CACC

Credit Acceptance Corp.

Finance/Real Estate


Presented:09/17/2020
Price:$329.68
Cap:$5.82B
Current Price:$466.28
Cap:$5.65B

Presented

Date09/17/2020
Price$329.68
Market Cap$5.82B
Ent Value$11.88B
P/E Ratio18.19x
Book Value$117.01
Div Yield0%
Shares O/S17.65M
Ave Daily Vol156,682
Short Int10.51%

Current

Price$466.28
Market Cap$5.65B
Credit Acceptance Corp. engages in the provision of dealer financing programs that enables automobile dealers to sell vehicles to consumers, regardless of its credit history. Its financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers. The company was founded by Donald A. Foss in 1972 and is headquartered in Southfield, MI.

Publicly traded companies mentioned herein: Credit Acceptance Corp (CACC)

Highlights

The presenter is short shares of Credit Acceptance Corp (CACC), the deep subprime automobile lender that is trading at ~$330 per share (~3x BV). CACC’s business consists of two portfolios. There is a traditional indirect automobile financing portfolio, which the presenter is generally neutral on and thinks should trade ~1x BV. The second part of the business is the Portfolio Program, which drives CACC’s returns. This program signs up car dealers to exclusive deals. When a customer with a low credit score goes to the dealership, he or she can’t simply pick any car he or she wants. The presenter notes that instead, the dealer will pick a car with a lot of miles that was purchased for a low price, then add a massive markup (i.e., charging $6k – $7k for a car with 150k miles that was purchased for $3k). CACC advances the dealer ~45% of the loan, and then each payment from the customer (at a ~25% interest rate) is split between CACC and the dealer. The presenter feels this short position is actionable now because a legal campaign against the Portfolio Program is escalating, and these efforts are calling for structural changes that would materially impact the business. 

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