Santander Consumer is one of the largest subprime auto lenders in the market. Delinquencies for auto loans in general, including both prime and subprime, have reached their highest levels this year since 2011.
Santander Consumer had $26.3 billion of subprime auto loans as of June 30 that it either owned, or bundled into bonds, According to a report from S&P Global Ratings, Santander Consumer has more than $25 billion in subprime auto loans which is almost 50% of the company’s total managed loans.
Today, I want to introduce another auto lender, Credit Acceptance Corporation
Credit Acceptance Corporation provides financing programs, and related products and services to independent and franchised automobile dealers in the United States. The company advances money to dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps various amounts collected from the consumers.
Don Foss is known as the pioneer of the subprime auto loan market. Back in the days, General Motors and Ford would only lend money to folks with good credit. So Don started selling cars on credit to people with shaky finances. Don was charging customers crazy high interest rates and could because nobody else was issuing loans to this particular population with bad credit. So in 1972, Foss founded Credit Acceptance (CACC) to handle financing and debt collection for his used car business. Today, CACC is a major player in the U.S. subprime auto loan market and its market cap is a little under $8 billion.
Credit Acceptance Corporation’s CACC third-quarter 2019 earnings of $8.73 per share missed the Zacks Consensus Estimate of $9.13. However, the bottom line was up 12.6% year over year.
Provision for credit losses increased 37.9% from the year-ago quarter to $19.3 million. Moreover, allowance for credit losses at the end of the third quarter was $509.1 million, up from $461.9 million as of Dec 31, 2018.
Credit Acceptance is well poised for growth in revenues, given the continued rise in consumer loans. However, persistently increasing expenses and deteriorating asset quality are near-term concerns.
So as the economy slows, companies hire less and layoff more, customers’ confidence decline, the more sub-prime auto loans default. And when this chain reaction fully materializes, CACC’s stock will crash.
At the moment, there is a nice band of support/resistance at the $450 level.
However, because this band of support/resistance was breached last month, the chart suggests to short price at the weekly supply at $460.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Today I would like to do a fun little exercise. Well, I think it’s fun because I’m a crypto lover. If you don’t like crypto, then you should probably stay well clear of my blog!
I spoke about the silliness of altcoin bashing last week, so I’m not going to delve into that again. Suffice to say: I believe in the cyclic nature of markets, and that altcoins will rise again. There ARE signs that that rise has started (meaning that altcoins have bottomed), but that has yet to be confirmed.
For today’s exercise I’m going to look at the following hypothetical situation:
Say I put $100 into the top 20 altcoins. What would they all be worth if they then got back to their All Time Highs?
I will be using the CoinGecko top 20. I know that most people prefer CMC, but I like the added functionality that CoinGecko offers. For example: with CoinGecko I can easily see how far each coin is from its All Time High (ATH).
From https://www.coingecko.com/en?view=all_time_high
Below is a table which I constructed to display those figures. Remember, in each case we are investing $100 at current prices, and then seeing what will happen if that coin gets back to its ATH.
1
BTC
$214,59
2
ETH
$800,00
3
XRP
$1 162,79
4
BCH
$1 315,79
5
USDT
$132,28
6
LTC
$613,50
7
EOS
$694,44
8
BNB
$194,17
9
BSV
$199,20
10
XLM
$1 265,82
11
ADA
$2 857,14
12
TRX
$1 219,51
13
XMR
$862,07
14
LEO
$200,80
15
OKB
$168,07
16
LINK
$168,92
17
HT
$156,99
18
ATOM
$206,19
19
NEO
$1 785,71
20
IOTA
$1 960,78
It’s true that one shouldn’t read too much into this: the playing field is not entirely level (for reasons such as some coins only being launched after the peak of the bull market). But what it does serve as is a semi-standardised benchmark indicator of potential ROI.
Yes, we all know that BTC is safer than altcoins, but I personally believe in chasing some higher potential ROI at the expense of a little more risk, and even a little bit of extreme ROI at the expense of massive risk. Note: being the top 20 coins, this table does not represent the “massive risk” section of the market – well….. that’s debatable, we’ll get back to that shortly.
Those are the numbers, the raw stats. Let’s now dig into them a little deeper:
At a mere $214.59 return on a $100 investment, BTC looks positively pedestrian when compared to the average – and it is. This is the entire point of investing in altcoins instead of in BTC, that and helping many small projects to become part of our everyday lives – thereby greatly enhancing them.
However, and this applies to all the coins, these returns are only to get back to ATH. They do not include further market growth beyond that point! Only the staunchest bears would believe that BTC has already reached its ultimate ATH. Another term for such people is “idiots who should be ignored”. As the ultimate crypto store of value, I believe that every portfolio should have BTC in it. I would consider 10-20% to be a good figure, though that is largely down to personal taste (and my own percentage is way outside that bracket at the moment!)
Moving lower down the table we see ETH returning $800. Wow, that’s really not a bad potential investment! Ethereum remains the biggest and most popular crypto platform by far, and it is really the only one with many high quality DApps already running on it. No, your 100 casino DApps on your favourite chain are not “high quality”. Even NEO – and you all know how much I love NEO – can boast only a small handful of good DApps at this stage. But Ethereum has hundreds of them, even if it is also packed full of trash coins which should, and probably will, die. The ETH team is also still very active and the platform continues to be developed, albeit that it misses target dates almost as badly as Cardano does! In summary, Ether is a fairly secure investment with possibly much higher returns than what BTC can offer.
You all know my feelings on Ripple. I mean XRP. I mean Ripple. Apparently XRP is Ripple when Ripple does good things such as forming major partnerships; but XRP is not Ripple when Ripple is criticised for e.g. being centralised or being a company full of ex-bankers. Oh how I hate Ripple and everything it stands for! BUT: like most dodgy investments, Ripple still has a LOT of support. I do not doubt that Ripple will once again see very good returns when the market runs. However, I could never condone investing in such centralised, anti-Satoshi rubbish – so if you want to hold Ripple, then you will be doing so without my support! The returns you may get on Ripple are better than those of ETH, but I would chose to put my money on ETH instead!
BCH and LTC remain viable alternatives to BTC, especially for smaller transactions. I believe that there is a strong future for such coins, a future in which BTC is the store of value, and such coins (you can add DASH, NANO etc to the mix) become the de facto mediums of exchange. It is interesting that BCH offers far higher returns than LTC when looking at their respective ATHs. I surmise that this may be because people once perceived BCH as possible legitimate competition for BTC, whereas LTC was only ever a coin that worked alongside BTC. The two coins are pretty even in my eyes.
Note Tether sitting between BCH and LTC, with a possible return of $132.28! I find that rather amusing!
At $694.44 EOS is not looking as good as ETH. This should serve as a mild warning to EOS investors. I have long said that EOS is good, but over-hyped. I stand by that statement.
At $194.17, BNB is deceptive. As far as exchanges go, Binance is by far the most well known. Crucially, its ROI to ATH is less than that of BTC, which on its own should make the decision to buy BTC instead of BNB a simple one. But BNB is a special case, and I caution against writing it off. While my favourite exchange is KuCoin (and its KCS token), I can not ignore the fact that Binance is also launching programs, projects and platforms left, right and centre. It’s very popular and I have great faith in its CEO. CZ has a brilliant mind and a comprehensive understanding of blockchain technology, business principles, international affairs and also a general sense of what a powerful agent of positive change cryptocurrencies can become.
I assess that if any blockchain company can become the next “Amazon”, “Google” or “Microsoft”, then Binance has the best chance of being that company. It is even possible that as other cryptocurrencies grow, so Binance may one day pass even BTC in terms of market cap! Don’t laugh, just think about it…
BSV is a joke, as is Mr I-did-not-pay-now-I’m-back-in-court Faketoshi. It is sad that such people even exist, they are an ugly scar on the beautiful face of crypto. ‘Nuff said.
Of the top 10 coins, XLM offers the second best potential returns (after BCH) on its climb back to ATH. Personally I consider it a little over-valued, but I far prefer it to its greatly overvalued and far more dodgy cousin XRP.
With the best potential returns of the lot (an incredible $2857.14 for a $100 investment) ADA does look like a prime choice! However, I urge you to remember what I have often said: that US investors are too fixated on US crypto in general, and also that ADA is way behind where it should be: many promises, no deliveries. Other platform coins have since moved far past it, even if market cap has yet to catch up to that fact.
At $1219.51 for $100, TRX is looking strong! It’s not that high up that you would expect it to fall down the market cap ladder, the potential returns look good and Tron is a good product. True, like most of the platforms, it also lacks a large number of good DApps – but those will probably come with time. Justin Sun is a dynamic young entrepreneur with enviable levels of charisma, I think there is a high chance that he will lead Tron to success.
XMR has been quiet lately, which is not always a good sign. But I still see Riccardo Spagni on every episode of “Magical Crypto Friends” and he still seems enthusiastic. While they still have issues to iron out, Monero remains the biggest name in privacy coins, and that is NOT something to ignore! A potential return of $862,07 to ATH is only slightly better than that of ETH, but one could argue strongly in favour of privacy coins, based on the way that crypto regulations are going. With exchanges blocking ZCash (which I no longer endorse), it is clear that privacy coins are a threat to the financial centres of the world. If they do succeed, then XMR may well be the most successful of them all.
LEO has a relatively low potential return (very similar to that of BTC), easily explained because it is so new. However, it is the coin of BitFinex, and I have no love for that exchange. I’m still waiting for the whole dodgy BitFinex/Tether monster to come tumbling down. I’m happy to have closed my account there a long time ago, and I have no intention of having anything further to do with that exchange. I suggest avoiding it.
OKB is the coin of another big exchange, though honestly it isn’t one of my favourites and there are other exchange coins which I would much rather hold. There’s nothing inherently wrong with it though, and like LEO, its price is not reflective of it’s potential, because it was only launched after the demise of the 2017/18 bull run.
To an impartial outside observer, the LINK figure of $168.92 should be very troubling! I keep saying that LINK is way too hyped at the moment. It’s possibly the most over-hyped cryptocurrency of all (at the moment). LINK is not a new coin and it’s not even a special coin in any way. Investors should be very worried that it is hovering so close to its ATH figure. I like LINK, but I would NOT buy it now!
HT is almost identical to OKB for the purpose of this post. I wouldn’t put money there.
ATOM has low returns back up to ATH. But Cosmos has been around since 2014 so it… wait. What’s that you say? Cosmos is a new coin? Oh yes, you’re right. Cosmos is a 2019 coin which (to me) looks remarkably similar to Blocknet (BLOCK) – a coin which has been around since 2014. Why is that relevant? Because BLOCK has a market cap that is more than 130 times smaller than that of very similar Cosmos. What does that mean? It means that ATOM is all new coin hype. No thanks.
NEO’s looking solid with a potential return of $1785.71 for its $100. It’s well known how much I love NEO, and with the current blockchain developments in China (which I have been predicting since the China FUD in 2017), I love it more than ever.
IOTA is a dark (and largely forgotten) horse, sitting at the bottom of the list, but with a figure of $1960.78 per $100 should it make it back to ATH. That’s the second highest in the table, and should not be ignored. I know there have been some criticisms of it, but I honestly haven’t looked deep enough into IOTA lately to know if they are valid or not. As with everything in crypto – you should do your own research.
Conclusion
I believe that good altcoins (note: GOOD altcoins) stand to provide much better returns than Bitcoin will in the near future. Of course with the chance of greater returns comes greater risk. How much risk you are willing to expose yourself to will depend largely on your investing style and current financial situation – I recommend being safe rather than sorry. Having said that, the mere fact that somebody chooses to invest in crypto indicates that they probably have a pioneering spirit (it’s still early days for crypto) and personally I already see BTC as a minor “risk”. If BTC works, then it’s logical that altcoins should work too, thus I invest a decent amount of money in them. As of yesterday, 43.2% of my crypto portfolio is in Bitcoin, which is actually almost the highest percentage it has ever been, a consequence of me holding my alts through the bear market.
I continue to invest slowly and carefully, some in BTC, some in altcoins (though I also keep missing the dips!). In the long-term I believe that altcoin investors will be richly rewarded, and I will continue to invest accordingly. Remember that the table above only deals with the top 20, there are many more coins out there. I suggest that people do their best to make decisions based on facts as opposed to emotional attachment. Crypto is often a sentiment game, but sentiment can’t keep a coin going indefinitely.
Yours in crypto
Bit Brain
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
Santander Consumer USA
Holdings Inc., a specialized consumer finance company, provides vehicle finance
and third-party servicing in the United States. Its products and services
include retail installment contracts and vehicle leases, as well as dealer
loans for inventory, construction, real estate, working capital, and revolving
lines of credit.
The company also offers
financial products and services related to recreational and marine vehicles;
originates vehicle loans through a Web-based direct lending program; purchases
vehicle retail installment contracts from other lenders; and services
automobile, and recreational and marine vehicle portfolios for other lenders.
Santander Consumer (SC)
reported earnings this past week and their quarterly earnings of $0.67 per
share beat Wall Street estimates of $0.66 per share. This compares to earnings
of $0.64 per share a year ago. Over the
last four quarters, the company has surpassed consensus EPS estimates three
times. But don’t let the numbers fool
you.
Santander Consumer is one of the largest subprime auto lenders in the market. Delinquencies for auto loans in general, including both prime and subprime, have reached their highest levels this year since 2011.
Prior to the Great Recession, banks were approving just about any applicant regardless of their income or ability to pay the mortgage. The banks didn’t care as they just packaged the loans as CDOs and sold them to Wall Street. All kinds of debt were repackaged and resold as collateralized debt obligations. As housing prices declined, many homeowners found they could no longer pay their mortgage resulting in mass defaults.
Santander Consumer does
the same thing today. The package these
auto loans and sell them to bond investors.
But in Santander Consumer’s case, if the debt can’t be paid back Santander
Consumer is often obliged to buy the loans back, which ends up being a loss on
their books.
Santander Consumer had
$26.3 billion of subprime auto loans as of June 30 that it either owned, or
bundled into bonds, According to a report from S&P Global Ratings, Santander
Consumer has more than $25 billion in subprime auto loans which is almost 50%
of the company’s total managed loans.
Are you thinking what I’m thinking…the stock is setting up for a short. Based on the monthly chart, the chart is suggesting two targets.
With the first testing being the level at $23.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Cotton has been used in textile production for 1000s of years and used in providing thousands of products like apparel, but even gunpowder. The US, India and China produce over 65% of cotton used by citizens of the world. A bale of cotton weighs about 500 lbs and can produce over 1000 T-shirts. Harvesting cotton begins in July until late November and is grown in about 15 states such as, but not limited to North Carolina, South Carolina, Tennessee and Virginia.
Georgia produces about
20% of cotton in the US, which is also its leading crop. The climate and
environment in Georgia facilitate the high-quality cotton growth which textile
mills worldwide desire.
In 2018, President Trump
put tariffs on Chinese goods coming into the United States earlier this year,
and the Chinese retaliated. The US is the top producer and exporter of soybeans
with China purchasing about 25% of what the US produces U.S. annual soybean
crop. China is the largest importer of
soybeans in the world. However, China
has canceled all shipment of beans from the U.S. causing the prices in the
soybean futures market to drop to the lowest price in a decade.
So what did farmers do, at least those located in the Southeast region of the US, they planted more and more cotton?
Recently on AgDay TV, Tyne Morgan spoke with David Hudson, an economist at Texas Tech University, about the trade war’s impact on cotton.
He says increased acres are part of that equation.
“As soybean prices fell more acres shifted over to cotton in year two and so now we’re seeing the effects in year two of this pretty substantial drop in cotton price,” says Hudson. “That is a trade effect, but it’s a delayed effect.”
Hudson even the strong MFP payments for cotton won’t be enough to offset falling prices in 2019.
“We’re talking about nearly a 40% decline in prices, year over year,” says Hudson.
Last week’s price action was a bit of a tease though trading volumes have remained somewhat elevated. Price lacks direction but sentiment has shifted bullish. All that’s required is another catalyst. Whether that transpires or not in the near term is, of course, impossible to know. However, China’s apparent embrace of blockchain has certainly ignited the crypto space with many a competing narrative hashing it out on Twitter and beyond.
My own take – this is all good for Bitcoin as centralized blockchain(s) can only ever be good for the real thing. It’s likely bearish for Chinese projects that aspire to be decentralized though bullish in the short-term for most China-based crypto. In the long term (a few years out), bearish for local projects barring the select few who ultimately receive government backing.
As to China’s intent – this is never in doubt – control and more of it – political, financial and social.
Investment potential and authoritarian intent are quite separate considerations…..and BTC could care less what any individual state actor desires.
Picks of the Week
Bitcoin as freedom in the making and outlining a new position between Alt-coiner and BTC Maximalist. This roundup of pending developments for Ethereum is another highlight.
A fascinating and challenging week. Lots to look forward to in the coming week/months/years. As always, looking forward to your comments and suggestions.
Note on Sources:
Twitter & Reddit (cryptos current meta-brains) / Medium / Trybe / Hackernoon / Whaleshares / TIMM and so on/ YouTube / various podcasts and whatever else I stumble upon. The aim is a useful weekly aggregator of ideas rather than news. Though I try to keep the sources current – I’ll reference these articles and podcasts etc. as I encounter them – they may have been published just a couple of days ago or in some cases quite a bit earlier.
Leon Howard aka “The Wallstreet Trapper” was born and raised in New Orleans. At the age of 9 he saw his mother get shot right before his eyes. At the age of 16, he went to prison for 10 years for attempted murder and armed robbery. But it was in jail that he met a white who told him black people are playing the wrong game. You see the white guy was in jail for embezzling millions of dollars from his job. But what he told Leon is wealthy people don’t trade time for money. Think about that for a second, wealthy people don’t trade time for money. Another way of saying this, in the famous words of Warren Buffett, “if you don’t find a way to make money while you sleep, you will work until you die.”
It was during this conversation that the white guy told Leon about the stock market. And for the rest of his time in jail, he read every book he could about the stock market, how banks work, etc. And before the other prisoners would get up to watch TV, he would get up before them and turn the channel to CNBC. And then a fellow prisoner, who read the USA Today, would give Leon the financial section every day.
The slang word trap has numerous definitions, but is mostly used to refer to any place where drugs are being exchanged. A trap can be anywhere, it can be an open spot where cops don’t frequent or a house which dealers typically refer to as a trap house.
Leon defines “Trap” as “a state or condition of a people being financially trapped, unable to find the path to financial freedom no matter how many jobs or side hustles worked.”
And so when he got out of jail his mission and targeted market was the people he knew on the streets because he knew the game they were playing and wanted to expose them to a different game. Leon committed to showing Black America a very different hustle, moving “From The Trap To Wall Street” one stock share at a time.
He’s a smart dude, because he is conquering Wall Street, but because he knows how to break down the financial literacy in a language that’s digestible. He tells people, you may possess the clothes on your back or the call you drive, but you don’t really own it because you don’t have any stake in the company. Do you remember how I talked about wealthy people don’t trade time for money. Leon is very big on that. So I want to salute Leo by sharing with you an article I read on Motley Fool about 3 stocks that pay dividends every months.
Pembina Pipeline (NYSE:PBA) currently pays its shareholders a dividend yield of just over 5% per year. While the Canadian company may offer some volatility for U.S. investors, given that its payouts are in Canadian dollars, it’s still one of the better dividend stocks in the oil and gas industry.
Strong free cash flow during the year also came in at more than CA$1 billion, although that was still below the CA$1.2 billion paid out in 2018. Even so, the company has been increasing its dividend payments. Five years ago, the stock was paying CA$0.145 every month; that figure is now up to CA$0.20. That’s a 38% jump, averaging a compound annual growth rate of 6.6%.
Apple Hospitality REIT (NYSE:APLE) operates in a much more stable industry, and its portfolio of 235 hotels gives investors a great opportunity to benefit from the tourism industry. With many upscale rooms in 34 states across the country, Apple Hospitality has a diverse cross-section of properties that includes big names like Hilton and Marriott.
The stock pays investors a dividend yield of 7.3%. Although the company isn’t one that investors have come to expect dividend increases from, with that high of a yield, shareholders would probably be happy if it were to simply remain intact.
LTC Properties (NYSE:LTC) is another REIT that investors in search of cash flow can add to their portfolios. With a focus on healthcare — in particular, senior living facilities providing long-term care, thus the name LTC — LTC has a much safer mix of properties in its portfolio than Apple Hospitality.
Like Pembina, LTC has increased its payouts over the years, although they haven’t been nearly as significant. From monthly payments of $0.17 five years ago, they’ve grown to $0.19 today, for a much more modest increase of 12%, which comes in at a CAGR of just 2.2%.
However, with a solid yield and a payout ratio that’s below 100%, LTC could be a great option for long-term investors.
These are just three of many well run companies that offer dividends on a monthly, quarterly, semi-annual and annual basis Dividends are really no different than interest earned on bonds…now look at me, now I’m sounding like “The Wallstreet Trapper.”
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
In summary, Ether is a fairly secure investment with possibly much higher returns than what BTC can offer.
