Portfolio Recovery Associates, Inc. (PRAA)

TMFPlatoish (35.38) Submitted: 8/17/06 11:07 PM : Start Price: $40.86 PRAA Score: 3.80

Like many financial service firms, especially those the deal in specialized areas, this company takes some specific knowledge and obscure computations to thoroughly analyze. Luckily I happen to know a guy who gets his jollies doing just that. If he ever gets run over by a snowplow some winter, I'll really have my work cut out. From what I can tell, this is the best in class of the debt collection and recovery industry. They have remained extremely disciplined in their purchasing methodology and have shown the confidence to wade in and buy aggressively when the pricing was right. They are dependent on being able to buy a continuing stream of charged-off paper at prices that will allow them to hit their target numbers on returns. A large influx of hedge fund money to private collectors may slow their buying rates as prices rise, but I believe they have the discipline to wait out any temporary over-priced market and storm in aggressively when the opportunistic money turns tail. The company represents long term value at these levels.

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