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June 2014 Value Idea Contest Announcement

July 09, 2014 | About:
hyperman299

GuruFocus

348 followers

June 2014 Value Idea Contest Announcement

In order to encourage more idea sharing GuruFocus hosts a monthly value idea contest. We will reward qualified value idea submissions $1000 if the idea double in 12 months. Qualified authors will also receive $100 per submission. The submissions are evaluated monthly.

We review all the submissions in the area of business quality, financial strength, management, valuation, presentations and user comments. To qualify the award and compensation, the submission should score 26 or higher. The goal of the contest is to dig out high quality companies at reasonable prices. That is also how the scoring tilted to.

These are June’s submissions and the results of the review. Click on the tickers will bring you to the submissions.

Ticker

Business Quality

Financial Strength

Management

Analytical Depth

Undervalued

Presentation

Comments

Total

JPM

4

4

4

4

4

4

3

27

AFL

4

4

3

4

4

4

3

26

TJX

4

4

4

4

3

4

3

26

EMMS

3

3

3

5

4

4

4

26

PRSV

3

4

4

4

4

4

3

26

CACC

4

4

4

4

4

4

1

25

QCR

4

3

3

3

4

4

1

22

MRCBF

3

5

2

3

5

2

1

21

SIMG

3

4

3

3

4

3

1

21

PIR

3

3

4

3

3

3

1

20

OME

3

4

3

3

3

3

1

20

SFFK

3

3

2

4

3

3

1

19

AMZN

4

3

4

3

1

2

1

18

RIG

3

3

2

3

3

3

1

18

AVACF

3

2

3

3

3

3

1

18

C

3

3

3

2

3

2

1

17

GS

3

3

3

2

3

2

1

17

GTS

2

3

2

2

3

3

1

16

SDRL

3

3

2

2

1

2

1

14

These are the comments on the submissions. Authors please review the comments and hopefully they will help you to write better in future submissions.

Author

Article

Comments

Robert Abbott

Credit Acceptance Corporation: Could “No Credit, No Problem” Produce Capital Gains?

One question is if the company approves 100% of the applications, how can it manage the risk?

cody56

Amazon: A Growth or Value Stock?

Lacks the depth we expect for the contest. Expect more analysis on financial strength, profitability, growth, valuation etc.

Robert Abbott

Aflac: An Opportunity During This Dip

Interesting idea. The stock seems to be undervalued.

David Chulak

It’s Retail and It’s Boring, but it’s TJX Companies

A high quality retailer that has temperory earnings miss due to foreign currency issues. Very deep and thorough analysis.

cody56

Morguard Corporation: Selling at a 30% Discount to Intrinsic Value

The company seems to be very cheap. Any idea why it is that cheap? Analysis on Business Quality, Management etc will help.

cody56

Undervalued Play on Puerto Rico

Again the lack of the analysis on business quality, management and why the company is cheap. Earnings seem to be flat and unlikely to trade at the same P/E as Berkshire.

cody56

Transcocean Ltd: Still A Turnaround Play

Simiar problems as in the author's other submissions.

Irish Investor

QCR Holdings is Undervalued and Unappreciated

A profitable small bank at cheap price. The only concern is the bank has a low equity to asset ratio of 6%, considering the minimum requirment is 5%. It is more leveraged than other banks. The author should definitely discuss the non-performing loan, loan reserve etc, why is key in bank investing.

apolloportfolio

Pier 1 Import offers 50% upside potential

What is the competitive advantages of Pier I? This is the key question to answer in retail industry. How is the same store sales? How is the trend of profitability?

DCResearch

Emmis Communications: Undervalued Thanks to a Recent Acquisition

A well researched article on the company in a declining industry. Just look at the history, the company is not investable. The author gave a clear argument on the future of the company. At its current valuation, it seems interesting.

drlee

Pharma Bio Serv: The Perks of Being a Small Investor

A nano-cap that is thinly traded and undervalued.

ankangni@google

Silicon Image Is An Undervalued Stock With Strong Growth Potential

An interesting tech company with some rare moat protected by licensing rights and enjoys high gross margins. But the industry is cyclacle and FCF might be as predictable.

mrz22

Trading Near BV and Primed for Growth, Schuff is Very Attractive.

A stock traded on OTC market. The company is in the transition of majority of shareholders, which may serve as catalyst.

Value Investor

Reasons To Remain Bullish On Seadrill

Discussions of management and valuations are expected. Company has too much debt.

cody56

Citigroup: Undervalued at 8.2x Its Pretax Earnings

A short analysis on a complex bank.

Robert Abbott

Omega Protein: Can You Swallow the Volatility?

The business seems to be too volatile to apply Peter Lynch Earnings line for the valuation.

ValueStalker

JPMorgan: Value Hiding in Plain Sight

An in-depth analysis on JPM. The management had a track record of avoiding risks. Undervalued, decent dividend payment.

Faisal Humayun

Avance Gas: Well Positioned for Strong Upside

A VLGC company with tremendous growth. But debt coverage of 2.8 from operating cash flow is low. The revenue growth is big, so is the expectations.

cody56

Goldman Sachs Undervalued at 10x Earnings

A short analysis on a complex business

$100 per submission will be paid to the qualified submissions. We will also track the performances of these submissions. $1000 will be paid to these authors if their picks double in the next 12 months. Non-qualified, but exclusive submissions will be paid as regular articles.

We are looking forward to more submissions. Wish your pick double in 12 months.


Rating: 4.0/5 (1 vote)

Voters:

Comments

Robert Abbott
Robert Abbott premium member - 1 month ago

In their comments above, about Credit Acceptance Corporation (CACC) the editors asked, "... if the company approves 100% of the applications, how can it manage the risk?".

It's a good question, and one I wish I had addressed more directly within the article. But, on the basis of better late than never, here are my thoughts on this question (with quotes from CACC's 2013 Annual Report and 10-K Report):

First, the company says in several of its annual reports, "We take 60 seconds, and we approve 100% of the applications submitted, 24 hours a day, seven days a week."

How is this possible? CACC gives credit first to its highly sophisticated loan application software, CAPS, which incorporates not only the usual loan application information, but also sifts through the its millions of records to assess likelihood of default, collection, etc.

With all this information combined, Credit Acceptance can then pinpoint the exact lending rate it needs to charge to earn a predetermined profit. This is the rate that is then offered to the applicant, who may then accept or reject it.

Here's how the company describes the process, "At the time of assignment, we forecast future expected cash flows from the Consumer Loan. Based on these forecasts, which include estimates for wholesale vehicle prices in the event of vehicle repossession and sale, we make an advance or one-time purchase payment to the related Dealer at a level designed to achieve an acceptable return on capital." (advance payments accounted for 93.5% of loan units).

When a loan is initiated, CACC shares the risk with the dealer, providing only an advance on the loan, rather than 'buying' it, until certain conditions are met. Those advances are assigned to pools of at least 100 consumer loans, and if dealers have more than one pool, these pools are cross-collateralized.

And, the company keeps improving its collection capabilities, focusing on just this one line of business, "We understand the daily execution required to successfully service a portfolio of automobile loans to customers in our target market. There are many examples of companies in our industry that underestimated the effort involved and produced poor financial results." Collection costs may be charged back to the dealer.

For dealers, the attraction is reduced risk, "Since typically the combination of the advance and the consumer’s down payment provides the Dealer-Partner with a cash profit at the time of sale, the Dealer-Partner’s risk in the Consumer Loan is limited." And, of course, it moves a car off the lot that might otherwise not be sold.

(A copy of this comment has also been posted with the original article)

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