lending and U.S. businesses and the earnings guidance is definitely conservative.

 

[rnr]

CCP is currently sitting just below the ATH of $28.90 and given the recent comments by (I assume) some shareholders it is obvious they are exceedingly happy with the acquisition of Baycorp.
There are also two (perhaps three) interesting gaps over the last month accompanied by higher volume that I thought tech/a may be interested in making a comment.

 

[JTLP]

Nothing hurts more than not getting the SPP right. FML

 

[Knobby22]

I read the annual report, or at least the Chairmans and CEO reports and they were losing market share in Australia due to irrational pricing and poor behaviour which they refused to match. One of those companies is now in legal trouble and another (or the same?)has become weak with poor returns. Taking over Baycorp also removed a competitor. So Australia should be better in the future.

They said some companies prefer to sell them their books at a slightly lower price due to their morals dealing with customers and reputation.

The USA business is going from strength to strength.

No wonder the SP keeps rising. Should have put them and Polynovo into the yearly comp. CCP has gone up 50% since the start of the year. Thankfully it was and is still my second largest holding. $31.56 - who would have thought.

 

[galumay]

Nothing hurts more than not getting the SPP right. FML

*Hold my beer

I sold half my holding in the low $20s

 

[JTLP]

*Hold my beer

I sold half my holding in the low $20s

Can’t go broke making a profit [emoji1360]