, founder of D3 Family of Funds, has sold 500 stocks of Asset
Acceptance Capital Corp. (
), out of his current holding of more than 5 million shares,
reported Oct. 5 on
GuruFocus Real Time Picks
. As a 10-percent owner of Asset Acceptance, Nierenberg sold at
an average price of $10 per share. The company has a current
market price of $7.45 per share, with a market cap of $244.6
million, a P/E (ttm) ratio of 14.7 and a P/S ratio of 1.1.
Asset Acceptance is a debt recovery company whose client base
includes credit card issuers, consumer finance companies, retail
merchants and utilities.
Last month, Asset Acceptance announced an expansion of its legal
collections operations in Florida and a closing of its
collections call center in Arizona.
The closing in Arizona will accompany restructuring charges for
all of the company's shareholders, amounting to about $0.9
million, or $0.02 per fully diluted share after taxes, according
to an Asset Acceptance press release. The restructuring charges
will include employee termination benefits, contract termination
for the remaining lease payments on the Tempe office, net of
potential sub-lease and accelerated depreciation. The employee
termination benefits and contract termination costs will require
an expense of about $0.7 million, while the accelerated
depreciation represents a non-cash charge.
As part of the Asset Acceptance office reshuffling, the company's
collection channel in India will be reallocated inventory from
the Tempe collections office, thus expanding the India office.
Asset Acceptance's current call center collections office in
Florida will help with the launch of the company's legal
collections channel, incorporating the unit in that same office.
The reallocations are expected to yield significant improvement
in the company's profitability by optimizing channel mix and
"Office closures are never easy," Asset Acceptance President and
CEO, Rion Needs, said in the release. "However, these actions
reflect our continued efforts to improve our operating
efficiencies and competitive positioning, as well as increase
"As we have recently discussed, we have been making investments
in our legal collections channel that we believe have attractive
economics... We anticipate further operational improvements going
forward that are expected to add increased value to our business
model," he said.
GuruFocus Interactive Charts
show that Asset Acceptance's market price is close to a
three-year high, and has been on the rise since its five-year low
of $2.97 per share in November 2011. It shows four Severe Warning
signs that indicate a revenue decline in the last five years, a
long-term gross margin decline, a long-term issuance of new debt
and cash flow divergence. The company also has four Medium
Warning signs, which reveal operating income loss and two-year
highs of P/S and P/B ratios.
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