SVR is reminding me why I love the stock market.The short answer...

SVR is reminding me why I love the stock market.

The short answer is that, the handful of loans under investigation in Aus, and whatever the NZ thing is, are legal matters, which the company won’t comment on. They will create a provision in the accounts…blah, blah….years later we will have some balanced view on things. Wrongdoing is bad, if that’s the story here. Of course, growing a business by hundreds of percent running into a recession is an undeniable public service, on its face, but gets you onto radar of regulators.

The simple facts we know from ‘the numbers’ and last 10 years, management has been systematically taking SVR away from markets where ‘dodgy’ stuff happens…..How do we know this? Many things. Main one being. It’s quite easy to get high LVR bank loans for financing real estate. I’ve never heard of a 360 million shareholder equity firm financing a 1.3 to 1.5 billion loan book, with cars being loan collateral. That type of stuff only happens when one goes to bank and says things like ‘no, we don’t do any of that stuff now. We only do this other stuff. That’s our future’. Trust, scale and predictability.

Mgment hasn’t really mentioned, but I think I’m correct. Last few half year reports have seen good rises in loan book, not necessarily matched by similar rises in originations. Is the only logical conclusion that customers are keeping their products (loans) for longer than past periods? The volatility of their customers is a matter for their unique lives, but repeats customers or customers staying longer, suggests a firm getting away from ‘churn’ and ‘scammy stuff’ and closer to the broadband needs and wants of customers with mainstream and comparable products.

SVR May look big, but the market grows at least 3% each year, so 3 SVRs will be created next year alone. It’s a really interesting investment proposition and part of me is hoping for a sub 1$ SP, so I can get the cob webs off my wallet and make a serious move.