Ann: CEO AGM Presentation, page-44

I agree 100% with your comment, “The runway is still exceedingly long in CCP's existing geographic markets.” The last thing I want to see is CCP indulging in unwanted ventures. Encore ventured into Australasia by acquiring Baycorp a few years ago, and ended up selling out to CCP not many years later. Initially, some HC posters feared that CCP's dominance in Australasia was threatened! The outcome suggests that the fear of Goliath was misplaced.

The point I wanted to make was that six or so years ago, market domination in Australia would have been seen as a growth-capping negative in a PDL-dominated business, because debt sellers would avoid getting into a scenario where the number of buyers is very small, and dominated by CCP. Management may have though along similar lines then, because that is when they launched CCP into the unsecured loan business and the US business. Currently, growth-capping negative SP sentiment should be a non-issue, because of CCP's “long runway”.

In a counter-intuitive way, Encore may prefer having CCP in the Top-3 debt-buyers' position. Encore's management would know that the PDL sellers would ensure there are a few viable buyers, so having a disciplined buyer like CCP in the top three or four buyers would be preferable to having undisciplined buyers forcing up the price of PDls. CCP will grow as a debt buyer at the expense of small buyers. One can be sure that Encore respects CCP as a result of the Baycorp experience, and the parties communicate with each other to mitigate mutually distructive behaviour.

Comparing CCP's performance to peers is possible on a segment by segment basis, but not on a whole-of-company basis. For instance, Wallet Wizard's peers are not peers of CCP's core business. Also, particularly in the US, some debt buyers redirect their debt-collection facilities to telemarketing, or have other lines of business that re dissimilar. That said, I would venture that whatever reasonable criteria that one uses, CCP would probably emerge as being near-best – a hyphenated term that I based on the pragmatic concept of “near-zero” in mathematics, and which the spellchecker accepted. I believer that comparison covering both the PDL and the unsecured-lending businesses, would put CCP in the top tier if debt leverage were the only criterion in an other-things-being equal setting. That is why I hold CCP with a high level of confidence.