There are no lack of customers for CPSS given the current state of economy. Consumer credit ratings have been dropping steadily over the past few years as increasing bankruptcies and foreclosures become a reality for consumers. This has caused many previously desirable borrowers to turn into subprime borrowers who require companies like CPSS to facilitate their next automobile purchase.
The company has been steadily increasing their access to credit facilities, which allow them to make the loans they need to grow revenues. Their most recent credit facility for $100 million was secured in March, allowing the company to make loans on that money with a fairly substantial spread between the cost of borrowing and the cost at which they lend to subprime borrowers.
A key strategic partner that had previously sold all of his shares prior to the financial crisis recently initiated a position in CPSS after being out for a number of years. Arthur Levine of Levine Leichtman Capital Partners bought roughly $1 million dollars worth of the stock in December of 2010. Mr. Levine can be viewed as an activist partner in CPSS due to his previous involvement in the company, serving on the board of directors and providing capital to the company through notes.
CPSS is still being priced as if we are in the midst of a banking crisis. Price-to-free-cash-flow here is less than 1 times the current price.
(ANFC) is a company that was spun off from its parent company
Voyager Oil and Gas
(VOG) in July of 2010. ANFC participates in oil/gas exploration in the much-heralded Bakken/Three Forks Shale in North Dakota.
Micro-sized oil/gas companies such as ANFC are speculations on the price of land first and the production of oil or gas second. What will drive companies like ANFC's stock price to atmospheric levels is a frenzy over the land in the Bakken region as more companies become willing to pay higher prices for the land in that area.
This land bubble will be a long-term process and will be 100% dependent on the price of oil. If oil prices were to remain stagnant or begin falling, land prices in oil-producing regions would decline in value, as well. If, however, a scenario that sees oil prices move up dramatically over the next few years takes place, companies like ANFC will see prices for the land they own explode, causing a surge in the stock price.