Prescott General Partners buys $1.78 million in Credit Acceptance Corp shares from Investing.com

Prescott General Partners LLC, a significant shareholder in Credit acceptance Corp (NASDAQ: ), has made a substantial purchase of the company’s stock, according to recent filings with the SEC. The private equity firm, known for its active investment strategy, purchased approximately $1.78 million worth of stock.

The transactions, which took place on September 18, 2024, involved the purchase of 1,000 shares at a price of $445.24 and another 3,000 shares at a weighted average price of $446.43, with individual sale prices ranging from $446.31 and $446.62. This activity indicates a strong vote of confidence in Michigan auto finance company Prescott General Partners.

Following these acquisitions, the company’s indirect ownership through Idoya Partners LP, a private investment partnership with Prescott General Partners as general partner, increased significantly. The filings state that Prescott General Partners disclaims beneficial ownership of these shares beyond its pecuniary interest, as outlined in the SEC filing’s footnotes.

Investors often monitor such trades by major stakeholders because they can provide insight into the sentiment of those with deep knowledge of the company. The acquisition by Prescott General Partners can 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 loan sector, offering financing programs that allow car 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 most recent reporting, Prescott General Partners’ ownership structure includes direct and indirect positions through various partnerships, with the SEC filing providing detailed information about these holdings. The document was signed by Scott J. Vassalluzzo, Managing Member of Prescott General Partners LLC, affirming the accuracy and completeness of the information reported.

In other recent news, Credit Acceptance Corporation reported mixed results for the second quarter of 2024. The company adjusted its forecast net cash flows by $147 million due to poor performance in collections and originations, particularly from loan 2022 and 2023. However, Credit Acceptance’s loan portfolio reached a record $8.6 billion. Despite slower growth in April, May and June saw an increase in upgraded units, 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 earnings per share and anticipates product and competitive environment improvements to drive future growth. However, macro uncertainties present challenges to predictable growth.

Credit Acceptance has updated the credit facility definitions to match their yield level accounting valuation method. They retain confidence in originating loans, which are expected to yield returns above the cost of capital. Despite these advances, 217,000 shares were excluded from the quarter’s earnings because they were considered anti-dilutive.

InvestingPro Insights

Given Prescott General Partners LLC’s recent stock purchases, it’s worth considering some key financials and analyst insights from InvestingPro to better understand Credit Acceptance Corp (NASDAQ:CACC)’s current market position. The company’s market capitalization is $5.5 billion, reflecting its substantial size in the personal lending sector. Despite recent market moves, Credit Acceptance Corp is trading at a high multiple of earnings, with a Price-Earnings (P/E) ratio of 31.31 and an adjusted P/E ratio for the trailing twelve months through Q2 2024, at 27.35.

InvestingPro tips suggest that management has been actively buying 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 short-term liabilities, demonstrating a strong liquidity position that can reassure investors about its financial health.

However, it is important to note that two analysts have revised down their earnings expectations for the coming period, which could warrant caution among investors. Despite this, analysts forecast that Credit Acceptance Corp will maintain profitability this year, a continuation of its performance over the past twelve months. The company’s profitability and a high return over the past decade can be convincing factors for potential investors.

For those interested in more detailed analysis, InvestingPro offers additional advice 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 picture of the company’s financial health and market potential.

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