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  • boratnumber1 boratnumber1 Oct 26, 2007 12:54 PM Flag

    -26% time to buy

    I keep going back and forth on this. Looking at the consolidation in this space (CheckFree buys Corillian, Intuit buys Digital Insight, Fiserv buys CheckFree, Open Solutions going private, etc.), I think the possibility of a purchase needs to be factored into any analysis of the stock. Each of those acquisitions involved pretty significant premiums. Additionally, the payments space seems to be the most valuable and quality assets in the space are becoming scarce.

    On the other hand, I wonder who the logical acquirer might be. I could have seen Fiserv before the CheckFree acquisition or Digital Insight before the Intuit acquisition. Maybe Metavante as a consolidation play. At this price, maybe a sponsor would consider taking the company private. With the craziness in the credit markets, I am not sure that is as likely as it would have been last year at this time. Their capital structure makes any acquisition or buyout rather expensive. Another question I have is management's willingness to sell. I think Matt Lawlor has a reputation for having completely unrealistic views of ORCC's value. That may not be as much a factor now that they have a large shareholder with a board seat (Tennabaum) who may be eager to force a sale rather than sit on dead money. The stock is now at the same level it was in late 2003. In absolute terms, that is just terrible. When you discount the current price back to 2003, their current performance is completely unacceptable.

    In the final analysis, I get nervous when I need to assign some value to a potential buyout to feel good about investing. At this point, I would probably not sell, but I am not a buyer either.

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    • topline1 Oct 26, 2007 1:03 PM Flag

      Appreciate your well thought out comments. Sometimes it is helpful to get one's thoughts tempered with another viewpoint that isn't clouded with the same perspective. Your points are well taken and perhaps some more caution here is advised. - But with that said I believe things have been overdone and as you pointed out valuation is as low as it has been ain a long time yet this is a larger better positioned company with above average growth prospects. Execution in the next couple of quarters, maintainig existing existing accounts and adding new ones will be key. -They must execute well. --I did send a note to investor relations asking about what seems to be a trend that several people have noticed of releasing good news (account acquistion) and holding off until CC's to disclose bad news (account losses) I will post any response that I get.

    • In a recent posting you state that "[t]he stock is now at the same level it was in late 2003." The stock is now at the same level it was in 1998, the year of its last private sale at $8.42 per share (before it went public at $14 per share). Its first private sale was in 1992, at $4.21 per share. Stop complaining; you are one of ORCC's more successful investors.