Prescott General Partners LLC, a significant shareholder in Credit Acceptance Corp (NASDAQ:CACC), has made a substantial purchase of the company's stock, according to recent SEC filings. The private investment firm, known for its active investment strategy, acquired shares worth approximately $1.78 million.
The transactions, which took place on September 18, 2024, involved the purchase of 1,000 shares at a price of $445.24 and an additional 3,000 shares at a weighted average price of $446.43, with individual sale prices ranging from $446.31 to $446.62. This activity indicates a strong vote of confidence in the Michigan-based auto finance company by Prescott General Partners.
Following these purchases, the company's indirect ownership via Idoya Partners L.P., a private investment partnership with Prescott General Partners as the general partner, has increased significantly. The filings specify that Prescott General Partners disclaims beneficial ownership of these shares beyond its pecuniary interest, as outlined in the footnotes of the SEC document.
Investors often monitor such transactions by major stakeholders as they can provide insights into the sentiment of those with in-depth knowledge of the company. The acquisition by Prescott General Partners may be seen as a positive sign for Credit Acceptance Corp's future prospects.
Credit Acceptance Corp has established itself as a key player in the personal credit institutions sector, offering financing programs that enable automobile dealers to sell vehicles to consumers, regardless of their credit history. The company's business model and performance are closely watched by investors interested in the credit services industry.
As of the latest reporting, Prescott General Partners' ownership structure includes direct and indirect positions through various partnerships, with the SEC filing providing detailed information on these holdings. The document was signed by Scott J. Vassalluzzo, Managing Member of Prescott General Partners LLC, affirming the accuracy and completeness of the reported information.
In other recent news, Credit Acceptance Corporation reported mixed results for the second quarter of 2024. The company adjusted its forecasted net cash flows by $147 million due to underperformance in collections and originations, particularly from the 2022 and 2023 loan vintages. However, Credit Acceptance's loan portfolio has achieved a record high of $8.6 billion. Despite slower growth in April, May and June saw improved unit growth, with July witnessing a robust 28% increase.
These developments come amid the company's continued investment in technology and the addition of new dealers to their network. The firm projects substantial economic profit per share and anticipates improvements to their product and competitive environment to drive future growth. However, macro uncertainties present challenges to predictable growth.
Credit Acceptance has updated credit facility definitions to match their level yield accounting evaluation method. They maintain confidence in their loan originations, which are expected to yield returns above their cost of capital. Despite these advancements, 217,000 shares were excluded from the quarter's earnings as they were considered anti-dilutive.
InvestingPro Insights
In light of the recent stock purchases by Prescott General Partners LLC, it's worth considering some key financial metrics and analyst insights from InvestingPro to better understand Credit Acceptance Corp's (NASDAQ:CACC) current market position. The company's market capitalization stands at $5.5 billion, reflecting its substantial size within the personal credit institutions sector. Despite recent market movements, Credit Acceptance Corp is trading at a high earnings multiple, with a Price-to-Earnings (P/E) ratio of 31.31 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 27.35.
InvestingPro Tips suggest that management has been actively buying back shares, which can be an indicator of the company's confidence in its own valuation and future prospects. Additionally, the company's liquid assets exceed its short-term obligations, demonstrating a strong liquidity position that may reassure investors about its financial health.
However, it's important to note that two analysts have revised their earnings expectations downwards for the upcoming period, which may warrant caution among investors. Despite this, analysts predict that Credit Acceptance Corp will maintain profitability this year, a continuation of its performance over the last twelve months. The company's profitability and a high return over the last decade can be compelling factors for potential investors.
For those interested in more detailed analysis, InvestingPro offers additional tips on Credit Acceptance Corp, which can be found at https://www.investing.com/pro/CACC. With seven InvestingPro Tips available, investors can access a comprehensive view of the company's financial health and market potential.
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