Can you comment on GSY earnings and the company in general? To me they appear to be record with great growth. Their model seems to be almost flawless with almost a limitless runway ahead in Canada with very little competition in their market. They now appear to also be benefiting from the new interest rate law as smaller competition is getting wiped out and they gain market share. I look at their market cap of only 2B...then I look at the revenue coming in. The valuation don't make sense to me. The company seems so cheaply valued by the market in my opinion. They keep executing, the loan book is now climbing at a exponential rate over the last couple years. It seems more and more people are needing their services. Do you think eventually they will take the company private? Or possible some private equity firm comes in and buys them out and keeps the dividend for themselves? With the numbers they are now putting out it appears like the company could buy itself out in only a few years. Am I correct in all this bullish view or what am I missing here? Appreciate the feedback!
Shane.
Quarterly comments are now posted; We do think it makes sense for a buyout for a couple of reasons in addition to those noted in the question. First, the company issues very little stock. It has of course, but we are sure it could finance elsewhere as well. Share count has only increased 3 million in 10 years. Second, the company has never gotten a really high valuation multiple, for several reasons. It is seen as a 'shady' business. It is seen as vulnerable to recession (it has proven not to be). It is seen as having too much government interference (this has been proved out). It is only 9X earnings now. It is still growing, so free cash flow is low, and this may preclude anything from happening in the near term. But, as the business matures, and maybe if grow slows, We are sure management will look at the low valuation and the $58M in pays out in public dividends each year, and wonder if it needs to be public at all.