In
my
most recent article, I discussed how installment lender World Acceptance
Corporation’s (WRLD) current situation offers an opportunity to investors. In
March 2014, the Consumer Financial Protection Bureau, or CFPB, sent the company
a Civil Investigative Demand, or CID, asking about its lending practices. This
caused the company’s shares to fall nearly 30% in the course of a few days.
Since
then, the company’s share price has been roughly flat. As I put it in my last
article, it is in a sort of “limbo”—too high if the company’s business model is
illegal, as short sellers argue, but too low if the company is fundamentally
sound. In the short run, this situation will only be decided when the CFPB
releases the results of its investigation.
In
the long run, however, if the CFPB does not shut down the company, World
Acceptance Corporation’s share value will be governed by its operating results.
Those operating results have shown some worrying trends over the past several
quarters. (Read More)
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