Last week debt collection company Asset Acceptance Capital
) agreed to the $200 million offer made by its bigger competitor
Encore Capital Group Inc. (
) back in March. Accounts combined, the companies have purchased
over 60 million consumer credit card, loan and phone accounts
valued at approximately $130 billion. President and CEO of Asset
Acceptance, Rion Needs, stated, "We believe Encore is a strong
strategic fit for Asset as the transaction will enable us to
maximize the full value of both our investments and our talented
workforce. The combination of our two companies will better
position us for success in a rapidly changing and competitive
Also last week,
of D3 Family of Funds reduced his position with Asset Acceptance
Capital Corporation (
) by 8.4%, as of April 16, 2013. Nierenberg traded at an average
price of $6.48, with a 0% change from average. D3 holds 4,691,647
shares after the trade.
Asset Acceptance Capital Corporation (
) has a market cap of $199.7 million, with a P/E of 18.2, a P/B
of 1.3, and a P/S ratio of 0.9. AACC is up 35% from January. The
current share price is $6.5.
Nierenberg's holding history:
Subject to regulatory and shareholder approval, Encore's
acquisition of Asset Acceptance Capital will be completed in
second quarter 2013. Encore's President and Chief Executive
Officer Brandon Black commented, "This acquisition moves our
industry into a new phase of maturity defined by more efficient
companies that are committed to operating ethically and treating
consumers with respect. Encore's strong operating and cost
advantages will allow Asset Acceptance's investments to be
significantly more profitable and will deliver greater value to
shareholders. Consumers also stand to benefit as we extend
Encore's industry-leading Consumer Bill of Rights to millions
more people who are on their way to financial recovery."
Check out Encore's positive growth:
When GuruFocus performed an in-depth financial and performance
checkup on Asset Acceptance Capital, we found multiple warning
signs, showing that the time is right for Encore's strong
management arm: Asset Acceptance Capital Corporation displays
poor financial strength, usually caused by too much debt for the
company. Carrying long-term debt, Asset Acceptance keeps issuing
new debt. Over the past three years, it issued $19.96 million.
Also, the company's Altman Z-score of 2.07 is in the grey area,
implying some kind of financial stress. If it is below 1.8, the
company may risk bankruptcy. Interest coverage is another warning
sign. The company's interest coverage is low at 1.7. Ben Graham
prefers a company's interest coverage to be at least 5. Finally,
Asset Acceptance Capital Corporation has had operating loss over
the past three years.
GuruFocus research also reveals the company's revenue growth.
Asset Acceptance Capital Corporation 10-Year History of Revenue
AACC data by GuruFocus.com
Guru David Nierenberg is the founder of D3 Family of Funds. His
update portfolio lists seven stocks with a total value of $147
million and a quarter-over-quarter turnover of 0%.
GuruFocus "Real Time Picks" reports the stock purchases and
sales that Gurus have made within the prior 2 weeks. The report
time lag can be as short as 2 days after the date of the
transaction. This feature is for Premium Members only. If you are
not a Premium Member, we invite you for a 7-day Free Trial.
Find stocks on a 52-week low here.About GuruFocus: GuruFocus.com
tracks the stocks picks and portfolio holdings of the world's
best investors. This value investing site offers stock screeners
and valuation tools. And publishes daily articles tracking the
latest moves of the world's best investors. GuruFocus also
provides promising stock ideas in 3 monthly newsletters sent to