wknecht

Ditto. Got 1820.

I would add that it still strikes me that they could comfortably add 2 or 3 turns of leverage in a dividend recap.

I sold my shares yesterday. Has been a nice ride, but I feel like the price is exceeding my knowledge of the company and its prospects.

Think it adds to BVPS simply because shares are being issued at a premium to book. Doesn't mean it's accretion to value.

CACC seems like a decent example. They skip the whole prepared remarks part of calls, repeat the same things over and over, and sometimes buttons heads with analysts. They strike me as data driven, so they don't go out on limbs on the calls making claims they can't back up. Generally shareholder friendly though. Good shareholder letters (a bit repetitive, but a lot of big picture things that shouldn't change much year to year), good shareholder Q&A on webaite, great performance.

Yes, very much so. Especially at the low end. I enjoy browsing Craigslist for cars and trucks, just browsing keeping pace with prices. The prices that people are asking for low end junkers is crazy. 17 year old Tacoma with 175k miles, $7k: http://pittsburgh.craigslist.org/cto/5730759423.html 16 year old Buick Le Sabre $3900: http://pittsburgh.craigslist.org/ctd/5733247620.html (this should be an $1800 car max) 14 year old Camry: 3500 note the hood won't close, obvious accident damage: http://pittsburgh.craigslist.org/cto/5730482118.html Prices for used cars at subprime lots are in the $7-10k range now. In the past they were typically in the $3-6k range. I should have just posted this and let it linger. 1998 Dodge Neon for $800, has a brand new motor (what else is bad..??) has 144k miles cracked dashboard covered with tape. Guarantee this thing shifts like a rock around 2nd or 3rd gear: http://pittsburgh.craigslist.org/cto/5714356377.html That's a crazy price. I remember looking at cars similar to this back before the crisis and they were in the $350 range. Cars are depreciating assets. The system isn't built around the assumption that their value will always rise, which facilitated the credit card treatment of houses and exacerbated the problem when that assumption proved wrong.

Is this thread about the presidential election? Are folks decisions really being driven by differing tax policies? To me, that seems like an irrelevant detail in the context of this election.

Their disclosure is different, but I think arguably simpler and in my view a lot more transparent. I think it's key to determine how accurately they underwrite through time, and they keep and succinctly disclose their score on that at point over 10-year rolling periods, hitting different points in past cycles. There are only so many levers to pull, so you're probably right that dealers raise the car price (indirectly, the cost of credit) more than others. But I feel that gets a lot of deals done that wouldn't otherwise get done (rather than sweetening a deal that was already going to get done), so which is the worse outcome for everyone? If you think - morally, philosophically, regulatory, whatever - that those deals shouldn't get done for the consumers sake, or it should be cheaper, then that may well be a reason to not own the stock.

A lot of good stuff to chew on. A couple of comments. Agreed that the level of dealer growth isn't sustainable over a long period of time, and that they need some help from the competitive environment for total long term growth. Management (who I think you must have confidence in to own the stock) seems to think a good runway remains though, and has provided data on the point. I think at these levels we're paying for some growth, though not historical growth levels. When comparing valuation, in addition to the items you noted, I think CACC's earnings stream is higher quality because of how they structure their portfolio program (most of their business). By that I mean the dealers have skin in the game, so (a) incentives are more aligned, and (b) CACC is in a more senior position compared to those using a direct discount purchase model. Regarding (b), up to CACC's advance, the dealer is in the first loss position and beyond that, 80% of the losses (variance below forecasted collections) are born by the dealer through reduced dealer holdback. So their earnings should be less risky and volatile on the downside, and so deserving a higher multiple (though clearly their earnings are quite cyclical and credit risky). Also, you're right that it's a tough business. It's not one of Buffett's businesses that is "so good an idiot could run." But I think if it were easy it would be a very bad business - totally comoditized. And they strike as having the philosophy, management, and discipline to do well. Not dissimilar to an investment business, insurance company, or bank, which are also not easy, but can be quite good if run in a rational and disciplined manner. A bit of a leap of faith with management is required.

If I'm understanding your hypothetical scenario, it sounds like a situation you could pay well in excess of 15mm and very safely earn far higher than 10%. yeah you're right. I didn't verify the math. I guess I could pay at most $48M to earn 10% or greater, as long as I could re-invest my coupons at 10%. Do some research on arbitrage (not saying that in a sarcastic way at all). You could pay a way higher price and still achieve 10%. Ignoring double taxation as your hypothetical was for conceptual illustration not details. Arbitrage isn't really the point though, the point is market prices and different amounts of risk in the underlying investments matter. And risks can often be hedged (if desired).

If I'm understanding your hypothetical scenario, it sounds like a situation you could pay well in excess of 15mm and very safely earn far higher than 10%.

Wells Fargo's online banking platform is the worst of all major banks that I know (far inferior to BofA) and even my small CU is better than what these guys came up with. They have not really changed anything in their banking interface for about 10 years as far as I can tell. And don't get me started in Wells Fargo Brokerage, although the latter has been recently updated. It is simply amazing that a major bank has such an antiquated inline Interface. Their IT budget must be really really small... The point was more thematic, but understood.

VaR (value at risk) was near perfect super computed mathematical model of risk right? How'd that work out in 2008....? If there is garbage data in the system (and any system with humans contains it because we're not rational and do weird things that don't make sense) then you can't predict anything with perfect accuracy. Yes, and not to mention the massive government intervention in all the data all of these models are calibrated to and likely will be in the future.

Sorry it was this one at around the 48 minute mark https://youtu.be/R2MV6CpGCwU

Dick Kovacavich talks about this branch question from a big banks perspective here if I recall: His basic point is it doesn't matter for big banks. Branches are just a different distribution channel that isn't smart to ignore. As long as it's justified from an economic standpoint they'll build branches of one type or another. And they're also a great online bank, so they'll adapt their distribution as tastes change. A good video in general.