Tuesday, March 31, 2009

Leucadia on AmeriCredit

Having already read (in this post) some of the reasons why Cumming and Steinberg might be invested in AmeriCredit, you might find it worthwhile to actually read what they said on the company themselves (at the start of their investment).

As of this writing, we have acquired 26% of AmeriCredit Corp. (“ACF”) for $373.9 million. We have known of this excellent company for many years, having been in the sub-prime auto business ourselves. ACF has made and financed over $53 billion of these loans and none of its lenders has lost a penny. In this environment, financing for ACF is going to be very difficult and management is taking appropriate steps to downsize the company. We are guardedly optimistic that the financial market will climb out of its bunker next year. People need auto financing to get to work.
The above was taken from the 2007 Chairman's letter. What's the deal with the last line--about people needing auto financing to get to work? That's something I'll cover later, as it refers directly to the "rules of the road"--their particular method of investing--that Leucadia's management team follows.

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