Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Debt Default Boom Has Begun, How to Profit From Corporate Thievery

Companies / Investing 2010 Feb 21, 2010 - 05:52 AM GMT

By: Investment_U

Companies

Best Financial Markets Analysis ArticleDavid Fessler writes: It was a crisp, cold night. 8:30 PM. I was dressed in black, as was my friend and partner-in-crime. (He asked that I not use his real name, so I’ll call him Pete.)

As Pete has done hundreds of times before, he was directing a covert night-time operation and I was tagging along with him in his specialized tow truck.


Pete’s very good at what he does. He has to be – he steals cars for a living…

The Debt Default Boom Has Begun

However, unlike regular car thieves, Pete never ends up in jail. That’s because his business is totally legal.

He’s known as a “Repo Man” – a guy hired by local banks and other loan agencies who want the asset back because the owners have stopped making their payments.

And as America struggles under its heaviest debt load in history, it’s no wonder that Pete’s business is booming. Weighed down by huge mortgages, car loans, and high credit card balances, consumers are defaulting in droves. Just look at these grim statistics:

  • One in five homeowners are underwater on their mortgage payments.
  • Credit card delinquency rates are at 4.54% – an all-time high.
  • Auto delinquency rates continue to rise. The rate is now almost 1% of all auto loans.
  • The Department of Education estimates that student loan default rates hit 6.7% in 2009 – a 29% jump over 2008. The number is expected to rise further.

The Thievery Corporation

On the night I joined Pete, we were looking for a BMW whose owner had stopped paying for it. Pete’s two assistants were in a separate vehicle, responsible for locating the car. The radio cut into our conversation: “We’ve got it. In the side lot at the ABC Pizza Place… blue 528i BMW… license number XYZ-123 right?”

“That’s it – we’ll be there in under a minute. Keep an eye out,” Pete replied. What happened next was impressive. As we pulled in to the parking lot, Pete quickly backed the truck up to the car and deftly maneuvered a special hydraulic clamp under the BMW’s front wheels. He then lifted the front of the car and we headed out. Total elapsed time? About 15 seconds.

After a mile or so, Pete pulled over and properly secured the car’s wheels for the 20-minute drive back to his impound yard. “That one went down just the way you want them to,” he smiled.

Finding vehicles is tricky sometimes. Owners can switch plates, hide the cars, or put them in storage facilities. But Pete’s quite resourceful, too. I asked him about the methods he uses to locate missing vehicles. He smiled: “Magicians never reveal their secrets.”

Once a vehicle is repossessed, the bank usually allows a grace period of three weeks, where the owner can pay up – usually in cash – to get their asset back. If he/she doesn’t, it’s typically sold at auction.

And Pete’s business is humming to the point where he’s now doubling the size of his impound yard and is even thinking of running a second repo crew. “We’re having a hard time keeping up with the demand from the banks,” he told me.

Three Ways to Profit from the Debt Default Boom

While you can’t invest in Pete’s operation directly, there are ways to profit from the debt default boom. Here are three of them…

  • Encore Capital Group, Inc. (Nasdaq: ECPG)

The firm purchases and manages consumer receivables that banks have already charged-off. This includes credit card debt, deficient auto loans and unpaid telephone bills.

Encore buys these for pennies on the dollar and gets to keep the bulk of what it collects.

And business is booming. Fourth quarter results exceeded analysts’ expectations and current projections have Encore outperforming its peers in the credit services industry for the next five years. As for the stock… it’s rocketed 591% higher since hitting a low of $2.62 on March 13, 2009.

  • Asta Funding, Inc. (Nasdaq: ASFI)

Asta purchases its receivables through privately negotiated direct sales, brokered transactions and auctions.

Consisting primarily of MasterCard, VISA and private label credit card accounts, Asta also provides repossession services.

Boasting a market cap of just over $100 million, Asta’s stock isn’t widely covered on Wall Street. However, just because Asta is a small firm doesn’t mean the gains are. Its shares are up 366% over the past year and it just notched up its first quarterly profit since 2008.

  • Portfolio Recovery Associates, Inc. (Nasdaq: PRAA)

The company’s business model within the credit services industry is similar to Encore’s. It purchases, collects and manages defaulted consumer receivables. It also provides collateral location services (”Repo Men”) for banks and other credit originators.

And like Encore, Portfolio Recovery’s shares have surged since hitting lows last March – up around 179%.

Investing in the debt default boom isn’t for everyone. But with the situation likely to get worse before it gets better, now is an excellent time to profit from America’s increasing debt levels. And investing in shares of the three companies above is a good starting place.

Good investing,

Dave Fessler

Editor’s Note: You can follow all of Dave’s latest investment research and stock recommendations in the pages of The Oxford Club’s Communiqué. Together with Alexander Green, Louis Basenese and a panel of other top experts, they dig deeper than the “one-size-fits-all” fodder from the mainstream financial press. You’ll get investment recommendations that are loaded with profit power, along with strategies and techniques that reduce your risk. Speaking of which, it’s also risk-free to give it a try. Find out more here.

Source: http://www.investmentu.com/IUEL/2010/February/the-debt-default-boom.html

http://www.investmentu.com

Copyright © 1999 - 2009 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Pam Michaels
22 Feb 10, 07:33
debt thievery

You are a ghoul.


Paul
22 Feb 10, 16:28
debt thievery 2

Ghouls profit on the folly of fools. The people of earth became dumb enough to believe debt was the money itself. let them relearn the hard way.


Pam Michaels
23 Feb 10, 23:40
Debt Default Boom

Maybe you're right, Paul. I mean "Are there no prisons? Are there no workhouses?


Post Comment

Only logged in users are allowed to post comments. Register/ Log in