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Enter Asta Funding...


Our best days may be behind us in this name but not for finding un-crowded ideas.

Consumer receivable asset management and liquidation company. What a mouthful. What in the world is that? One of my favorite businesses for a long time. All of the consumers we are worried about who may not be able to pay for their house get started by not paying bills first.

They might not pay the gym club, the phone bill, or the department store charge account, to name a few of a loooong list. Enter Asta Funding (ASFI) and a few others. They buy up much of that bad debt. How much do they need to collect to make it work? The latest quarter saw ASFI buy $5.2 billion in face value receivables for $200 million. That's 3.8 pennies per dollar.

You don't have to have too many honest hard-working people who want to eventually do the right thing at that price. A good thing, I know, since that's not a group you're terribly bullish on right now. How good? A record quarter and record year just announced. Records for profits can occur despite weakening consumers, sometimes because of them.

When things "look bad out there" I have always wanted to add – it just depends on where you look. Only four Wall Street analysts cover this stock despite many of their strategists predicting (in my opinion) their industry's success via dim outlooks over the past several years.

The risk is that it has quietly been a terrific business for too long, and it is attracting competition, so bidding for this bad debt has the threat of pushing prices higher than 3.8 cents. Our best days may be behind us in this name but not for finding un-crowded ideas.
Position in ASFI
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