Motley Fool covers the company and had some nice commentary on the earnings report. Two points stand out. First, the company has been misunderstood, and some press have contributed to the confusion:
The Associated Press added to the general lack of understanding last month with a completely misleading article, which claimed that higher prices paid as a percentage of the original debt's face value was indicative of increased competition and lower returns for industry players... If a company spends 10 cents on the face-value dollar for a portfolio on which it reasonably expects to recoup 300% of its outlay, is that not preferable to spending 5 cents on the dollar for a chance to recover 250% of its expenditure? Someone at AP certainly doesn't understand that math.
The second point was some commentary from the company's conference call, in which CEO Steve Fredrickson stated that Portfolio Recovery was "overcapitalized". This is a fancy way of saying that the company has the enviable problem of having too much cash. It led to a flurry of questions during the call as to what to do with the problem. Frederickson indicated that they intended to hang on to the cash to use as opportunities might present themselves. Dry powder, in other words.
One final point about the Fool article is that Portfolio has made some acquisitions over the past few years. It turns out that these purchases were funded out of earnings, instead of debt. This company has done very well managing its capital, and it looks like it is continuing to do so.
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