Provident Financial - Woodford, Barnett & Darwall

Malthusian

AnotherJoe wrote: »

This does put the lie to all those who say that you can't beat the market because how can you know better about a company than an all those super sophisticated investment companies who can do ultra detailed research, talk to the execs etc. Like Woodford no doubt did.

No it doesn't, it demonstrates the complete opposite. Woodford did all his research and talked to the execs and got it wrong. Other fund managers like Ashworth-Lord did his research and talked to the execs and got it right. There is no evidence that any one of them will get it right all the time. Nor is there any evidence that you can make money by guessing which ones are going to get it right in the next few years.

How do you know that a fund manager understands the market? Examine their past record of delivering returns in that market? That's what led people to invest with Woodford. Read their commentaries, watch their videos and listen to them prattle on about "disruption" and "game-changers"? They all do that, so that's even less useful than past performance.

If Provident Financial's change to salaried collectors had proved a roaring success we'd be saying that this proves Woodford is a genius and Ashworth-Lord is an underperforming schmuck.

Glen_Clark

Malthusian wrote: »

To say that the real problem is that people have too much debt ignores the fact that people have had too much debt for at least two decades.

How much has personal debt risen over the last 2 decades? Since you just say 'too much' without giving any figures does that mean you don't know?

Perhaps more to the point how much have rents and commuting charges risen whilst real incomes stagnated or fell.?

Even some salaried professionals like nurses have been found relying on foodbanks because rents and commuting costs are so high. This was unheard of 20 years ago. Such people can appear creditworthy - but may be unable to repay loans they have taken out to cover living expenses.

george4064

The stock is bouncing back very nicely.

The shares were trading as low as 450p a share on Tuesday 22nd August at midday, and if bought them would be showing a stunning 100% increase today as the share currently trades at 913p a share!!

Malthusian

Glen_Clark wrote: »

Even some salaried professionals like nurses have been found relying on foodbanks because rents and commuting costs are so high.

A tiny minority of nurses are relying on foodbanks because being an angel of mercy does not stop you from spending more than you earn.

Foodbanks were unheard of 20 years ago not because every single person in the UK budgeted correctly and never found themselves short of money with an empty cupboard, but because foodbanks weren't a "thing" - charities hadn't opened as many of them, Job Centres didn't refer people to them and the hard left hadn't fixated on them as a beacon for what they see as the injustice that not everyone is equal. If you were skint and hungry you went to a church.

The number of people in the UK who reported being unable to afford food actually dropped after the credit crisis and the Great Recession according to the OECD.

I would not dispute that far too many people are in debt, or that average real wages have not stagnated. What I find unlikely is that Provident Financial's debt collection rate dropped from 90% to 57% in a year purely because of the economy.

jimjames

george4064 wrote: »

The shares were trading as low as 450p a share on Tuesday 22nd August at midday, and if bought them would be showing a stunning 100% increase today as the share currently trades at 913p a share!!

It does show how the market can overreact at times. Efficient market might be over a longer time but in minutes/hours I don't think it always works

jennyjj

george4064 wrote: »

The stock is bouncing back very nicely.

The shares were trading as low as 450p a share on Tuesday 22nd August at midday, and if bought them would be showing a stunning 100% increase today as the share currently trades at 913p a share!!

Question is: Is this a dead cat bounce?
Maybe, maybe not. I remember 40 years ago how mum and dad got 'Provident cheques' to buy my school uniforms. There were limited places to spend them, which drove up prices and of course there was the terrible interest rate. Back then, there was a lot of financial ignorance: There still is.
The reason I just placed a speculative buy order ( at 845 ) is that The Prov has been around for a lifetime and I don't see it disappearing this year.
However, reading current news on the company, they are in a very big hole.

Time will tell.

dividendhero

jennyjj wrote: »

Question is: Is this a dead cat bounce?
Maybe, maybe not. I remember 40 years ago how mum and dad got 'Provident cheques' to buy my school uniforms. There were limited places to spend them, which drove up prices and of course there was the terrible interest rate. Back then, there was a lot of financial ignorance: There still is.
The reason I just placed a speculative buy order ( at 845 ) is that The Prov has been around for a lifetime and I don't see it disappearing this year.
However, reading current news on the company, they are in a very big hole.

Time will tell.

Short sellers covering their positions will be a big part of the bounce.

As for longer term, as I understand it the problem "doorstep lending" side of the business is one of four divisions and the other three divisions are fine. When I heard of the plan to move from a 100 year old model to the new computerised model I was somewhat dubious. I believe the work was done in-house so they'll have little legal redress to IT suppliers

Glen_Clark

Malthusian wrote: »

the hard left hadn't fixated on them as a beacon for what they see as the injustice that not everyone is equal.

So who is this 'hard left'who says everyone should be equal?
When you exaggerate points it doesn't make them valid.
It just loses you credibility.

Glen_Clark

Malthusian wrote: »

- the plummet in collection rates and profits seems too sudden to be blamed on the economy,

I guess its a bit of each.
If one set of debt collectors is being sacked and replaced with another, human nature being what it is, they are not going to make it easy for their successors are they?
Like handing over tips and inside information?
More likely to tell the debtors how to get out of paying.

Seabee42

Surely the collectors are the same people though, I know there are less and they are officially employed rather than self employed but even so were they not from that group?


What surprises me is a business with a loan book of £500m is worth so much (yes I know I do not know enough about the business).