CCP Creditcorp

[winner69]

Why were debt collectors so popular in the early 2000's?

It wasn't as if they were new technology.

Good old days debt collectors collected debts in a fee based/commission basis. No collection no fee sort of agreement. The debt stayed with the lender.

Then along came financial engineering and all that. Banks would sell their distressed ledgers at a discount and the debt collection houses would buy them ......on the pretence that what they collected over time was more than hey paid for the distressed debt. Technology also made this a much more efficient process.

Heaps to be made ...so much you could even afford to borrow to but distressed debt. Get the picture .....great profits would flow

A bit of dodgy accounting (amortising the purchased debt in particular) and things looked really honky dory ....eps growth ...shareprices go up .....but one day not as much came in as assumed and huge write downs .......and share price tumbles

Whether they more responsible today I don't know. Banks would sell their distressed to the highest bidder and in the foray to be the biggest they paid over the top. But one should look at th accounts of the cup to see whether amortisation rates are in line with collection rates and that sort of thing ...or else surprises in the future.

Lesson ....money to be made in flavours of the month as long as you follow those charts closely .....even if the dynamics of the industry don't make much sense
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[silu]

Winner basically said it all. The way to positive return rate expectation from purchasing debt ledgers and some creative accounting made for a mighty fall from grace. Stayed away from Baycorp, lost money in RMG, made heaps with CCP, more than doubled CLH. Also I hold PRAA on the NASDAQ for a nice return.

I've lived by the rules that collection always worked best in a growing economy with growing wages and that the quality of the debt is of utmost importance. You just can't wring water from a stone.

As a business owner collecting debt is a major drag on your cashflow. If things are tight you sell your major debts at a big loss but at least you get paid straight away so the collection business is here to stay

[born2invest]

Bought in today at $8.64.

Added to the current holding in my portfolio, about 30% of my investment money is now in CCP.

The rest is in SNL and a small cash holding.

[silu]

Good Luck. I'm not aware of your reasons for buying but just looking at the chart it has been trending pretty much downwards for 8 weeks and broken through a longterm support level.

discl. I used to know this company inside & out but am completely out of the loop now. Still hold parcels of CLH.AX and PRAA.NASDAQ

[winner69]

Good Luck. I'm not aware of your reasons for buying but just looking at the chart it has been trending pretty much downwards for 8 weeks and broken through a longterm support level.

discl. I used to know this company inside & out but am completely out of the loop now. Still hold parcels of CLH.AX and PRAA.NASDAQ

Probably born2's ddm on growth of 20% plus 50% dividend pay out has it returning well in excess of the 15% pa returns he is after

They reckon they are collecting more of the ledgers than they assumed ..... collect the assumed amounts and good profits ..... collect more and you have super profits

[born2invest]

Good Luck. I'm not aware of your reasons for buying but just looking at the chart it has been trending pretty much downwards for 8 weeks and broken through a longterm support level.

My reasons are that I think of my investments as investing in a business and not following a squiggly line on a screen.

[born2invest]

Probably born2's ddm on growth of 20% plus 50% dividend pay out has it returning well in excess of the 15% pa returns he is after

They reckon they are collecting more of the ledgers than they assumed ..... collect the assumed amounts and good profits ..... collect more and you have super profits

Bingo.

Only have to look at the amount of debt purchasing they have made over the past 2 years compared to the past and the positive news coming out of the USA and their personal loan division.

[silu]

My reasons are that I think of my investments as investing in a business and not following a squiggly line on a screen.

I'm not a TA guy either but I've learned the hard way that no matter how well run a company is it's really hard to swim against the trend.

[born2invest]

I'm not a TA guy either but I've learned the hard way that no matter how well run a company is it's really hard to swim against the trend.

I understand what you are saying but technical analysis just doesn't run through my mind at all when I make an investment decision.

I've bought companies in the past that soon after buying have gone down 10-15% but I knew my company analysis was sound so I knew the strength of the business would prevail and the share price would follow.

[born2invest]

For those interested in my analysis of the company as I know people like to learn and ask questions on ShareTrader.

Assumptions:
- I want a 15% p/a return after tax over a 7 year period
- Over the 7 years, I assume the EPS will grow at 9% p/a on average (higher over the next few years but dropping progressively as the years go on. This is conservative since the EPS has been growing consistently around the 20% mark.
- Dividend payout ratio of 54% will continue for the 7 years (the payout ratio will most likely increase as the company becomes more mature)
- The stock will be valued at a PE of 16 in year 7. This is based on valuations of other companies in similar industries.
- I pay 30% tax on my dividend since it is an ASX company and there are no imputation credits on the dividends
- I pay no capital gains tax when I sell (I think 7+ years is enough to consider myself a buy and hold investor rather than a trader, I only make a few transactions per year, so I'm sure IRD would consider me a buy and hold investor also)
- I look at management, the industry, it's future growth plans, etc also but I look at these before I run them through this Dividend Discount/Gordon Growth model.

						16	Sale PE 7 Year
	1.15
	1.09
year	eps	div	price+div	price	sum div	compounding
0	69.80	26.38	1143.18	1116.80	26.38	876.00	1	12.55
1	76.08	28.76	1272.46	1217.31	55.14	1007.40	1
2	82.93	31.35	1413.36	1326.87	86.49	1158.51	1
3	90.39	34.17	1566.95	1446.29	120.66	1332.29	1
4	98.53	37.24	1734.36	1576.45	157.90	1532.13	1
5	107.40	40.60	1916.83	1718.34	198.50	1761.95	1
6	117.06	44.25	2115.73	1872.99	242.75	2026.24	1
7	127.60	48.23	2332.53	2041.55	290.98	2330.18	1
8	139.08	52.57	2542.46	2225.29	317.17	2679.70	FALSE
9	151.60	57.30	2771.28	2425.57	345.71	3081.66	FALSE
10	165.24	62.46	3020.70	2643.87	376.83	3543.91	FALSE
	Buy below
	$8.76
	12.55 PE