Asta Fdg Inc (NASDAQ:ASFI)

value

Positive:
- Solid balance sheet, good cash flow
- Valued below tangible book
- Have just reduced their float by about 5% through a transaction with a private shareholder and paid from working capital

Negative:
- Chart still undecided between double top or breakout
- Regulatory issues loom large due to regultation by CFPB at year end (has supressed the stock price) but the company has prepared for that by avoiding new business and keeping the cash in the bank

Category: R13BRp

Excellent history of profitability. Trading at ~80% NCAV. Piotroski score of 8. Don't know yet if I'd want to hold this company forever. I'm not sure if they have any kind of durable competitive advantage.

net-net

Now at 44.76% Net Current Asset Value per share
Debt/Equity ratio 1.05
Operating cash flow at 4.56/share

This one may take a while to turn around, but when it does it has plenty of room to run.

This company has taken a beating this year and is likely to continue to hurt but I think the market has overshot on the downside. Hopefully things won't be as bleak as some think/expect.

Market cap of 113M vs net tangible assets of 244M.

loading up on discounted receivables now > good profits in the future

ASFI jumped from 7.5 to 10, but it is still cheap. I see it in 12-15 in the next 6 months. That's up to a 50 percent gain. They have the fundamentals and they have bottomed. Clear road ahead right?

Company

Return, 1998-2007

Jan. 1, 1998 Market Cap

Hansen Natural (Nasdaq: HANS)

21,201%

$16.5 million

Asta Funding

8,252%

$3.1 million

Celgene (Nasdaq: CELG)

6,771%

$129.0 million

Apple (Nasdaq: AAPL)

5,959%

$1.7 billion

Comtech Telecommunications (Nasdaq: CMTL)

4,246%

$11.3 million

Daktronics

3,493%

$23.1 million

Green Mountain Coffee Roasters (Nasdaq: GMCR)

3,455%

$24.7 million

Clean Harbors

3,378%

$15.8 million

Innodata Isogen

3,135%

$3.1 million

Immucor

2,941%

$70.0 million

Data from Capital IQ, a division of Standard & Poor's. Includes only U.S. stocks listed with verifiable stock price histories on major exchanges.

Stock is hugely discounted to book value based on mkts view of future impairments and a small financing hiccup. Really cheap stock. Good risk/reward here.

Stock has an experienced mgt team and is about 25% family owned.

They recently took a moderate write down on a big portfolio and their stock got slammed. Stock has gone from about $44/sh to $8/sh within a year. Looks over sold. I think it is a solid company (hard to get info. about its portfolio) and will be able to survive their latest mishap and the downturn in financial sector. Looking for a double or triple from $8/sh within 2 years. I will bet a little on it, but not a lot.

Problems with most recent debt portfolio purchase have been overblown. Expect stock to be back to $30 within two years as cash flow increases resume.

Hastily punished, should regain some.

This company is bound to go up if their earnings stay in line with estimates.

More bang for the buck.. this baby is low mileage and it was once owned by a little old lady.

Fundamentals are strong - with debt levels at all time highs - these guys should be plenty busy collecting the 'good' bad debt for years to come.
Valuation ridiculous - trading under book (as long as the books aren't cooked - of course - the fear driving this one down)
Short squeeze candidate? 30% of the float is short.. Thats over 21 days for shorts to cover at current avg daily volumes. Decent earnings WILL spur buying and a short covering rally.. good for 20%.. That should beat the S&P..

Asta Funding is a very unique company that is in the business of buying bad debt from credit card companies and then sending their team of lawyers out to collect on that acquired debt. The secret to their success is that they are able to buy that debt for about 10 cents on the dollar. So if they collect lets say 15 cents on a credit default, that accounts to a 50% profit because they only paid 10 cents for the rights to that debt. The company is in the right business at the right time as people are defaulting on their credit cards in droves. This should create tremendous opportunities for the company going forward.

As an investor you should closely look at this future winner in that it has absolutely been trashed by Wall Street and since it is classified as a Finance and Loan company it has been brought down with the rest of the financial industry. But is that justified? Absolutely not! The reason is that we have done our analysis of the stock and find it to have a FireRock Element (Main Street Valuation per share) of $48.35 while the stock trades at around $16. This is a stock that has reached what Sir John Templeton had once quoted "The point of maximum pessimism". The best time to buy stocks is when everyone hates them. Asta Funding is such a stock. The reason that people are not buying it is because they have never heard of it and it never hits the top tier of news coverage.

Here is a stock that once traded at $46 and now trades at $16. Because no one knows about it that gives us the advantage and anytime you have the advantage in the stock market you win big most of the time. Asta Funding is expected to earn $3.68 ( TTM) a share and has a PE of 4. A few years ago I created a ratio called the Psaras Ratio which simplified is PE/ROE. When the result is less than 1.0 the stock is undervalued and when it is over 1.0 it is overvalued. The farther it goes below 1.0 the more attractive the stock becomes. I have backtested this ratio for over a decade with impressive results, but I won't bore you with the details right now.

Asta Funding has a PE of 4.45 and a Return on Equity of 24.34% so if we do the math = 4.45/24.34 we get .18 as a result for the Psaras Ratio. To show you what a bargain we have with Asta Funding let us compare that number to a Psaras Ratio result of a stock that Warren Buffett recently purchaed called GlaxoSmithKline (GSK). If we do the math for GSK we get a PE of 11.61 divided by a ROE of 52.42% = 11.61/52.42 = .22. So in purchasing ASFI at these levels you are getting a valuation less than Warren Buffett got in buying GSK for Berkshire Hathaways portfolio.

Way oversold.