ADS - Alliance Data Systems

[Foreign Tuffett]

Arlington Value sold some of its ADS stake in Q1

https://seekingalpha.com/article/4264194-tracking-allan-mechams-arlington-value-capital-portfolio-q1-2019-update

[undervalued]

Glenn Greenberg also sold some of his holdings.

[mwtorock]

Glenn Greenberg also sold some of his holdings.

kudos to them if they sold before the deal announcement. that was a disappointment.

[abitofvalue]

Definitely looking more and more likely that this is the end game.....either way I haven't seen many opportunities (except for extreme market dislocations) to buy rapidly growing businesses with 30% returns on incremental capital selling at this multiple.  By the way does anyone think that there is a company that could more profitably deploy the card business assets within their business model? Is there another company that anyone can think of where synergies are significant and where it makes sense to transfer ownership?  Thx

Discover..   couple of yrs back dfs said only way they would get into private label is of they could buy something big.  Dfs partnership with SYF may be an issue . But maybe not.   Guess arguably syf could also buy it and create a Pvt label powerhouse.  Don't see any large being interested or getting approval.. well maybe Citi but unlikely

Other option would be a China union pay / Amazon Pay type that wanted to expand acceptance into stores rapidly... But that likely has more issues that I am forgetting as I spitball.

Private equity could be an interesting owner though maybe too cyclical. Valuation would need to fall more before they got interested imo. 

[decko]

 How effective or destructive is the secular downturn in physical retail to ADS?  Also, is there a shift away from CC's to digital (paypal, etc)?   Depending upon the answers is ADS a melting ice cube?

[glorysk87]

How effective or destructive is the secular downturn in physical retail to ADS?  Also, is there a shift away from CC's to digital (paypal, etc)?   Depending upon the answers is ADS a melting ice cube?

It hurts them, at least in the short-term, evidenced by the amount of receivables they've had to either wind-down or sell off over the past year or two, mainly as a result of outdated retailers going bankrupt (eg. BonTon, Gander Mountain). I don't think this trend is permanent, but more a temporary air pocket. ADS is seeing success signing up new retailers (eg. Carter's) that are more successful, as well as digital players (eg. Houzz, Wayfair). These new portfolios will take time to spin up, but I don't think it's a stretch to see ADS returning to growth. I don't think there is much if any structural change to the business.

[adhital]

New CEO https://www.sbnonline.com/article/alliance-data-kicks-into-high-gear-under-melisa-millers-leadership/?all=1

[KCLarkin]

New CEO sounds promising

[Broeb22]

New CEO https://www.sbnonline.com/article/alliance-data-kicks-into-high-gear-under-melisa-millers-leadership/?all=1

“We believe high-growth companies have to double in size every five years, and so our plan always keeps us on that path,” Miller says.

When a CEO of a financial company says that, it’s not very encouraging to me.

[Spekulatius]

New CEO https://www.sbnonline.com/article/alliance-data-kicks-into-high-gear-under-melisa-millers-leadership/?all=1

“We believe high-growth companies have to double in size every five years, and so our plan always keeps us on that path,” Miller says.

When a CEO of a financial company says that, it’s not very encouraging to me.

She said the same thing 4 years ago.
https://www.columbusceo.com/content/stories/2015/12/qampa-melisa-miller-of-alliance-data-card-services.html