The goal of the value investor is to identify investments where there is a potential for earning outstanding returns over time with little to no risk of permanently losing one’s capital. Such investments are relatively rare when considering the entire universe of publicly traded equities, and outside passive minority investors usually have to scour the stock market to find companies that trade at deep discounts to intrinsic value and that have attractive risk profiles. Usually, the securities that meet these criteria trade at such deep discounts because they are misunderstood or underappreciated by the marketplace, but sometimes securities that appear to be misunderstood are trading at depressed levels for legitimate reasons – because the underlying companies are at risk of going into default or, even worse, into bankruptcy.
Distressed equity securities are usually too difficult for most ordinary investors to handle, and the majority of outside passive minority investors would be well-advised to stay clear of such companies unless they are extremely confident that they will not lose their principal in the case of bankruptcy, run-off, or, in times like these, receivership or nationalization. Deep-pocketed outside investors or control investors, on the other hand, enjoy quite a different position than ordinary investors, as they can try to influence a distressed company’s restructuring process, implement turn around plans, invest new capital into the company, or in some cases acquire the troubled company at an extremely low price.
Warren Buffett has often stated that he tries to purchase great businesses trading at fair prices, but Buffett, unlike many investors, also often has the opportunity to acquire distressed companies that could be great businesses under different circumstances, and that are trading at great prices. Last year, for example, Berkshire’s MidAmerican Energy subsidiary made a bid for Constellation Energy that was so low it would have effectively been stealing the company had another bidder not appeared. Buffett was able to make such a lowball bid because Constellation had severe liquidity issues, and Berkshire was offering Constellation an immediate cash infusion that would have enabled the company to avoid filing for bankruptcy protection.
Deep-pocketed value investors such as Bruce Berkowitz’s Fairholme Fund and Leucadia National, the conglomerate run by Ian Cummings and Joseph Steinberg, are at their best when they are able to find distressed investment opportunities like the ones Buffett enjoys. Fairholme and Leucadia have found just such an opportunity in their investment in AmeriCredit, an auto finance company that operates primarily in the subprime space. To understand what they see in AmeriCredit, it is important to recognize that Berkowitz, Cummings, and Steinberg – some of the shrewdest investors out there – are huge Buffett admirers and have probably learned a great deal from closely following his deal making. Indeed, their investment in AmeriCredit has many similarities to Buffett’s acquisition of a manufactured housing company called Clayton Homes in 2003, which Buffett discussed at length in this year’s annual letter to the shareholders of Berkshire Hathaway. It would be instructive to discuss Buffett’s acquisition of Clayton Homes to understand the opportunity Fairholme and Leucadia see in AmeriCredit and also to learn some useful lessons about subprime lending and securitization along the way.
Clayton Homes is the largest company in the manufactured home industry and, according to Buffett, is responsible for about 34% of the industry’s total sales. In addition to being a manufacturer, Clayton also finances the majority of sales made to its homebuyers. In 2003, Berkshire was able to buy Clayton Homes at a steep discount to the company’s intrinsic value by taking advantage of industry-wide distress, Berkshire’s AAA balance sheet, and Jim Clayton’s affinity for Warren Buffett.
Here’s Buffett discussing the Clayton Homes acquisition and the distressed state of the manufactured housing industry back in his 2003 annual letter:
Sound familiar? Buffett thinks so. In his 2008 letter he states that the “manufactured-home debacle,” which resulted in “staggering industry losses,” “should have served as a canary-in-the-coal-mine warning for the far-larger conventional housing market” that precipitated the financial meltdown last year.
So why did Buffett buy a manufacturer in an industry where demand was declining, where sales were dependent on providing loans to borrowers with low FICO scores (many of whom were “subprime” borrowers), and where the ability to fund such loans required accessing a securitization market that increasingly refused to participate in such lending? Because he saw value in acquiring a distressed company such as Clayton that manufactured a decent product and made good lending decisions to buyers of its products. Buffett knew that as a subsidiary of Berkshire, Clayton Homes’ funding problems would disappear. The company could then concentrate on making appropriately priced mortgage loans to manufactured home buyers and taking market share away from its competitors who were dependent upon a faltering securitization market that no longer trusted manufactured home loan originators.
As of yearend, the delinquency rate on loans originated by Clayton was only at 3.6% despite so many of these loans being “subprime.” Buffett explains the low delinquency rate by praising borrowers’ virtuous decisions, stating that Clayton’s borrowers “took out a mortgage with the intention of paying it off, whatever the course of home prices.” In reality, it is Clayton Homes’ management that should be praised for their insistence on properly conducted due diligence and adherence to conservative underwriting standards. According to its last 10-K filed with the SEC before the acquisition, Clayton’s underwriting guidelines “require that each applicant’s credit, residence, employment history and income to debt payment ratios meet predetermined guidelines.”
In other words, Clayton Homes practices risk management, something that the majority of financiers apparently forgot about (or didn’t care about) in the past years of cheap credit. Clayton makes sure that its borrowers – including so-called “subprime” borrowers – have enough income to be able to make their monthly mortgage payments. As Buffett points out in his annual letter, foreclosures are usually event-driven. That is, they occur as a result of job loss, death, medical problems, etc. After all, buying a primary residence is not just an act of investment – it’s an act of consumption. It shouldn’t matter if a mortgage is “underwater” so long as the buyer is happy with the value he’s gotten and can afford to make payments on the home. Lenders who originate well-priced, reasonably structured loans to borrowers who are intent on utilizing their homes should, over time, earn a return on the total portfolio of loans underwritten even if the lender does not intend to sell the loans to third parties.
Today, we are seeing turmoil in the asset-backed securities market on a much larger scale than ever before, and lenders of all types who have relied on the securitization market to permanently finance their loan originations are in danger of losing their status as going concerns.Ă‚ AmeriCredit is one such company that, despite having admirable underwriting standards and due diligence practices, is facing the possibility of going into run-off due to its reliance on securitization.
AmeriCredit purchases new and used car installment sales contracts originated by automobile dealers in its dealership network, the majority of which are for cars purchased by subprime borrowers. AmeriCredit then securitizes these auto finance receivables, earning income from the difference between the finance charges received and the interest paid to investors in the asset-backed securities. Because the securitization transactions are structured as secured financings, the finance receivables and the related securitization notes payable remain on AmeriCredit’s balance sheet.
Like Clayton Homes before the acquisition by Berkshire, AmeriCredit funds its originations in the short term by drawing down its warehouse lines of credit and in the long term by securitizing the finance receivables it has purchased. And like Clayton before the acquisition, AmeriCredit’s earnings depend significantly on a functioning securitization market. Here’s Bruce Berkowitz discussing AmeriCredit’s problems in an interview with Forbes:
This description of AmeriCredit’s operations explains why Fairholme and Leucadia collectively own close to 50% of the common shares of AmeriCredit, as they appear to have identified an opportunity incredibly similar to the one that Warren Buffett saw in 2003.
In the worst case scenario, Fairholme and Leucadia probably won’t lose any money. Berkowitz has indicated in interviews that he has identified the present value of the inflows and outflows in the case of run-off and has determined that there is a margin of safety in the price Fairholme has paid for its shares. Berkowitz’s judgment that AmeriCredit’s current book value probably represents its liquidation value is trustworthy not only because he is a phenomenal investor but also because the company appears to have acted appropriately in marking down its loan book as the economy has deteriorated and defaults have increased. It’s also important to recognize that AmeriCredit’s annualized net credit loss ratio is currently only around 9%, and while it is likely this ratio will go up, it is unlikely that it will skyrocket upwards due to borrowers walking away from their cars. After all, AmeriCredit’s borrowers have purchased vehicles that they know will depreciate in market value because they need these vehicles to get to and from work. As with Clayton Homes’ borrowers, defaults and repossessions for AmeriCredit’s borrowers tend to be event-driven, and the company does its best to work with borrowers to maximize the amounts ultimately recovered from the loans.
In the best case scenario – where the securitization market recovers and AmeriCredit avoids run-off – the investment will be a home run, probably even better than Buffett’s acquisition of Clayton Homes. Unless a robust public transportation system or ubiquitous car sharing industry suddenly appears overnight in the United States, individuals with below prime credit scores will need to obtain loans to purchase cars for getting to work for the foreseeable future. AmeriCredit has been serving such individuals for years now, and unlike many other lenders, the company has been doing it the right way.
AmeriCredit is incentivized to make sure that the dealers it does business with lend money in a responsible fashion because all loans purchased are kept on the company’s balance sheet even after they have been transferred into a securitization trust. This method of securitization – where the securitizing party retains equity in the loans securitized – ensures buyers of AmeriCredit’s asset-backed securities that the loans are not destined to default because if defaults do occur, the company itself takes a hit. It would not at all be surprising if investors demand this sort of structure for asset-backed securities going forward, since so many of them have been burned by irresponsible lenders who were only interested in selling off as many loans as possible regardless of the risk of credit losses. If AmeriCredit can overcome its liquidity issues and the securitization market recovers in a timely fashion, the company will be well-positioned to substantially increase its share of the subprime auto loan market, and the company will be worth far more than its current market capitalization.
How likely is it that AmeriCredit will avoid run-off? It’s probably quite likely given management’s actions and the involvement of Fairholme and Leucadia. AmeriCredit dodged a bullet in December by successfully issuing $1 billion of senior/subordinated securitization notes, which will enable them to operate without needing to access the securitization market until late 2009. They were able to complete the securitization transaction because Fairholme agreed to purchase the subordinated bonds as part of an exchange of senior notes held by Fairholme for newly issued AmeriCredit common. This transaction increased Fairholme’s stake in AmeriCredit to 24.6% of the company, which means that AmeriCredit now has two institutions, Fairholme and Leucadia, which will do everything in their power to make sure that the company remains a going concern.
Then, earlier this month AmeriCredit dodged another bullet by successfully obtaining the amendment and extension of its short term loan facility. Before the amendments were granted, certain covenants associated with AmeriCredit’s warehouse credit facility would almost certainly have been breached by the company, including a covenant requiring that the its net credit loss ratio not go over 8.5% on a rolling six-month annualized basis. This would have put AmeriCredit in default, and the company could have had all its short term funding for originations cut off. Having no access to short term funding would have resulted in the company’s going into run-off. However, the warehouse lenders agreed to modify the credit facility by amending the covenants at issue, reducing the size of the facility, and increasing the cost of funds to better match the current credit environment. This was both a win for the lenders and for AmeriCredit.
Given the above developments, it is likely that the company’s liquidity issues will probably be resolved once the Fed’s Term Asset-Backed Securities Loan Facility (TALF) gets up and running. The TALF will hopefully help restart the securitization market so that investors are willing to purchase asset-backed securities issued by honest and competent lenders such as AmeriCredit. AmeriCredit estimates that about 70–75% of its new senior-subordinated securities will be AAA-rated, which means that these securities will be eligible investments for TALF participants. However, AmeriCredit also notes that in order to find buyers for its subordinated AA- and A-rated securities, the company may have to pay investors “other forms of consideration in addition to the interest coupons on the securities, including upfront commitment fees and warrants to acquire our common stock.” This happened in December with the Fairholme transaction, and it is possible that small shareholders will have their stakes in the company further diluted by the issuance of more common stock to deep-pocketed investors like Fairholme and Leucadia in exchange for their participation in subordinated bond issues.
Then there is Leucadia’s involvement in AmeriCredit. Leucadia is well known for buying control stakes in distressed companies, turning things around, and then selling the companies to bigger players for a substantial profit. Indeed, it is likely that Leucadia’s involvement was the reason why Fairholme entered into a position in AmeriCredit in the first place, as Berkowitz highly respects Steinberg and Cummings. It is entirely possible that Leucadia will help make AmeriCredit the best in class subprime auto finance company and possibly even the best in class auto finance company, period. The end game may then be for the company to be sold to a big commercial bank which will gain the benefit of AmeriCredit’s lending infrastructure and brand/franchise value.
Fairholme and Leucadia’s shareholders are lucky to have investment managers with the resources and skills to be able to dive into distressed situations, and who are astute enough to recognize investment situations that hold the potential for outstanding returns with a large margin of safety. Their AmeriCredit investment is nothing less than Buffett-esque.
Sumit Shah
www.sumitshah.com
Distressed equity securities are usually too difficult for most ordinary investors to handle, and the majority of outside passive minority investors would be well-advised to stay clear of such companies unless they are extremely confident that they will not lose their principal in the case of bankruptcy, run-off, or, in times like these, receivership or nationalization. Deep-pocketed outside investors or control investors, on the other hand, enjoy quite a different position than ordinary investors, as they can try to influence a distressed company’s restructuring process, implement turn around plans, invest new capital into the company, or in some cases acquire the troubled company at an extremely low price.
Warren Buffett has often stated that he tries to purchase great businesses trading at fair prices, but Buffett, unlike many investors, also often has the opportunity to acquire distressed companies that could be great businesses under different circumstances, and that are trading at great prices. Last year, for example, Berkshire’s MidAmerican Energy subsidiary made a bid for Constellation Energy that was so low it would have effectively been stealing the company had another bidder not appeared. Buffett was able to make such a lowball bid because Constellation had severe liquidity issues, and Berkshire was offering Constellation an immediate cash infusion that would have enabled the company to avoid filing for bankruptcy protection.
Deep-pocketed value investors such as Bruce Berkowitz’s Fairholme Fund and Leucadia National, the conglomerate run by Ian Cummings and Joseph Steinberg, are at their best when they are able to find distressed investment opportunities like the ones Buffett enjoys. Fairholme and Leucadia have found just such an opportunity in their investment in AmeriCredit, an auto finance company that operates primarily in the subprime space. To understand what they see in AmeriCredit, it is important to recognize that Berkowitz, Cummings, and Steinberg – some of the shrewdest investors out there – are huge Buffett admirers and have probably learned a great deal from closely following his deal making. Indeed, their investment in AmeriCredit has many similarities to Buffett’s acquisition of a manufactured housing company called Clayton Homes in 2003, which Buffett discussed at length in this year’s annual letter to the shareholders of Berkshire Hathaway. It would be instructive to discuss Buffett’s acquisition of Clayton Homes to understand the opportunity Fairholme and Leucadia see in AmeriCredit and also to learn some useful lessons about subprime lending and securitization along the way.
Clayton Homes is the largest company in the manufactured home industry and, according to Buffett, is responsible for about 34% of the industry’s total sales. In addition to being a manufacturer, Clayton also finances the majority of sales made to its homebuyers. In 2003, Berkshire was able to buy Clayton Homes at a steep discount to the company’s intrinsic value by taking advantage of industry-wide distress, Berkshire’s AAA balance sheet, and Jim Clayton’s affinity for Warren Buffett.
Here’s Buffett discussing the Clayton Homes acquisition and the distressed state of the manufactured housing industry back in his 2003 annual letter:
Progress in design and construction [in the manufactured housing industry] was not matched [] by progress in distribution and financing. Instead, as the years went by, the industry’s business model increasingly centered on the ability of both the retailer and manufacturer to unload terrible loans on naive lenders. When “securitization” then became popular in the 1990s, further distancing the supplier of funds from the lending transaction, the industry’s conduct went from bad to worse. Much of its volume a few years back came from buyers who shouldn’t have bought, financed by lenders who shouldn’t have lent. The consequence has been huge numbers of repossessions and pitifully low recoveries on the units repossessed.
. . . Clayton, though it could not isolate itself from industry practices, behaved considerably better than its major competitors.
* * *
[When I made an offer for the business,] Clayton’s board was receptive, since it understood that the large-scale financing Clayton would need in the future might be hard to get. Lenders had fled the industry and securitizations, when possible at all, carried far more expensive and restrictive terms than was previously the case. This tightening was particularly serious for Clayton, whose earnings significantly depended on securitizations.
Today, the manufactured housing industry remains awash in problems. Delinquencies continue high, repossessed units still abound and the number of retailers has been halved.Ă‚ A different business model is required, one that eliminates the ability of the retailer and salesman to pocket substantial money up front by making sales financed by loans that are destined to default.
Sound familiar? Buffett thinks so. In his 2008 letter he states that the “manufactured-home debacle,” which resulted in “staggering industry losses,” “should have served as a canary-in-the-coal-mine warning for the far-larger conventional housing market” that precipitated the financial meltdown last year.
So why did Buffett buy a manufacturer in an industry where demand was declining, where sales were dependent on providing loans to borrowers with low FICO scores (many of whom were “subprime” borrowers), and where the ability to fund such loans required accessing a securitization market that increasingly refused to participate in such lending? Because he saw value in acquiring a distressed company such as Clayton that manufactured a decent product and made good lending decisions to buyers of its products. Buffett knew that as a subsidiary of Berkshire, Clayton Homes’ funding problems would disappear. The company could then concentrate on making appropriately priced mortgage loans to manufactured home buyers and taking market share away from its competitors who were dependent upon a faltering securitization market that no longer trusted manufactured home loan originators.
As of yearend, the delinquency rate on loans originated by Clayton was only at 3.6% despite so many of these loans being “subprime.” Buffett explains the low delinquency rate by praising borrowers’ virtuous decisions, stating that Clayton’s borrowers “took out a mortgage with the intention of paying it off, whatever the course of home prices.” In reality, it is Clayton Homes’ management that should be praised for their insistence on properly conducted due diligence and adherence to conservative underwriting standards. According to its last 10-K filed with the SEC before the acquisition, Clayton’s underwriting guidelines “require that each applicant’s credit, residence, employment history and income to debt payment ratios meet predetermined guidelines.”
In other words, Clayton Homes practices risk management, something that the majority of financiers apparently forgot about (or didn’t care about) in the past years of cheap credit. Clayton makes sure that its borrowers – including so-called “subprime” borrowers – have enough income to be able to make their monthly mortgage payments. As Buffett points out in his annual letter, foreclosures are usually event-driven. That is, they occur as a result of job loss, death, medical problems, etc. After all, buying a primary residence is not just an act of investment – it’s an act of consumption. It shouldn’t matter if a mortgage is “underwater” so long as the buyer is happy with the value he’s gotten and can afford to make payments on the home. Lenders who originate well-priced, reasonably structured loans to borrowers who are intent on utilizing their homes should, over time, earn a return on the total portfolio of loans underwritten even if the lender does not intend to sell the loans to third parties.
Today, we are seeing turmoil in the asset-backed securities market on a much larger scale than ever before, and lenders of all types who have relied on the securitization market to permanently finance their loan originations are in danger of losing their status as going concerns.Ă‚ AmeriCredit is one such company that, despite having admirable underwriting standards and due diligence practices, is facing the possibility of going into run-off due to its reliance on securitization.
AmeriCredit purchases new and used car installment sales contracts originated by automobile dealers in its dealership network, the majority of which are for cars purchased by subprime borrowers. AmeriCredit then securitizes these auto finance receivables, earning income from the difference between the finance charges received and the interest paid to investors in the asset-backed securities. Because the securitization transactions are structured as secured financings, the finance receivables and the related securitization notes payable remain on AmeriCredit’s balance sheet.
Like Clayton Homes before the acquisition by Berkshire, AmeriCredit funds its originations in the short term by drawing down its warehouse lines of credit and in the long term by securitizing the finance receivables it has purchased. And like Clayton before the acquisition, AmeriCredit’s earnings depend significantly on a functioning securitization market. Here’s Bruce Berkowitz discussing AmeriCredit’s problems in an interview with Forbes:
They got caught up in the shutting down of the securitization market, which is a tough business. At the end of the day, if you are dependent on securitizations and nobody can securitize for you anymore, it can be a death blow. But with AmeriCredit, they did it the right way. They give loans to people that need cars to get to work. They do the loans based upon the income of the person, not the collateral value of the car. They do their own work as to whether or not the person can afford the car. They don’t want to sell the car to someone who can’t afford it, unlike a dealer that just wants to sell the car, get the commission and thank you very much. So they do the work and the management is smart.
This description of AmeriCredit’s operations explains why Fairholme and Leucadia collectively own close to 50% of the common shares of AmeriCredit, as they appear to have identified an opportunity incredibly similar to the one that Warren Buffett saw in 2003.
In the worst case scenario, Fairholme and Leucadia probably won’t lose any money. Berkowitz has indicated in interviews that he has identified the present value of the inflows and outflows in the case of run-off and has determined that there is a margin of safety in the price Fairholme has paid for its shares. Berkowitz’s judgment that AmeriCredit’s current book value probably represents its liquidation value is trustworthy not only because he is a phenomenal investor but also because the company appears to have acted appropriately in marking down its loan book as the economy has deteriorated and defaults have increased. It’s also important to recognize that AmeriCredit’s annualized net credit loss ratio is currently only around 9%, and while it is likely this ratio will go up, it is unlikely that it will skyrocket upwards due to borrowers walking away from their cars. After all, AmeriCredit’s borrowers have purchased vehicles that they know will depreciate in market value because they need these vehicles to get to and from work. As with Clayton Homes’ borrowers, defaults and repossessions for AmeriCredit’s borrowers tend to be event-driven, and the company does its best to work with borrowers to maximize the amounts ultimately recovered from the loans.
In the best case scenario – where the securitization market recovers and AmeriCredit avoids run-off – the investment will be a home run, probably even better than Buffett’s acquisition of Clayton Homes. Unless a robust public transportation system or ubiquitous car sharing industry suddenly appears overnight in the United States, individuals with below prime credit scores will need to obtain loans to purchase cars for getting to work for the foreseeable future. AmeriCredit has been serving such individuals for years now, and unlike many other lenders, the company has been doing it the right way.
AmeriCredit is incentivized to make sure that the dealers it does business with lend money in a responsible fashion because all loans purchased are kept on the company’s balance sheet even after they have been transferred into a securitization trust. This method of securitization – where the securitizing party retains equity in the loans securitized – ensures buyers of AmeriCredit’s asset-backed securities that the loans are not destined to default because if defaults do occur, the company itself takes a hit. It would not at all be surprising if investors demand this sort of structure for asset-backed securities going forward, since so many of them have been burned by irresponsible lenders who were only interested in selling off as many loans as possible regardless of the risk of credit losses. If AmeriCredit can overcome its liquidity issues and the securitization market recovers in a timely fashion, the company will be well-positioned to substantially increase its share of the subprime auto loan market, and the company will be worth far more than its current market capitalization.
How likely is it that AmeriCredit will avoid run-off? It’s probably quite likely given management’s actions and the involvement of Fairholme and Leucadia. AmeriCredit dodged a bullet in December by successfully issuing $1 billion of senior/subordinated securitization notes, which will enable them to operate without needing to access the securitization market until late 2009. They were able to complete the securitization transaction because Fairholme agreed to purchase the subordinated bonds as part of an exchange of senior notes held by Fairholme for newly issued AmeriCredit common. This transaction increased Fairholme’s stake in AmeriCredit to 24.6% of the company, which means that AmeriCredit now has two institutions, Fairholme and Leucadia, which will do everything in their power to make sure that the company remains a going concern.
Then, earlier this month AmeriCredit dodged another bullet by successfully obtaining the amendment and extension of its short term loan facility. Before the amendments were granted, certain covenants associated with AmeriCredit’s warehouse credit facility would almost certainly have been breached by the company, including a covenant requiring that the its net credit loss ratio not go over 8.5% on a rolling six-month annualized basis. This would have put AmeriCredit in default, and the company could have had all its short term funding for originations cut off. Having no access to short term funding would have resulted in the company’s going into run-off. However, the warehouse lenders agreed to modify the credit facility by amending the covenants at issue, reducing the size of the facility, and increasing the cost of funds to better match the current credit environment. This was both a win for the lenders and for AmeriCredit.
Given the above developments, it is likely that the company’s liquidity issues will probably be resolved once the Fed’s Term Asset-Backed Securities Loan Facility (TALF) gets up and running. The TALF will hopefully help restart the securitization market so that investors are willing to purchase asset-backed securities issued by honest and competent lenders such as AmeriCredit. AmeriCredit estimates that about 70–75% of its new senior-subordinated securities will be AAA-rated, which means that these securities will be eligible investments for TALF participants. However, AmeriCredit also notes that in order to find buyers for its subordinated AA- and A-rated securities, the company may have to pay investors “other forms of consideration in addition to the interest coupons on the securities, including upfront commitment fees and warrants to acquire our common stock.” This happened in December with the Fairholme transaction, and it is possible that small shareholders will have their stakes in the company further diluted by the issuance of more common stock to deep-pocketed investors like Fairholme and Leucadia in exchange for their participation in subordinated bond issues.
Then there is Leucadia’s involvement in AmeriCredit. Leucadia is well known for buying control stakes in distressed companies, turning things around, and then selling the companies to bigger players for a substantial profit. Indeed, it is likely that Leucadia’s involvement was the reason why Fairholme entered into a position in AmeriCredit in the first place, as Berkowitz highly respects Steinberg and Cummings. It is entirely possible that Leucadia will help make AmeriCredit the best in class subprime auto finance company and possibly even the best in class auto finance company, period. The end game may then be for the company to be sold to a big commercial bank which will gain the benefit of AmeriCredit’s lending infrastructure and brand/franchise value.
Fairholme and Leucadia’s shareholders are lucky to have investment managers with the resources and skills to be able to dive into distressed situations, and who are astute enough to recognize investment situations that hold the potential for outstanding returns with a large margin of safety. Their AmeriCredit investment is nothing less than Buffett-esque.
Sumit Shah
www.sumitshah.com
