Author Topic: ADS - Alliance Data Systems  (Read 89596 times)

mwtorock

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Re: ADS - Alliance Data Systems
« Reply #360 on: August 16, 2019, 11:17:10 AM »
Why the 5% down - why's Mr. Market unhappy: Credit card data, DB downgrade, or the tender price was below where the stock was trading (actually better for value of stock)?

Technical pressure. 13mm shares were tendered implying some ppl bought shares ahead of the tender with the expectation that they'd be able to tender them at a small profit. Tender came in well below the expected price which made all those tender trades unprofitable. Since 13mm shares were tendered and only 5mm were bought back, that leaves 7mm shares that needed to be dumped today to get out of the trade.

Good explanation! thanks

Just saw that Arlington Value added significantly to ADS in Q2

Now his 2nd largest position outside of Berkshire!

https://www.dataroma.com/m/holdings.php?m=AV

Also some people dumped it entirely in Q2 (Glenn Greenberg- https://dataroma.com/m/m_activity.php?m=CCM&typ=a).


LowIQinvestor

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Re: ADS - Alliance Data Systems
« Reply #361 on: August 16, 2019, 12:17:29 PM »
This feels like forced selling/ capitulation

I bought some today

Don't forget that they are expecting mid-teens, low teens growth rate from active AR in the back half of the year.

kab60

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Re: ADS - Alliance Data Systems
« Reply #362 on: August 16, 2019, 01:00:39 PM »
I'm very overweight but bought more as well. Active receivables grew 16 pct in July. Incl buybacks we're around 6x2020 earnings?

HJ

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Re: ADS - Alliance Data Systems
« Reply #363 on: August 20, 2019, 07:24:40 AM »
Finally looked into the 10Q a bit given how much the stock has sold off.  Is it right that the company has less than $1 billion of tangible net worth if you exclude all the good will & intangibles?  All this against a $17 billion credit card portfolio?

frank87

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Re: ADS - Alliance Data Systems
« Reply #364 on: August 20, 2019, 09:16:21 AM »
Finally looked into the 10Q a bit given how much the stock has sold off.  Is it right that the company has less than $1 billion of tangible net worth if you exclude all the good will & intangibles?  All this against a $17 billion credit card portfolio?

Not the right way to look at it given that Epsilon and LoyaltyOne - which account for most of the goodwill - are still on the books. Their bank subs, Comenity Bank and Comenity Capital Bank, which house the receivables, has CET1 ratios of 14-15%.

KCLarkin

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Re: ADS - Alliance Data Systems
« Reply #365 on: August 20, 2019, 09:23:26 AM »
Finally looked into the 10Q a bit given how much the stock has sold off.  Is it right that the company has less than $1 billion of tangible net worth if you exclude all the good will & intangibles?  All this against a $17 billion credit card portfolio?

A substantial portion of the credit card portfolio is held by non-recourse securitization entities.

glorysk87

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Re: ADS - Alliance Data Systems
« Reply #366 on: August 20, 2019, 10:35:27 AM »
Little bit surprised how far this is trading off in the past few days. Originally thought the tender arbs were pressuring the price, but now we're 3 days on and I'm not sure. Could be a big holder dumping their position I guess.

chompsterama

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Re: ADS - Alliance Data Systems
« Reply #367 on: August 20, 2019, 03:26:07 PM »
Finally looked into the 10Q a bit given how much the stock has sold off.  Is it right that the company has less than $1 billion of tangible net worth if you exclude all the good will & intangibles?  All this against a $17 billion credit card portfolio?

A substantial portion of the credit card portfolio is held by non-recourse securitization entities.

Roughly 40% I believe

abitofvalue

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Re: ADS - Alliance Data Systems
« Reply #368 on: August 21, 2019, 08:02:04 AM »
Finally looked into the 10Q a bit given how much the stock has sold off.  Is it right that the company has less than $1 billion of tangible net worth if you exclude all the good will & intangibles?  All this against a $17 billion credit card portfolio?

A substantial portion of the credit card portfolio is held by non-recourse securitization entities.

The notion that these are "non-recourse" is a joke. the day a securitization trust fails is the day ADS fails.  they will have zero fundraising ability.  That said, think Frank87 is looking at it correctly.  The finco has substantial assets and adequate capital.

Best guess on recent pressure - shows there are a lot of investors looking to sell and i suspect a good portion of the 7M shares they didnt accept are in the process of being liquidated.

At sub-$140, i think its starting to get more interesting. Still not convinced that they deserve a multiple higher than SYF but downside seems more protected now.  I dont really believe they are meaningfully better at marketing and think their faster growth is offset by SYF's scale and better mouse trap (profit-share vs royalty), and more diversified products - dual card, non-card businesses). need to think through what their real growth and recession credit looks like - their portfolio / growth will be meaningfully different making comparisons to 2008 almost meaningless imo.



frank87

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Re: ADS - Alliance Data Systems
« Reply #369 on: August 21, 2019, 08:28:38 AM »
Finally looked into the 10Q a bit given how much the stock has sold off.  Is it right that the company has less than $1 billion of tangible net worth if you exclude all the good will & intangibles?  All this against a $17 billion credit card portfolio?

A substantial portion of the credit card portfolio is held by non-recourse securitization entities.

The notion that these are "non-recourse" is a joke. the day a securitization trust fails is the day ADS fails.  they will have zero fundraising ability.  That said, think Frank87 is looking at it correctly.  The finco has substantial assets and adequate capital.

Best guess on recent pressure - shows there are a lot of investors looking to sell and i suspect a good portion of the 7M shares they didnt accept are in the process of being liquidated.

At sub-$140, i think its starting to get more interesting. Still not convinced that they deserve a multiple higher than SYF but downside seems more protected now.  I dont really believe they are meaningfully better at marketing and think their faster growth is offset by SYF's scale and better mouse trap (profit-share vs royalty), and more diversified products - dual card, non-card businesses). need to think through what their real growth and recession credit looks like - their portfolio / growth will be meaningfully different making comparisons to 2008 almost meaningless imo.

FYI, Alliance has dramatically increased their direct deposits as a mix of their funding compared to 10 years ago when their receivables were almost entirely funded by securitization.