Rent-a-Bank: QAV America #73

QAV America 73

[00:00:00]

Cameron: Welcome to QAV American Edition, Tony, episode 73. It is the 6th of October, 2026. We were just talking off air about portfolios and

Tony Kynaston: Mm-hmm

Cameron: all of that kind of stuff. Um, normally I start the show with a bit of news. I didn’t really write anything down today. But I know I did see in my global consequences briefing, Tony, this morning that

Tony Kynaston: We should call it the Dr. Strangelove briefing, I think from now on

Cameron: That, uh, was, um, uh, y- th- they, they are saying that the amount of oil coming out of the Middle East now is pretty much back to pre-war levels, which I find hard to believe,

Tony Kynaston: Given the oil price

Cameron: The seven-day moving average reached 18.3 million barrels a day on the 30th of September versus roughly 18 million before the war. it’s [00:01:00] higher than where it was. Uh, Saudi Arabia drove much of the recovery exporting through both the Gulf and the Red Sea. But then it says at least seven tankers were attacked during the past week, and I also read this morning that the Houthi attacked the East-West Pipeline again. There are reports that they blew up, uh, a pumping station, but it’s still unclear as to the extent of that damage. So I don’t know. Um, and oil prices have come back a little bit, but they’re still pretty high. So, you know, it’s gonna take a long time to recover all, all the barrels that have been lost in the last six months if this level of output through the Gulf continues. Whether or not it does, know, could be back down again a week from now.

We don’t really know Uh, Brazilian elections

Tony Kynaston: Yes

Cameron: Bolsonaro and Lula, the first round. So that was in my news

Tony Kynaston: Yeah. So can I just interrupt you there for a minute? [00:02:00] Have you seen what’s been happening to Brazilian ADR stocks since that was announced?

Cameron: Um, no, I haven’t

Tony Kynaston: So I’m just trying to remember what stocks we had. Do we have Petrobras, I think, in the portfolio?

Cameron: We do, and it’s actually doing quite

Tony Kynaston: Correct. Yeah. So, uh Just going through my notes. So the. Leading up to the elections, um, the Brazilian real weakened, and we saw that in some of our valuations. ‘Cause remember, as we did the pulled porks on the Brazilian stocks like Petrobras, a lot of the, uh, benefit to the companies was because of the exchange rate, between Brazil and the US.

And, and it started to weaken, and we saw those stocks drop off. Um, and that was on the fear that, uh, the government would continue to run huge deficits. But then kind of as a surprise, Bolsonaro is, um, um, has outperformed. And in the last sort of forty-eight hours, [00:03:00] the Brazilian, uh, deposit receipts have all shot up.

So, um, part of that was because they were a week before the election and they’re rewri-rewriting themselves. But stocks like, uh, Petrobras has went up ten percent in a day,

Cameron: Yeah

Tony Kynaston: they’re, they’re still powering on

Cameron: Yeah, so it could have an impact on some of our stocks. I was actually going to do another Brazilian stock as my pulled pork today, but then I looked at its sell line and it was kind of iffy, so I decided against it. The other big news, um, that’s gonna have an impact is, um, the US are pulling all of their bombers out of the UK.

Did you see

Tony Kynaston: No. No, I, I missed my global consequences briefing this morning. Had to go to the bathroom. Sorry.

Cameron: wasn’t, covered on the ABC when you were listening to it this morning?

Tony Kynaston: No. Had a great story about a cat in a tree, though.

Cameron: [00:04:00] Uh, in jokes. Um, yeah, um, according to, this is the New York Times, according to US and British officials, 12 B-1 Air Force bombers from RAF Fairford Air Base with- withdrawn because of the risk of a drone attack ordered by Iran’s Islamic Revolutionary Guard Corps. So the US, uh, was using this base, British base, um, to house a lot of the bombers that they were planning on using to attack, uh, Iran with, and they had to pull them all out quickly ’cause there was a potential attack. not an actual attack, just a threat of an attack, and they’ve had to pull all their bombers out, so Interesting,

Tony Kynaston: interesting. I would have thought they had good defenses against drone attacks at a US Air Force base in England.

Cameron: Hmm.

Tony Kynaston: No?

Cameron: Yeah. Well, look, we- we’re seeing, um An escalation in [00:05:00] drone warfare between Russia and Ukraine. Russia, I saw Zelensky say Russia fired 900 jet-powered drones at them in a single night the other day, and they intercepted half.

Tony Kynaston: Wow

Cameron: But that’s a lot of drones getting through. Then with Iran’s drone attacks in the US bases

Tony Kynaston: Mm-hmm

Cameron: East, which is getting under-reported as far as I can tell in the mainstream media. there’s a heavy degree of censorship going on in Western media about the impact of those, uh, under wartime censorship restrictions. Uh, but they seem to be quite effective, uh, in, in attacking US bases. So if you can attack a US base in Bahrain or Oman or Qatar or wherever it is, um, and they’re getting drones through in Riyadh and the Houthi are getting drones through, I don’t think anything is safe from

Tony Kynaston: Yeah

Cameron: I mean, you might be able to intercept some, but you can’t intercept all if they’re doing a swarm, a [00:06:00] drone swarm attack.

Tony Kynaston: Yeah

Cameron: So it’s a crazy world we live in

Tony Kynaston: Yeah, the military’s changing for sure, and you wonder if big lumbering bombers are the way to go. But I guess, um, that’s above my pay grade

Cameron: Yeah, me too. Um, on the portfolio stuff, Tony, uh, I did have to sell a stock out of our lite portfolio, US lite portfolio today, Ardent, ARDT, which only added on the 11th of September. They became a three-point trendline sell. They’re only down 5%, they breached their sell line. And CAL, Caleres, glow with passion, the shoe company from last week, is also a three-point trendline sell already.

Tony Kynaston: That was quick.

Cameron: last week.

Tony Kynaston: Hmm

Cameron: the, our buy price was $12.52. Um, the sell price was $12.50. now $12.25, so it’s gone [00:07:00] 2% down since we bought it. we only bought it last week. I’m giving it a bit of grace to see what happens, uh, rightly or wrongly, but, um, I’m reluctant to terminate it so quickly. But we’ll see what happens. And also, I just noticed that, um, something else has become a three-point, uh, rule one sell, RJET, Roger Ramjet, which we added on the 10th of August at $21.39. It is down 20%, uh, in roughly two

Tony Kynaston: Give it a proton pill

Cameron: Yeah, that’s, it’s, it’s run out of proton pills. They’re all, they were getting them from Iran.

They’re under sanctions Um, then generally speaking, our portfolios in the US are not doing great at all. They are struggling. I mean, not, when I say not doing great, I mean in recent times, relatively [00:08:00] speaking. Um, the. Let me see if Stockopedia will come up. Yeah, here we go. So the model portfolio that we’ve been running since September 2023 is currently up 84.5% total weighted return versus 75% for the S&P 500. So it is beating it, but not by as much as it was. It was up, we were up 130% July, so versus 69%. So nearly double market a couple of months ago. It’s fallen a lot just in the last couple of weeks. Um, and our lite portfolio, US lite portfolio, which has been running since December last year, is currently up, mm, nearly 11% versus 13% for the S&P.

It’s actually had a really good week. It’s up, like, um, quite a bit in the last week. [00:09:00] So, uh, it’s really, you know. It, it’s also quite bigger. It’s got way more stocks in it, the lite portfolio. The model portfolio, as I talked about last week, is pretty concentrated just because it was hard to buy stuff for a while. And Willis Lease’s

Tony Kynaston: Mhm

Cameron: company is a big chunk of it, and it keeps falling. It fell 16% in the last week again. It’s fallen from $76 in June to $45 today. They did release results on the 4th of August, and then between the 3rd of August and the 10th, it fell from $72.64 to $56.58, so roughly 22%. But the results were not that bad.

Operating profit rose 20%. Combined lease rent and maintenance reserve revenue grew just 5%. They lease out airplane

Tony Kynaston: Hmm

Cameron: But fees linked to how much customers fly [00:10:00] its engines fell from 50.2 million to 39 million, about 22%, exactly the same amount that the share price fell So, um, there you go.

So it’s, and there was a little bit of insider selling too. The CFO, Scott Flaherty, sold 30,000 shares, about 1.63 million in early September. Reduced his holding by about 12%, and the CEO sold 15,000 shares. chairman also sold some shares. So, and there’s a bunch of other stuff going on. There’s expansion going on, which added to their financing costs.

They’ve got a deferred, a preferred share placement with the Development Bank of Japan, where they’re getting an 8% dividend, uh, which they get before shareholders. A few things like that. But anyway, I mean, it’s still. I’m not complaining about it. It’s still, you know, been one of the better stocks in our portfolio.

It’s still up 171% since we bought it in November 2023. So [00:11:00] not complaining, but it’s just had a rough

Tony Kynaston: Yeah. I’m wondering whether, uh, raising int- rising interest rates has affected it too

Cameron: Could

Tony Kynaston: Yeah. Okay

Cameron: Could be, Tony. Beyond my pay grade, but, um, you know, the, so you asked me this question about, in an email about, um, market without AI stocks

Tony Kynaston: Yeah

Cameron: You wanna just explain your thinking

Tony Kynaston: No, I saw a graph on the weekend which said, um, since August S&P 500 was up, but if you take out the chip stocks, it was down, um, I think from memory 5%, something like that. And I just wondered how our portfolio had gone over that same period

Cameron: Well, I’ll talk about both of them. So the model portfolio on the 3rd of August was worth, uh, $45,510. Today it’s 36,944, so it’s

Tony Kynaston: It’s down. Yeah [00:12:00]

Cameron: But the lite portfolio is down 0.25% in the same period,

Tony Kynaston: Right

Cameron: But the model portfolio is, yeah, it, it’s taken a bit of a beating, as I said, mostly I think from, uh, Willis Lease, WLFC. Um, most of the other stocks aren’t doing too badly actually. Just it’s that one that’s suffered the most. Anyway, you know, swings and roundabouts,

Tony Kynaston: It is I agree

Cameron: with that, I’ll get onto my pulled pork for the week. Atlanticus. Do you ever watch The Man from Atlantis

Tony Kynaston: I did, yes.

Cameron: What was his name?

Tony Kynaston: I’m just, uh, Pat, uh, Dempsey? No, Drury. S-

Cameron: Duffy?

Tony Kynaston: that’s it. Yes, it was Patrick Duffy.

Cameron: he was in Dallas or

Tony Kynaston: he was.

Cameron: the youngest son or

Tony Kynaston: Mm-hmm

JR’s brother

Cameron: And all of us [00:13:00] kids tried to swim the way that he swam in The Man

Tony Kynaston: Like a dolphin.

Cameron: like this dolphin swimming thing. Yeah, yeah

Tony Kynaston: Yeah. That was a crazy, crazy TV show

Cameron: It was a crazy TV show, yeah. Like, um Believe it or not, I’m walking on air.

Tony Kynaston: Oh, I think that was much better. Greatest American Hero. Yep. Hmm

Cameron: see that they’ve, they’ve got a, a, a graphic novel of that coming out. I’ve seen him promoting it on the social medias. So the, the actor who played the main guy is part of the production team for it.

They’re coming out with a continuation in a comic book. Fantastic. Anyway, Atlanticus. So, um, these guys, Tony, are an American company that helps banks offer credit to people who fall short of their usual lending requirements. Non-prime. More non-prime.

Tony Kynaston: Subprime, yeah

Cameron: Subprime, non-prime. I think we’ve talked about subprime a bit.

I

Tony Kynaston: Yeah

Cameron: [00:14:00] Financial was one that we did not long

Tony Kynaston: Correct. Yep

Cameron: Roughly 63 million American adults have subprime credit. That’s their market, which surprised us last time. It’s

Tony Kynaston: Hmm

Cameron: 20% of the population, I

Tony Kynaston: Mm-hmm

Cameron: According to their website blurb, “Empowering better financial outcomes for everyday Americans.

We facilitate financial solutions to meet the needs of everyday consumers. Whether it’s credit for day-to-day expenses, important purchases, or managing the complexities of healthcare, we enable the tools that help consumers manage their financial wellbeing. They’re good people, dreamers, achievers, and entrepreneurs, and they take their commitments seriously. They need a partner. We are here to help.”

Tony Kynaston: That’s great.

Cameron: fuzzies?

Tony Kynaston: Thanks, Atlanticus

Cameron: Atlanticus, maybe not surprisingly, is based in Atlanta, Georgia. Listed on the [00:15:00] Nasdaq, ticker code ATLC. Market cap’s about 1.4 billion the share price is roughly $92. Uh, for a little bit of price context, uh, on the 5th of April their share price was about $53. So they’ve had a ripper six months. They were near the top of our buy list this week, number two the buy list. Interesting, number one Opportune Financial I don’t know what that tells you about where the American economy is at or financial services part of the economy. But, uh, anyway, number one and number two are both subprime, uh, lenders. So as you see, the company’s pitch is um, cr- offer credit to everyday Americans, but they kind of work with banks to do it [00:16:00] and shops.

So they have an ecosystem where they provide like retail credit cards and because they’re not a bank, they’re what is described as a non-bank consumer credit business. they have to partner with banks to actually provide loan facility and then they buy that. they provide the technology of it, the, um, analysis, the credit risk analysis, the setup, all of that kind of stuff. The servicing capabilities, at the end of the day, the, uh, customer pays them, they collect the money, but they also buy the debt off the bank. So the bank creates it and then they buy it off them. The bank uses their software to assess it, create the account, provide the loan, and then these guys buy it off the bank and take the risk.

Usually. Sometimes they [00:17:00] split it with banks, sometimes they split it with the retailers. They have a number of hybrid arrangements, so it gets a little bit complicated. But essentially they’re buying the debt of, and then obligation and then managing it and, and taking most of the risk in the majority of s- situations as far as I can tell. But they don’t have a banking license is the point. History goes back to 1996 and a kind of interesting story about the founder of it. Founder was a guy called David Hanna, and he ran it until March of 2021 as CEO and chairman, and now he’s the executive chairman. He and his brother Frank run the Hanna family’s investment firm, Hanna Capital. Their website says they began in 1989 with a small amount of personal money buying loan portfolios and refining mathematical valuation models [00:18:00] Five years later, after buying loans with $1.5 billion face value, sold a majority of that business to another private equity fund. And then they’ve set up a number of things.

So, so I guess the, the, the beginnings of Atlanticus came out of that from David. And Frank runs something called HBR Capital, which is a merchant banking firm also based in Atlanta. Now, I read an interview with Frank, as you do, the brother. He did a 2005 interview with some website about Catholic school education, where he said he wanted to set up Catholic schools, discovered how much capital that required, so then set up a business to build the capital so he could build Catholic schools, which he now runs.

And his brother David, the [00:19:00] founder of Atlanticus, also is a co-founder of the Holy Spirit Preparatory School in Atlanta, which is a, a sort of a private Catholic school. So these guys are really big into religious education, Catholic education, and seem to use their money to invest in private Catholic schools.

It’s one of their big motivations. So that’s kind of interesting, I thought.

Tony Kynaston: Did they, did they take, did they take that bit of the Bible out which, where Jesus overturns the tables of the money lenders?

Cameron: Yeah. And he got immediately executed by Roman soldiers. No, he didn’t. Oh, that’s bizarre. You would’ve thought they would’ve had pretty good, pretty good, uh, security on the money changing tables. He managed to overthrow those and then just, uh, waltz away unharmed. Uh,

Tony Kynaston: the

Cameron: [00:20:00] eventually.

Tony Kynaston: soldiers turn the other cheek.

Cameron: They were good Christians. Jeffrey Howard is the chief executive of Atlanticus today. He took over when Hanna retired. So I guess, look, everyone can guess how this works, but in case you can’t, in case you’ve never bought anything with a credit card, somebody goes into a, a shop, they wanna buy a fridge. They can afford monthly repayments, but they don’t have room on their credit card to pay 500 bucks for a fridge. The shop’s usual finance provider turns them down, so the retailer has another option that would go under the brand of Fortiva. Fortiva is one of Atlanticus’s financing brands. So most customers would never have heard of Atlanticus. They would heard of, have heard of

Tony Kynaston: Yeah

Cameron: brands that they now own, like Mercury, that they bought, which I’ll get into later on. So they sign up, uh, go through the process [00:21:00] of, uh, setting up an account with Fortiva, and they walk away with the fridge, happy campers, and they make their monthly payments, hopefully. But as I said before, Atlanticus aren’t a bank, so they need one involved. So it might be, for example, the Bank of Missouri might issue the credit account, the retailer. They retain the account and oversee the lending policies and compliance, some of the legal regulatory oversight of it. Atlanticus supplies the technology that assesses the application and manages the program, including the statements, the payments, the customer service. Atlanticus also buys the amount owed from the bank, along with of the associated rights for interests and fees.

And the bank gets a, a payment, basically. They clip the [00:22:00] ticket essentially. Easy money for the bank. Um, the customer takes the fridge home, makes the payments to Fortiva, which is Atlanticus, and if they stop making their payments, that’s Atlanticus’s problem, not the retailers, not the banks. The difference between Atlanticus and a bank is, you know, banks can usually finance these sorts of things from deposits. Atlanticus doesn’t have deposits ’cause they’re not a bank, so they need to borrow funds to cover their acquisition of the loans. And that comes obviously with interest and expenses and so it becomes that classic balancing act. They need to make more money off of the repayment of the loans than it costs them to finance the financing of the loans in the first place. Similar to Opportune Financial that we’ve talked about before. So that’s it basically. Very s- simple business, um, on the surface of it. [00:23:00] Sounds like a nightmare to run to me, but, you know,

Tony Kynaston: It’s like,

Cameron: what I do.

Tony Kynaston: can I chip in here? Are you sort of covered? Okay. So, um, why do you think they play this game of pass the parcel with the banks?

Cameron: ‘ Cause they’re not a bank?

Tony Kynaston: A- and yeah. And why is that, why is that an advantage?

Cameron: For them or for the bank?

Tony Kynaston: for them

Cameron: Oh, why is it an advantage? That’s a good question. hmm

Tony Kynaston: so a bank has to hold tier one capital, which we’ve spoken about before when we’ve done Pulled Porks on banks.

Cameron: Mm-hmm

Tony Kynaston: doesn’t have to hold tier one capital, which,

Cameron: Right

Tony Kynaston: it an advantage over if it did get a banking license. So it doesn’t have a banking license. So it, it has this piggyback relationship between the bank and what they do.

So they do [00:24:00] everything to run this loan portfolio and credit card portfolio, uh, without having a banking license. And s- and it pays the bank to do that, and it structures the relationship to get around looking like a bank, I guess. Um, all, all completely legal. Um, but the other reason for doing it, and interesting that you mentioned the Bank of Missouri, is because there is, uh, a law in the US which, which talks about, um, uh.

I’ve got to find the exact term here. Um Do, do, do, do, do, do, do, do, do. Oh, there’s so many different terms here I’m reading. Uh, look, I won’t find the term, but basically what it means is that, um, the, each state has their own interest rate ceiling laws. Um, and we spoke about this with Opportune, that, uh, you know, um, the states can often see these kind of subprime lenders as [00:25:00] sometimes, uh, charging too much in interest rates.

And so, uh, some states will allow up to 30% or even a bit above that as the maximum rate that can be charged, and some states have clamped right down on that. But there’s a federal law which says that the state of the bank originating the loan comes into effect even if the customer lives in a different state.

And so Atlanticus has partnered with banks like Missouri Bank, which is in a state which has a higher credit ceiling, to be able to offer, uh, loans in other states which are above the local state laws’ ceilings on interest rates. So that has been challenged in a, a number of jurisdictions and even federally.

And so a lot of, a lot of the work that this company does is in courts trying to uphold its ability to be able to, um, offer loans at, uh, higher interest rates than the local state laws allow. And some [00:26:00] states are now changing their local laws to enforce, um, via different means, the ability to cap the interest rates.

So a lot of the work that this company does is to, um, defend itself from legal action, but also to, um, take on some of the states’ legislatures about being able to transport interest rates from one state to another, if I can put it that way.

Cameron: Right

Tony Kynaston: Um, so that’s a, and that goes way back to David Hanna’s founding of a company called CompuCredit, which also, um, uh, you know, very, very entrepreneurially, um, looked at the existing legal landscape and, and found ways to, to operate, um, to the benefit of the company, um, but not necessarily the spirit of the law.

So, um, that’s, that’s a very interesting dimension to this business. And there’s been a couple of, a couple of legal, uh, cases which have been won by, [00:27:00] uh, Atlanticus. One was in Maryland in, uh, May 2024. So the Maryland Office of the Commissioner of Financial Regulation, they brought an administrative action against Atlanticus and the Bank of Missouri, claiming they were operating an unlicensed rent-a-bank program.

And, uh, they sought to invalidate fifteen years of consumer loans being offered by the pair. Uh, but Atlanticus prevailed. And, uh, so that’s become a, I guess, a precedent in this area of jurisdiction. Uh, and in May 2026, California, um, uh, had a court case called OppFi, O-P-P-F-I versus Hewlett, where a California Superior Court granted summary judgment in favor of the fintech model.

Um, and the court ruled that because the partner bank controlled the underwriting and compliance, the arrangement was not a sham, and it upheld the valid when made rule, establishing that a loan that is legal at [00:28:00] inception cannot suddenly become illegal just because its economic rights were transferred to a fintech company.

So they’re, um, they’re kind of two classic cases among many that are going on at the moment. Um, but I thought it was worth highlighting that, uh, you know, one of the, one of the interesting twists to this is that companies like Atlanticus have been exploiting wrinkles in the law, um, to be able to offer these high interest loans in states which have outlawed them.

Cameron: Well, that’s America, Tony. Yeah. they do ch- I did look at their interest rate. They charge about 30% on their general purpose credit cards, which is pretty high. I mean, I think we did talk about 36%, uh, on similar sorts of subprime loans on another ep- uh, another show, another different episode.

Tony Kynaston: Yeah. And, you know, um, oftentimes these loan books run at ten to twelve percent delinquency. I think this company has about a twelve percent delinquent [00:29:00] ratio. So you do have to offer a high, um, interest rate to or charge a high interest rate to be able to make a margin if twelve percent of people are defaulting,

Cameron: Yeah

Tony Kynaston: repayments.

And the other thing too, which I should mention that Atlanticus is doing to, um, mitigate this kind of legal wave that’s going on with state challenges in the US is they acquired a company called Mercury, um, recently, uh, which is higher up the food chain in terms of credit rating. So it’s near prime. And so they’re trying to, um, at least diversify the portfolio away from heavy subprime to being, um, closer to prime and therefore the interest rates are lower and they’re, um, not as, uh, not as, um, they’re, they’re attracting less legal interest from other states.

Cameron: Yeah. And this acquisition of Mercury, which went through about a year ago, September 2025, roughly double the size of their business. It’s a pretty big [00:30:00] deal. Um, they paid about 166.5 million upfront for that, but it took on about a billion in card debt the customers owed. Got about 1.3 million customers.

So it’s a, it was a pretty big deal. They were doing about 3 billion in loan book, I think, at the time, and it doubled to s- over six now. And then a month later, October 2025, they announced another deal. They bought the customer card business off V-V, Vive, Vive, V-I-V-E Financial, not sure how they pronounce that,

Tony Kynaston: Viva

Cameron: card, Viva,

Tony Kynaston: Viva Financial

Cameron: A credit card financing business owned by PROG Holdings out of Salt Lake City, Utah.

You ever been to Salt Lake City,

Tony Kynaston: I have not. Haven’t been to, I may have crossed into Utah to see the Grand Canyon, but that’s about all[00:31:00]

Cameron: I’ve been to Salt Lake City on a number of occasions. Chrissy has family that lives there. It’s a nice place. Very smelly. The

Tony Kynaston: Oh.

Cameron: stinky.

Tony Kynaston: Hmm

Cameron: Uh, but I believe it’s kind of dried up now, so maybe it’s not stinky anymore. But, uh, it was very smelly when I was there. You could smell it. Anywho, um, ATLC Chief Executive Jeffrey Howard said the aim o- o- of this acquisition was to deepen existing retail relationships, add new ones, and establish a partnership with PROG. So they didn’t buy the whole PROG business, just the credit card side of it. But the point is, they’ve been acquiring these sorts of businesses

Tony Kynaston: Mm-hmm

Cameron: to get economies of scale, I guess, and also, as you said, to move up the food chain a little bit and, um, move beyond some of these legal issues that they’ve been having.

Tony Kynaston: Hmm. And it’s an interesting dichotomy, isn’t it? I mean, if they are provide, they do provide a service to people who can’t get credit. [00:32:00] And, um, you know, as long as that’s well managed and the customer is, um, is treated fairly, then it’s, you know, it’s, it’s they’re providing a service. Um, it’s not seen that way by some states who view high interest rates as predatory, but, you know, that’s, that’s an- another way of looking at it, I guess.

Cameron: Yeah. Uh, so I just wanna mention a little bit about the Stockopedia numbers. I got a little bit confused when I was trying to make sense of this. So if you look at the revenue history in Stockopedia, it has their 2025 full year revenue as 865 million, their 2026 estimate as 3.008 billion. And I was like, “Whoa, that’s a big jump.

I know they did some acquisitions, but really?” But then if I pulled the 10K report and the 2025 numbers actually [00:33:00] have reported revenue of 1.968 billion, less loan losses and valuation adjustments of 1.1 billion, which gets you down to revenue after that of 865 million. So I think Stockopedia are using those final numbers for 2025 but haven’t done that for the 2026 estimate because they probably don’t know what the

Tony Kynaston: Right

Cameron: predicting into the future.

So the actual jump is probably 1.968 billion to 3 billion. Still a big jump. It’s

Tony Kynaston: Yeah

Cameron: a jump in revenue, again because of the acquisitions, but, uh, not as big a jump as it looks if you just take the Stockopedia numbers. They’ve also been cutting the cost of the loan book. They refinanced 750 million at lower interest rates recently.

They also sold off their car finance operation called [00:34:00] Car, which was branding genius. Uh, yeah, Barry and Stan, full, full whack on that one. Um, in the quarter ending June 30th, 2026, the revenue of the car side of the business was 10 million, 734 million in cards. So it wasn’t a huge part of the business. Sold all of it just a few weeks ago, 17th September 2026. So it’s not gonna show up in the numbers yet, but they sold it for about 71 million. 154 employees of the car division are moving over to the buyer. They say they’re gonna put the cash towards debt repayment and faster growing credit products. Um, but look, the, the, obviously the balancing act with this is making more money than you’re losing by people not repaying. Funnily enough, I started my career in, at Ford Credit. Don’t know if I’ve ever

Tony Kynaston: Oh, why, why did they call it Ford Credit [00:35:00] when Car was the obvious

Cameron: Ford Credit was even lazier branding option. Um, yeah, well I was like 18, 19, I was repossessing people’s cars for a living. Alan Bond’s, uh, car, I, I repossessed his, uh, Bentley R Turbo, I remember.

Tony Kynaston: good stories, Cam? Did you, like, get chased down the street by guys, by bouncers or anything like that?

Cameron: I’ll tell you two stories that com- uh, that

Tony Kynaston: This, th- this,

Cameron: listeners

Tony Kynaston: might be a job interview for Atlanticus, so

Cameron: Hmm.

Tony Kynaston: they’re good

Cameron: Johnny Young came in for an appointment with me once.

Tony Kynaston: Did you, did you sing?

Cameron: RIP Johnny Young.

Tony Kynaston: Mm-hmm

Cameron: uh, uh, uh, American listeners or Australians bey- uh, you know, who are too young to know, he only passed away like a couple of months ago. Johnny was a pop star in Australia in the ’60s, then in the [00:36:00] ’70s he had a TV show that ran for decades called Young Talent Time. He actually had a talent school that he ran, and he would have kids that had been through that on a TV show where they would perform cheesy, chintzy s- songs, and then they would have. Like it, it was a talent show. Then ki- other kids would come on and would do stuff and, you know, voted for or whatever. Kylie Minogue’s younger sister, Dannii Minogue, was on it. She was probably one of the more high-profile Young Talent Time

Tony Kynaston: Tina Arena

Cameron: Tina Arena, who became a pop

Tony Kynaston: Jamie Redfern

Cameron: Jamie Redfern, and then there was, uh, who was the other girl, um, generation before them?

Um,

Tony Kynaston: Was it Sally Bowles?

Cameron: I forgot about Sally Bowles.

Tony Kynaston: Ooh.

Cameron: totally in love with her when I was a kid. No, there was another one.

Tony Kynaston: Okay.

Cameron: Anyway.

Tony Kynaston: Yep

Cameron: Anyway, J- Johnny Young had this really clean-cut image. At the end of every episode, they’d sing a schmaltzy version [00:37:00] of,

Tony Kynaston: Close your eyes and I’ll kiss you. Tomorrow I’ll miss you. Yep

Cameron: was like, not The Beatles version, it was a slowed down chintzy m- multsy version. I, of course, growing up watching that TV show, had no idea it was a Beatles song. Didn’t discover The Beatles until I was probably 12 and heard their version and was like, “Oh, that’s way better than Johnny Young’s version.” Anyway, had this really clean-cut image, butter wouldn’t melt in his mouth kind of stuff. He comes into my office one day, cigarette hanging out of his mouth, swearing like a trooper, ‘ cause I just, I just repossessed his wife’s BMW 750 or something. “Yeah, you fucking know who I am,” kind of stuff.

I’m like, “Yeah, Johnny, I know who you are.” He abused the crap out of me. I was like 19 and it was the funniest day of my [00:38:00] life. I thought it was really great. But then I had this guy that repossessed cars for me, and he was like Ray from Mr. Inbetween.

Tony Kynaston: right

Cameron: Lovely guy, but I went to his apartment. He had a little flat actually in, um, Box Hill, somewhere around that.

Uh, uh, and I went to his house one night to pick up some keys or deliver some keys or something. I can’t remember what. Deliver a contract. And I go, uh, um, I knock on the door, ring the doorbell, and he goes, “Door’s open. Come in.” come in and there’s a little table sitting right in front of the door, like a little hallway that he’s sitting in. A flag with a swastika hanging on the wall. And I, he goes, “Sit down at the table.” And I sit down and he goes, “Look under the table.” And I look under the table and there’s a gun to the underneath of the table pointing at the door. I kid you not. It was like out of a fucking [00:39:00] Elmore Leonard novel, uh, or something. And I sent him to repossess a, a truck or something from the Victoria Mar- no, not the Victoria, the Footscray markets once. And he came in to see me, uh, the next day and he said, uh, “Yeah, we’re not getting that car back.” I said, “Yeah, what happened?” He goes, “Well, I, I rocked up at the markets about 4:00 AM and, uh, you know, there was these about 50 of these burly blokes standing around.”

They go, “What do you want?” I go, “I want that car.” And they go, “Come and take it then.” He said, “I just stood there and I looked at them and I went, ‘Nah, it’s fine. You keep it.’” Yeah, write it off. He goes, “Yeah, we’re writing that one off.” I’m like, “I’m not. Yeah, okay, yeah, it’s not worth the 12 grand or whatever we owed on it.” Anyway, back to the story. So basic problem is people won’t pay, uh, and you need to cover that. So y- you know, these guys obviously assume that [00:40:00] their software that’s figuring out who’s an acceptable risk and who isn’t is gonna do a good enough job of assessing the risk, and then their collection are gonna do a good job on the other side of it. They do run pretty high losses, uh, in terms of their rates. I’ve got it in my notes later on, I’ll get to it in a second. But

Tony Kynaston: I, I saw 12% when I did my research

Cameron: I’ve got a feeling it’s higher than

Tony Kynaston: that

Cameron: but they’re making money,

Tony Kynaston: Yeah

Cameron: So comparing the June ’25 quarter to the June ’26 quarter, year on year revenue rose from 394 million to 744 million. Obviously, acquisitions are part of that. Profit after tax, uh, rose from 28.4 million to 47.4 million.

Mercury contributed about 240 million of the June ’26 quarter’s [00:41:00] revenue. if you back that out of the 744, they still grew their existing business, uh, quite substantially. Their interest bill also grew from 53.7 million to 123.4 million between those quarters, but again, bought the book, so bigger interest bill on covering the, the loans for that. Interesting is– The interesting fact of this is when they put out the reports, they assess the value of their loans is gonna be in the future to determine their value today. It’s kind of like doing a discounted cash

Tony Kynaston: Mm-hmm

Cameron: Um, it’s literally doing a discounted cash flow, I guess. It’s pretty much what it is.

Tony Kynaston: Yeah.

Cameron: Like every business has to do forecasts about what their sales and their costs are gonna be. guys go, “Yeah, based on our payment rates and [00:42:00] our collection rates, we think we’re gonna get more back out of these repayments next year than we thought we were gonna get when we last did our analysis a year ago.” Obviously, sometimes these loan repayments are going out over two years, three years, five years, depending on whether you’re buying a fridge or something more expensive. So they’re reassessing all of the time, and in the June ’26 quarter, they made favorable changes in loan assumptions, which added $41.4 million before tax. they were like, “Yeah, uh, we think, yeah, the amount of money we’ve got outstanding is actually worth more than we did

Tony Kynaston: They also have to do that too, Cam, because one of the dimensions to the business is that they do what’s called asset securitization. So they bundle up a whole heap of outstanding loans and, uh, issue them to people who want to invest in bonds, uh, and agree a coupon, and then they have to make sure that they [00:43:00] recover enough from the loan portfolio to pay the bond holders and make a profit

Cameron: Bundling up subprime

Tony Kynaston: Hmm

Cameron: and selling them onto the market. I feel like I’ve heard

Tony Kynaston: Hmm

Cameron: Can’t really place where that was.

Tony Kynaston: It was in America and it was in 2007.

Cameron: Oh, yeah.

Tony Kynaston: Yeah,

Cameron: was it. Yeah, The Big Short. Yeah

Tony Kynaston: Although to be fair, the, um, The Big Short happened because people bundled up bad loans with good loans and called them good loans. I don’t think there’s any sort of whiff of that about this company. They’re all subprime loans priced accordingly, from what I can see

Cameron: from The Big Short, uh, apart from, uh, what’s her face in a bubble

Tony Kynaston: Margot, Margot.

Cameron: Margot Robbie. It was amazing. It was like 20 years ago. She was big enough of a star

Tony Kynaston: Hmm

Cameron: to be in that. still around. Um

Tony Kynaston: Why does that surprise you?

Cameron: Well,

Tony Kynaston: still around.

Cameron: of her as like 25, but 40s now,

Tony Kynaston: Oh, at least[00:44:00]

Cameron: I, I remember Anthony Bourdain, uh, chopping off chicken, uh, fish heads and putting them in a bouillabaisse and saying, “You know, I’m taking last week’s, uh, fish I couldn’t sell and chucking it in a pot and selling it as a brand-new dish to

Tony Kynaston: Hmm

Cameron: was a great way of describing it. Any- I remember when we were making our film, Marketing the Messiah, I wanted to have Ray in a bubble bath.

When we were shooting in-

Tony Kynaston: We did talk about it, yeah.

Cameron: Where were we shooting? Um,

Tony Kynaston: Durham, yep

Cameron: I wanted to have Ray in a bubble bath explaining something about the Bible, but we just didn’t have time to shoot it. Oh, that would’ve been so good. I just wish I’d gotten that on camera. That would’ve been gold. Anyway, um, uh, now of course, when they came out with the last quarterly report, so w- they’re, they’re, they’re assuming that they’re gonna make more money th- than they previously thought.

When I first read that, I thought, “Well, hold on. The [00:45:00] Fed has just raised interest rates

Tony Kynaston: Mm-hmm

Cameron: in the US is dicey.” I mean, there are mixed reports on whether it’s doing great, it’s the greatest economy of all time, it’s got some real underlying struggles. guys seem to be fairly optimistic about their, uh, upside anyway.

But I realize they came out with the report before the Fed raised

Tony Kynaston: Right

Cameron: But reading through their forecast, they did give themselves some wiggle room here that things might not go as well as they thought they will.

Tony Kynaston: Mm-hmm

Cameron: see.

Tony Kynaston: Yeah, and of course, they might write something up this quarter and write it down next quarter as well as, as their portfolio modeling changes. Yeah

Cameron: Yeah. Now, there is substantial family influence in the company. David Hanna still owns about 42% as of July 2026. His, uh, Hanna family trust owns a bunch of sh- special shares through something called Dove Ventures. His brother, Frank, is [00:46:00] also involved in some shares. So th- these guys are still heavily invested in this business, which is, you know, from our perspective, usually a good thing, hopefully. They’re usually gonna try and, uh, the business successful got a lot tied up in it. Uh, at the last shareholder vote on May 2026, the shareholders elected seven directors, including Blake Paulson, former senior US bank supervisor. Now, I did mean to look him up before the show, but wasn’t there a chairman of the Fed that was a Paulson?

Tony Kynaston: Yeah, John Paulson, I think his name was

Cameron: Uh, this guy is, is he related? No, related. Was it a Henry Paulson?

Tony Kynaston: could have been

Cameron: Hmm. I [00:47:00] don’t see anything on Wikipedia about this guy being related, so there you go. Okay. Um, David Hanna remains executive chairman. Jeffrey Howett remains chief executive. So in terms of their I got that Atlantiq has reported a 17.7% annualized net principal loss versus 12% at Opportune that also does sort of subprime card lending. So that’s quite a big jump. It’s almost like 48% higher. dollars lost after recoveries, not a percentage of customer defaults. Uh, but they’re still making money, so am I to judge how they run their business? You know, I– when I break any of these businesses down based on what you’ve taught me over the years, really I’m looking at, [00:48:00] is this business making money?

Tony Kynaston: Mm-hmm.

Cameron: Uh, does it, is it seem to be managed well? Do they seem to know what they’re doing? Are they growing the business? Are they reducing debt? Are they, are they running a relatively good ship here? And can I get it cheaply looking at primarily price to operating cash flow?

Tony Kynaston: Mm-hmm

Cameron: Can I, can I get it, can I get it at a discount? it generating cash and is it well run? I mean, at the end of the day, that’s kind

Tony Kynaston: It is

Cameron: the headline of what I’m looking at. Are these guys,

Tony Kynaston: what else, what more do you want in a business investment?

Cameron: AI

Tony Kynaston: Well, okay You pay a lot more for it

Cameron: well, maybe AI will help businesses like this improve

Tony Kynaston: thought.

Cameron: assessment. You know, you would ho- you would think.

Tony Kynaston: Mm

Cameron: So anyway, that’s the basics of the business. If I run through the, the scoring, uh, for it. quality rank is a 55. We only score it if it’s 60 or better, so I couldn’t [00:49:00] score them for that. But their stock rank is a 92. We score it over a 90, so they scored for that. Their F score is a five, than 4.5, so I scored it for that. Their price is not less than our IV1. Our IV1 is 91. Oh, sorry, is $39.48. Their share price is $91.89 when I did the analysis, so it’s well, well above our intrinsic valuation number one. But our intrinsic value number two came in at $101.12. They were below that, so I could score them for that. Uh, price is not less than book or less than book plus 30. Um, price to book ratio is 1.98, book plus 30 would’ve got me in at $60, and they’re at $91.89. They obviously do have a three-point uptrend, and as I said at the beginning of the show, their price has nearly doubled [00:50:00] last six months.

They’re well and, and truly above their buy line. three-point. No new three-point upturn as a result of that. Growth is, growth over PE is not greater than 1.5, so I couldn’t score them for that. Uh, they do have positive book growth, though, 23%, uh, three-year annual growth. PE is not, uh, below yield.

They have sort of a zero yield, so I couldn’t score them for anything that’s yield related, including yield above bank debt. And their forecast IV is not greater than twice the price. Forecast, um, IV is $101. Twice the share price would be about 183 bucks. of course, their Pr/OpCaf is seven. Their Pr/OpCaf was 1.48. Very low Now, with financial services businesses, the Pr/OpCaf is always a little bit. The operating cash flow is always a little bit kind [00:51:00] of weird, uh, by the nature of their business, money coming in, money coming out. as we’ve talked about before with these businesses, particularly in the US, because we have a lot of financial services businesses, um, on our buy list. I’m just letting it pass. I mean, I’m not, I’m not trying to second-guess it. Um, it is what it is. Um, so all up for these guys, final score, QAV quality score was sixty-six point six seven percent, not above seventy-five, but it was okay. And the QAV score was zero point four five, as I said, um, the second highest after Opportune on my list this week.

They got eight out of 12 points. um, yeah, that is these guys. I’ve added them to my, uh, portfolio for this week. Picks, uh, [00:52:00] do your own research, make your own decisions, anyone listening to this. Um, but it’s an interesting, interesting business.

Tony Kynaston: Very interesting. Yeah, very interesting. Risky for a number of reasons, but also too from a legal point of view, ’cause they’ve maximized the bank, non-bank relationship, um, to their benefit and the state-by-state dimension to their benefit. So it’ll be interesting to see how that carries on, um, going forward as well.

Cameron: But in America, man, you get found in breach of anything, it’s a slap on the wrist. know? I don’t think i-i. They’ll, they’ll pay a, “Oh, no, we’ll pay a million dollar fine and keep our billion dollars in profits, thank you very much.” It’s not like they’re, they’re, they’re all, they’re gonna be shut down and they’re gonna go to jail for breaches of this as far as I can see. Just quickly before we go, um, looking through the list of Pulled Porks that I’ve done over the last, uh, [00:53:00] year or whatever, a half. Some of the recent ones that we’ve done, um, OneMain Financial, which I did on the 14th of September, is down 10%, another financial services business. Had a look at it, to figure out why.

Couldn’t really figure out why, but it’s down. Um, some of the other notable ones, Slide Insurance that we talked about

Tony Kynaston: Mm-hmm

Cameron: the 18th of August are up 12% since then. Republic Airways, Roger Ramjet, as I said earlier, down 20% since we talked about it on the 10th of August. Uh, Banco Bradesco, were they Argentinian or Brazilian? I think they were Brazilian. They’re up 9%, might be the, uh, Brazil bump

Tony Kynaston: Yep

Cameron: Petrobras up 34% that we mentioned earlier. K-O-H-L-S-S, is up 12% since we talked about them in July. But F&G we talked about the week [00:54:00] after on the 7th of July are down 23%. So there’s a big spread, I guess, is what I’m getting at here.

Tony Kynaston: right

Cameron: Some of the stocks that we’ve talked about, Opportune Financial we talked about in April, they’re up 42% since then.

Tony Kynaston: Mm-hmm

Cameron: S- Eastman Kodak are up 28%. Pitney Bowes up 54. Who are the, uh, golf guys? Uh, Topgolf

Tony Kynaston: Callaway

Cameron: up 35% since we talked about them, uh, in November last year. But Cal-Maine Foods, which were doing really well at one point, I remember, and we were like, “Oh, look at them,” they’re now down 31%. So I don’t know, man. It’s all over the place. All up, uh, out of the 71 stocks that we’ve done Pulled Porks on, 45 are up, 25 are down, so it’s about a 63% win rate,

Tony Kynaston: Perfect

Cameron: which is, yeah, [00:55:00] what we, what we

Tony Kynaston: Hmm

Mm-hmm.

Cameron: there you go

Tony Kynaston: Yeah. Very good

Cameron: for, new listeners, I mean, as, you know, just said, we only predict a 60% win rate.

We have rules in place. We sell the ones that go the wrong way, I had to do today with one of them, I mentioned Ardent. And we keep the winners, and we just keep filtering out the ones that go the wrong way and keep building portfolios of winners and eventually you end up with a portfolio of more winners than losers, and, um,

Tony Kynaston: Yeah. Pull the weeds, let the flowers bloom is the saying. Yeah. And it can take a while for a portfolio to settle down and that process to have an effect, um, is the other thing to say. And, uh, and things are up and down, but the rules take care of that. Um, so do we have a. Do we know why it’s happening?

Possibly because of the declining economic [00:56:00] environment. Um, do we know how it’s gonna play out? No. Do we guess? No.

Cameron: Do we care? No, not really.

Tony Kynaston: Yep

Cameron: No. Yeah, it just, it just runs itself.

Tony Kynaston: Yeah

Cameron: and it all works out. Well, that’s, uh, QAV America for this week, TK

Tony Kynaston: That was interesting. Thank you. I really enjoyed researching this company.

Cameron: Yeah, interesting.

Tony Kynaston: Hmm.

Cameron: Okay,

Tony Kynaston: All right. See ya

Cameron: Happy hunting, everyone