I think an investment in LOAN is a win-win, regardless of economic conditions. That is because their stock price tends to move in the opposite direction of their fundamentals. During good economic times their business does bad because it cannot find enough high quality people to lend to due to competition. Yet, their stock price always rises in these periods, and typically sells at a premium to book value. Conversely, the company does great during bad times when nobody but they are lending, and yet their stock always gets hammered along with the broad market. During the bottom last year, LOAN was selling for 25 cents on the dollar to their loan portfolio minus all liabilities. With such a discount to book value, you'd think they would be struggling, but instead they were making money hand over fist as high quality borrowers had nowhere else to turn to for loans.
So if the economy continues to improve and credit eases further, LOAN may struggle again, but their stock price will likely rise to meet book value as it has in the past, producing gains for the investor. If the economy weakens and credit tightens again, the stock price may once again dip but Manhattan Bridge will flourish once again, increasing their intrinsic value.
Added to a basket of net-nets or cigar butts, I believe LOAN makes a great investment. The low risk profile of this pick makes it very possible that Ben Graham would have owned this stock if he was managing his little partnership today.
*A word about liquidity. With just $10,000 worth of shares exchanged on average day, liquidity is low. However, even someone with a 7 figure portfolio can establish/exit a small position if one takes a few days or even a week to patiently buy/sell. I hate it when people whine about low liquidity in these stocks, you cannot expect great liquidity in net-nets. It comes with the territory. If they had great liquidity they probably wouldn't be this cheap to begin with. If you're scared of liquidity, you probably should not be investing in these types of stocks. You will not find any liquid, billion dollar stocks selling for 2/3 of their net current asset value.