I have just bought another 450 CCP shares.
N160917761 Buy CCP ... 475 ... 31.45 ... 04/02/2022
It may not be the best buy to make, and I should not have so much concentrated in the stock, but the advantage of CCP for me is that I know more about it than I do about alternative stocks. The dividend of 38c in the relatively near future helped to convince me to buy. I'll concern myself with spreading my risk later, and I will be forced to sell some shares this half year to pay myself the amount that my SMSF is mandated to pay me by 30 June.
I think CCP is going to do well in the USA, and if it suits CCP, it could extend its reach to include Canada. It may make sense to initially expand collections facilities in a north-south direction to keep the initial operations in a limited number of time zones to maximise the ability to switch resources from one geography to another. Not that I think a third collections centre is going to be considered soon, but one may pop to the fore via an opportunistic acquisition.
CCP's approach to the debt buying and unsecured loans business is different to the culture that I understand is common in the USA. CCP is much less litigious, and it is also possible that CCP's target-profitability style is different too. The latter tends to avoid CCP chasing PDL acquisitions and loan growth in an undisciplined way, and not to maximise its returns when it can (and thus improve client goodwill). Further on culture, the major competitors in the USA have all been found guilty of bad collections behaviour. Google “litigation” and either “Encore” or “PRA Group”, you will learn about these firms – for instance:
A third point of difference is capital structure. Most PDL buyers are relatively highly leveraged, and CCP is not. I do not have a handle on the unsecured loan business in the USA, but I imagine it is well populated by firms that are highly leveraged.
I think the US sellers of high-quality debt will warm to CCP's style, and each new supplier that CCP gains would tend to be very sticky, and CCP will rise from its last reported position as the sixth largest buyer to fifth or fourth position fairly quickly. The size ranking is not the most important goal, it is the ranking in relationship to the high-quality debt sellers that suits CCP best that is important.
How CCP fares in the loan business remains to be seen.
CCP Price at posting:
$31.69 Sentiment: Hold Disclosure: Not Held
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