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EZCORP, Inc. Message Board

ezpwjunky 37 posts  |  Last Activity: May 24, 2016 12:31 PM Member since: Apr 15, 2004
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  • Reply to

    Still accumulating...

    by pler33 May 24, 2016 11:17 AM
    ezpwjunky ezpwjunky May 24, 2016 12:31 PM Flag

    I'm getting ready to put another big chunk into EZPW but I'm having trouble getting the funds in the right place...it should be done in the next couple of days but as it has gone up day after day I'm torn between being happy and being sorry that I didn't get this last chunk in the $5s....on the other hand, I've got a bunch of June 17 $5 call options that are up about 9X...the stock going up as I try to buy another big position is definitely a high class problem.

    Sentiment: Strong Buy

  • Reply to

    Grupo sale

    by nitabosco May 18, 2016 9:59 AM
    ezpwjunky ezpwjunky May 18, 2016 4:00 PM Flag

    pier33, While I have nothing but my gut to go on for stock price movement before the next announcement, I tend to agree with your guesses on the stock price...I think that it continues to trend up on no news and once GF is announced there will be a big leap.

    I think the big leap will happen once the GF divestiture occurs even if they don't get much cash but instead the buyer simply accepts responsibility for the debt...that said, I do expect cash coming in and the debt going away.

    We should know about GF before long...I agree with the timing that aa just posted (i.e. it won't take to the end of Sept...the outside of their timing estimate).

    Sentiment: Strong Buy

  • Reply to

    Anyone

    by pler33 May 11, 2016 1:01 PM
    ezpwjunky ezpwjunky May 11, 2016 3:41 PM Flag

    I'm buying more...when it goes to $15-20 I won't care too much whether I bought at $3 or $6.

    I've been averaging down for over a year and I don't mind buying at these levels.

    Sentiment: Strong Buy

  • Reply to

    Rotunda Execution

    by ezpwjunky May 10, 2016 11:15 AM
    ezpwjunky ezpwjunky May 11, 2016 10:27 AM Flag

    aa, Ha... After I wrote the note, I saw the double entendre in the title and thought the same thing...and for the record he is not fat. Although his wallet is getting fatter as his almost 1 million shares of stock (current ownership plus restricted stock) is soaring.

    One of the reasons, I'm so heavy in EZPW stock is based upon Joe's heavy ownership himself and what must be his intense desire to gain back some of the tens of millions of dollars he is down during the "lost years".

    He is known as the best pawn operator in the US and the recent performance of EZPW's core pawn businesses are clearly showing he hasn't lost his touch.

    Sentiment: Strong Buy

  • ezpwjunky by ezpwjunky May 10, 2016 11:15 AM Flag

    Everyone is hyper-focused upon the GF divestiture and what this means for the company. This is understandable since it is the "drag" on the stock price.

    However, if you look closely at the 10Q and the very thorough presentation from this morning (see EZPW investor relations link), the more important story is the VERY IMPRESSIVE performance of the core US and Mexican pawn businesses.

    Not only are these businesses executing very well and throwing off tons of cash but they are clearly outperforming CSH and FCFS on some key metrics (especially pawn loans outstanding/PLO growth and pawn service charge/PSC growth). This shows some impressive growth while at the same time improving margins (merchandise margins up 500 basis points over last year).

    My guess is that they are taking market share from CSH and FCFS. But even if this is not the case, the stock will soar once Rotunda's performance is compared to FCFS and CSH without the problems associated with GF.

    Sentiment: Strong Buy

  • In addition to the confirmation that GF is being sold completely and the improved debt collections at GF (set forth in the 10Q and discussed on the CC this am) there was another important disclosure made about GF.

    When Grimshaw was asked about the auction process being run by UBS for Grupo Finmart, he said that there was more interest then they expected and they were quote "pleasantly surprised". When later asked if the potential buyers were strategic buyers, Mexican buyers or US buyers...he answered "all of the above". He also said the process was moving quickly and they hoped to have something done in the next couple of months (and in any event by the end of Sept).

    I think that Wall Street is now convinced that EZPW will be rid of GF and that they will then be on an "apples to apples" basis with CSH and FCFS. At that point, EZPW will need to trade at about 3X higher to be close to the same metrics as their other publicly traded competitors.

    Sentiment: Strong Buy

  • ezpwjunky by ezpwjunky May 9, 2016 7:04 PM Flag

    For those of you worried that GF wasn't going to have any value, the language below from the 10Q may be comforting...it is too bad the goodwill is gone but clearly there is still value there even after paying EZPW back the $35m they owe the parent company...

    As discussed in Note 6 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements," we tested goodwill and intangible assets with an indefinite useful life for potential impairment during the current quarter due to the existence of certain indicators of impairment, including a continued decline in our stock price, as well as continued delays in collections and bad debt experience at Grupo Finmart. Our Step 1 analysis determined that the fair value of the Grupo Finmart reporting unit (estimated to be $46.5 million) was below its carrying value. Thus, under Step 2, we compared that fair value with the fair value of Grupo Finmart's net assets, and determined that we should impair the goodwill attributable to Grupo Finmart by $73.9 million. This impairment charge was recorded in the current quarter. No other assets held by Grupo Finmart were determined to be impaired as of March 31, 2016.
    In February 2016, we announced that we were conducting a comprehensive review of the strategic options for Grupo Finmart. In April 2016, a special committee of our board of directors, after reviewing a variety of strategic alternatives with management and the company's financial advisors, concluded that a sale of the business was the preferred alternative and authorized management to proceed with a process to solicit proposals from interested buyers. The determination of U.S. GAAP fair value for purposes of determining the degree of impairment was based on a discounted cash flow methodology, using assumptions based on our capacity to continue to operate the business under its current capital structure. We would expect that prospective buyers would have their own valuation.

    Sentiment: Strong Buy

  • Reply to

    Question for Junky

    by alexalekhine Apr 30, 2016 1:22 PM
    ezpwjunky ezpwjunky May 1, 2016 5:08 PM Flag

    aa, I've been incommunicado for 4 days and just read about the CSH and FCFS deal.

    My take is that this will help EZPW's stock price because when billion dollars deals get done (the combine companies are worth about $2b) Wall Street tends to take a look at the sector and try to figure out what is going on. A closer look at the overall pawn business can only be good for EZPW. Especially when Wall Street digs deeper and sees that EZPW is outperforming both CSH and FCFS in many pawn metrics (their recent growth means they are taking organic market share from CSH and FCFS). When Wall Street sees that the EZPW well oiled US and Mexican pawn business trades at only about 25-35% of FCFS and CSH on most pawn metrics they will start buying EZPW.

    When Grupo Finmart gets sold this stark delta in valuation will become even more obvious since they will all be on an apples to apples basis.

    As for the merger itself...While EZPW will be smaller than the combined companies and the combined companies will be able to spread certain costs over a larger revenue base, I don't see that as a big disadvantage (it is marginal at best...especially when compared to the valuation delta).

    Finally, the merger could even be a boon for EZPW....companies going through big deals like this normally take their eye off the ball. The CSH and FCFS execs and middle management will be worried about their jobs and not fine tuning pawn performance. Meanwhile, Joe Rotunda will be continuing to do what he does best....EXECUTE and throw off a ton of cash.

    Finally, it is possible (I haven't studied the market) that the DOJ or the FTC will want CSH and FCFS to divest pawn shops in certain geographies, if there is a lot of overlap. If so, EZPW may be able to pick up some new stores. (The overall deal will clearly go through because the combined companies will have less than 25% of the total US market).

    I hope this is helpful.

    Sentiment: Strong Buy

  • First of all...I'm not bragging. I bought a lot in the $2s and $3s but I also bought a lot higher than that and its been a painful year or so.

    I talk about the doubling of the stock price because I'm guessing it will get some attention...my guess is that most of the time when Wall St. sees a stock double in price in short order it is because it is either a thinly traded penny stock or it is a stock that has recently had a "home run" (e.g. buy out offer, huge new contract, FDA approval etc. etc.)

    When Wall St sees EZPW double they might try and figure out why...they will be confused...other than saying they will make a strategic decision on Grupo Finmart nothing much has changed in the last couple of months.

    They will then perhaps dig a little deeper. to try and understand...they will see a company trading at only 25-35% of where its competitors trade (even after the recent doubling of the stock). They will assume that for the reasons discussed here before that GF is not going to be a disaster.

    At this point, Wall St know that this is a low risk value play. Some "big boy" came to that conclusion today and bought hundreds of thousands of shares. Others will follow...the shorts will scramble to cover...Grupo Finmart will sell for a decent amount of cash...after all this happens, we'll look up before the end of the year and the stock will in double digits.

    You can take it to the bank.

    Sentiment: Strong Buy

  • Reply to

    Moves like this

    by alexalekhine Apr 19, 2016 10:04 AM
    ezpwjunky ezpwjunky Apr 19, 2016 11:54 AM Flag

    aa, Thanks for the kind words...the recent EZPW summary by Blue Tower is consistent with my "thesis"...obviously, with the strong recent moves there are a number of "big boys" who are seeing the same value proposition I've been describing. I can't wait until they announce the GF deal.

    In the meantime, we should have a pretty nice earnings release in a couple of weeks (after you back out GF) based upon the strong execution in US and Mexican pawn.

    Sentiment: Strong Buy

  • Reply to

    10K language on Grupo Finmart

    by ezpwjunky Apr 15, 2016 11:21 AM
    ezpwjunky ezpwjunky Apr 15, 2016 5:20 PM Flag

    cdrios88, At the Annual Meeting they said they'd be done by the end of the third calendar quarter...yet in the press release the next day they said they'd be done by June 31st.

    My guess is that the deal will be announced (an LOI?) by the end of June but they are giving themselves to the end of September to close the deal. Quite reasonable.

    In any event, they are moving fast and the hiring of UBS as their investment banker shows that they are going to try and drive an auction process. I'm hoping that Credito Real and a PE group interested in cash flow (but not US GAAP) get into a bidding war. But the truth is that even if they don't get much for it, the stock will still soar as they go to an "apples to apples" comparison with FCFS and CSH.

    Sentiment: Strong Buy

  • Below is the language on GF goodwill copied directly from the 10K filed in December. You will note that GF goodwill is valued at 30% higher than what it is on their books. (This after having an army of auditors climbing all over the GF books and bad debt).

    "As of September 30, 2015, the calculated fair value of each of the reporting units in the U.S. Pawn, Mexico Pawn and Grupo Finmart segments exceeded their carrying values by approximately 15%, 60% and 30%, respectively."

    Things may have gone downhill in loan collections in the last couple of quarters at GF, but there is no way it is so dramatic a change that the entire value of GF has been wiped out...in short, I feel sure that EZPW will sell GF and get decent money for the divestiture. This will strengthen an already strong balance sheet and put EZPW on an "apples to apples" basis versus FCFS and CSH.

    At that point (coming soon) Wall Street will recognize that EZPW trades at merely 15-20% of the value of the other US publicly traded pawn companies versus most key pawn metrics. Watch the stock double the day GF is announced...just my wild guess.

    Sentiment: Strong Buy

  • Reply to

    EZPW annual meeting this morning

    by ezpwjunky Apr 5, 2016 12:37 PM
    ezpwjunky ezpwjunky Apr 12, 2016 3:29 PM Flag

    right,

    In answer to your questions, here is what I posted about 2 months ago...the numbers have not changed dramatically since then..without GF this thing will go into double digits very quickly...the math doesn't lie.

    On pure revenue numbers, FCFS trades at a 6.7 X premium over EZPW.
    On an outstanding pawn loan basis, FCFS trades at a 8.2 X premium over EZPW.
    On an operating cash flow basis, FCFS trades at a 4.9X premium over EZPW.
    During the June-Sept. quarter EZPW grew pawn loans outstanding by 9% compared to 3% for FCFS.
    On the last conference call EZPW said that the Sept. quarter in pawn was the best they’ve had in 5 years.
    They also said that so far in Q1 the trend seemed to be continuing (we’ll know Monday night).
    Joe Rotunda drove the EZPW stock price up ~30x while he was CEO…Joe is now back running the bulk of their businesses.
    The Grupo Finmart debacle was a revenue recognition issue with no cash impact and no fraud.
    EZPW continues to value the Grupo Finmart goodwill at more than 30% higher than what is on their books.

    Sentiment: Strong Buy

  • Reply to

    EZPW annual meeting this morning

    by ezpwjunky Apr 5, 2016 12:37 PM
    ezpwjunky ezpwjunky Apr 12, 2016 10:05 AM Flag

    manager, happy to talk...let me know how to contact you and I'll give you a call. junky

    Sentiment: Strong Buy

  • ezpwjunky ezpwjunky Apr 8, 2016 10:48 AM Flag

    Momo, Hi...having a lot of experience with corporate governance at a publicly traded company, I can assure you that with all the stuff that has been going on in the last year, it was prudent for EZPW to have a self imposed insider trading ban. This is not an excuse made up after the fact and it does explain the lack of insider buying. I was glad to hear it.

    As for a share buyback... this was asked about at the annual meeting and like on a previous conference call, Grimshaw said that he wanted his cash for liquidity and growth...not artificially increasing EPS by lowering the denominator...he discussed some studies showing that this tactic was helpful short term for share price but not long term.

    Finally, I would say that they've take a lot of other shareholder friendly actions...exiting the Payday loan business in the US due to unrelenting regulatory pressure....moving to divest GF....and most important, dramatically improving the underlying performance and growth in their core businesses (US and Mexican pawn).

    When GF is gone (and they get cash for selling it), the stock will soar...everything else is just so much noise.

    Sentiment: Strong Buy

  • Reply to

    EZPW annual meeting this morning

    by ezpwjunky Apr 5, 2016 12:37 PM
    ezpwjunky ezpwjunky Apr 7, 2016 12:08 PM Flag

    aa, I think the restatements at GF were caused by a difference between US GAAP and Mexican GAAP (nothing to do with the put option causing them to up their ownership).

    If you look at a publicly traded competitor to GF in Mexico (Credito Real) you will see that they are in the same business and doing quite nicely. Under Mexican GAAP, Grupo Finmart must look pretty good (see historical numbers)...but because of the slow paying Mexicans it looks like #$%$ under US GAAP that the accountants have said EZPW must use.

    Solution: Sell it to someone who is interested in future cash (not US GAAP EPS numbers)...this must be their plan.

    Sentiment: Strong Buy

  • ezpwjunky by ezpwjunky Apr 7, 2016 12:02 PM Flag

    I think that with the recent action, the big boys are finally understanding that GF will NOT be a huge disaster when they sell it in the next quarter or two. I say this based upon numerous facts (e.g. they continue to assure us that the bulk of the late loans come from people still employed by the governments in Mexico and they will eventually be paid).

    But my biggest level of comfort comes from the recent 10k. In November, after having an army of accountants pouring over GF's finances to do the restatement, EZPW had the possibility of doing a HUGE write off of the GF goodwill. But instead they value the goodwill at 30% higher than they have it on their books. They must have really wanted to write it down but the accountants must have run the cash flow numbers and refused their request.

    So there you have it...GF will be sold, but it won't be given away. And when the core business is compared "apples to apples" to FCFS and CSH the stock goes into the mid to high teens.

    You can take it to the bank.

    Sentiment: Strong Buy

  • Reply to

    EZPW annual meeting this morning

    by ezpwjunky Apr 5, 2016 12:37 PM
    ezpwjunky ezpwjunky Apr 7, 2016 11:55 AM Flag

    aa, No travel...the meeting was 5 minutes from my house. But it is the first time I've been to the meeting in about a decade...since I jumped out in the 2007-2008 time period.

    Sentiment: Strong Buy

  • Reply to

    EZPW annual meeting this morning

    by ezpwjunky Apr 5, 2016 12:37 PM
    ezpwjunky ezpwjunky Apr 5, 2016 6:23 PM Flag

    apemn88, I know from reading the SEC docs that a put option forced them into buying that final part of GF to take them to 94%.

    As for the meeting this am, they admitted that GF was what was holding them back because Wall Street doesn't understand it. They confirmed that they are on target to have an answer for GF in Q3 (probably a divestiture but they didn't specify what will happen).

    As explained on earlier conference calls they said that the 34% bad loan reserve was forced by US GAAP but not Mexican GAAP and that was what forced all the very painful restatements. They also reconfirmed that they are likely to get the majority of that bad loan reserve reversed as the loans are paid off in the future (after being written off at 180 days).

    In short, I believe that GF has a lot of value for someone more worried about long term cash flow and/or someone who is not subject to US GAAP. This means a Mexican buyer or PE group are possible buyers. And I don't believe that the divestiture will be painful for EZPW.

    Once the GF deal is done they are apples to apples with FCFS and CSH and then the magic that Rotunda has been working in the core pawn businesses will become abundantly clear. Even with a hair cut for the dual stock structure at this point the stock will go into the mid-teens.

    Btw...they spent most of the meeting crowing about the performance in the core pawn businesses.

    Sentiment: Strong Buy

  • Reply to

    EZPW annual meeting this morning

    by ezpwjunky Apr 5, 2016 12:37 PM
    ezpwjunky ezpwjunky Apr 5, 2016 4:31 PM Flag

    nvstr44, I remember you from the old days...like you I left after making a small fortune. I returned after Rotunda went back into the company. It has been a painful year for me but I'm pretty sure that like early last decade, it is going to be another grand slam in the next couple of years.

    The revenue, store counts, cash flow and pawn performance in the US and Mexico can't be overshadowed by Grupo Finmart forever. When it goes "apples to apples" with FCFS and CSH watch the stock quickly go into double digits. This is not even a stretch call.

    Sentiment: Strong Buy

EZPW
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