One must be clear that lending money is not easy. It is necessary to judge the propensity of the debtor to repay. Many people think that this is easy whereas in fact it is not. However, throughout history people have been hard at it. For instance ten years ago just when the High Street clearers reckoned that they had entered perpetual heaven they got hit by economic downturn and the unexpected which proved to be politicians of quite spectacular dishonesty offering their two and sixpence (think Gordon Brown). They in turn unleashed the regulators who brought conspicuous silliness to their conduct as well. RBS is still not out of it yet.
There are lenders which typically are not encountered on the High Street. One such is Provident Financial (LON:PFG), now capitalised at £3.4bn (at £23.40). Its business still is doorstep money lending and – this is vital – collecting. However, the trouble is that this is expensive and old certainties as to with whom a lender is dealing are tending to evaporate swiftly. Just who is this Mr Patel? etc. – I think you get the picture. The result is that staff who are paid for collections are melting away.
So PFG is turning to online transactions. However, they are here hitting intense competition. So PFG is dying.
My friend is examining buying vast chunks of recoverables from Provident Financial. PFG wants 92p in the £. This will never be achieved.
Tnav of PFG is around £700m or one fifth of the current capitalisation. My target price is much lower than here.
*****
Meanwhile, TSLA has probably broken down. It’s taken a long time.
*****
Finally, Barney Roy at 3/1 is a gimme in the Coral Eclipse (tomorrow Sandown 3.35).