CACC Sold ==> That is my 76th consecutive winning trade

[mrmarket]

Please build me a temple. You can put solar panels on top of it to make it affordable. Today I sold CACC at 273.58. That’s a 16% gain over my purchase price of 234.95. Ha Ha HA! I love making money.
That makes 76 consecutive profitable trades of 15% or better. This is a world record. Go ahead and Google it. No one else has ever done it.

I am HUGE! Bring me your finest meats and cheeses. How do you like me now? How do you like ME now? I am the greatest stock picker on the planet!

How HUGE is $$$MR. MARKET$$$?

· $$$MR. MARKET$$$ has a diary. It's called the Guinness Book of World Records.
· $$$MR. MARKET$$$ can pick oranges from an apple tree and make the best lemonade youve ever tasted.
· When $$$MR. MARKET$$$ was in middle school, his English teacher assigned an essay: "What is courage?" He received an A+ for turning in a blank page with only his name at the top.
· M.C. Hammer learned the hard way that $$$MR. MARKET$$$ can touch this.

Now the question becomes….in this bull market….do you want to see another stock pick? If you ask nicely, I might come up with more than one.

I am HUGE!!

$$$MR. MARKET$$$


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07-16-2015, 09:53 AM #1 mrmarket's Avatar mrmarket mrmarket is online now
Administrator
Default CACC ==> The Acropolis Winner
($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)

Full disclosure….I bought this stock back in 2010 and made money on it. I like it so much now, I bought it again. I liked the write up back then too. So I am using some of it today, since it still makes sense.
Have you ever put much thought into pent up demand? You know when you’re going to a football game and you’ve been tailgating quite a bit and you’ve just finished your 11th beer and you start to look around for a port a potty and you can’t find one? That’s pent up demand.

You know when you go to the office in the morning and you have a Venti Starbucks coffee, a bran muffin and the USA Today sports section is sitting at your desk? That’s pent up demand.
Not long ago, the US auto industry was chugging along at a healthy clip. Then the housing market crashed and everyone’s home equity lines disappeared. People still wanted to buy a new car but they didn’t have any quatloops. They wanted to buy a new Corvette so that even though they were an endomorph or didn’t have gigantic biceps like $$$MR. MARKET$$$, at least they could pretend:



So they went to the bank to get more quatloops and the bank pretended they were closed. So even though you still had a job, and wanted a new car, you couldn’t get a loan. GM went bankrupt because you couldn’t get a loan.

Well..that was yesterday.

Today I bought CACC, Credit Acceptance Corp, at 234.95. I will sell it in 4 to 6 weeks at 270.57. Here’s why I like CACC:
Look at this chart…all this stock wants to do is go UP!!!



The stock is up 107% over the last year yet it’s PE is around 17. It’s a growth stock at value stock prices…what a bargain.
Credit Acceptance Corporation provides auto loans to consumers primarily in the United States. The company primarily provides the portfolio and purchase programs. Its portfolio program comprises advancing money to dealer-partners in exchange for the right to service the underlying consumer loan; and the purchase program includes buying the consumer loan from the dealer-partner and keeping various amounts collected from the consumer. The company offers its products through a network of automobile dealers.

At the end of the day, it’s a really simple story. Pent up demand. People haven’t bought cars for yearss. Their cars are getting older. They need new cars. In order to get new cars, they need a car loan. That’s where Credit Acceptance comes in. Pent up demand. The banks are still picky about who they give loans to. The consumer loan industry was crushed when the credit markets basically froze. That was yesterday. It’s getting warm outside and Credit Acceptance wants to loan money to Joe Lunchbox who wants a new car. Liquidity is no longer a problem and credit markets have stabilized.
As CACC increases their active dealer network, they increase their access to revenue. When someone comes into a lot to buy a car, the car dealer gets online with Credit Acceptance and they work up a loan in less than a minute over the internet. Credit Acceptance generates revenue mostly through servicing fees on loans. It takes 20% on loan payments. If a borrower pays $500 a month to pay down a loan, CACC keeps $100. The quality of loans also should go up as the job market improves since people will need cars to commute (and be true to their loans while employed). CACC works with thousands of independent and franchised automobile dealers in the U.S. and provides capital for auto loans to people with substandard credit.

New auto loan originations are at record highs, thanks to low interest and unemployment rates. Severe delinquency rates are the lowest that they have been in nearly 20 years. Joe Lunchbox is making his payments because he has a job now. The more people who go back to work, the more people who want car loans. CACC specializes in subprime loans, which are loans to people who don’t have the AAA rated credit scores. To cover the risk of a default, the lender charges a high interest rate for the risky loan. Lower overall interest rates have made loans more attractive. Cheaper gasoline has hastened the search for new cars. If people are paying off their loans, it means they have money to spend. The forecast is good. With these lower loan balances, issuers can raise interest rates and increase credit standards. Based on favorable delinquency trends and an improving economy, default rates should be peaking.

So what does this mean for Credit Acceptance’s earnings? Remember, it’s all about the earnings. In April, CACC reported first-quarter profit of $71.5 million. It had net income of $3.41 per share. The results exceeded Wall Street expectations. The average estimate of ANAL-ysts was for earnings of $3.36 per share. The auto financing company posted revenue of $194.2 million in the period.
So things are getting better? Of course. Will they continue? Take a look:

Profit Margin (ttm): 42.91%
Operating Margin (ttm): 67.70%
Return on Assets (ttm): 10.10%
Return on Equity (ttm): 38.59%
Qtrly Revenue Growth (yoy): 10.80%
Gross Profit (ttm): 723.50M
Qtrly Earnings Growth (yoy): 43.60%

ANAL-ysts expect CACC to earn $3.54. Talk about pent up demand…I am laughing so hard at that number I have to siss myself. With the improving auto market, the $$$MR. MARKET$$$ earnings model predicts that CACC will easily earn $16.17 per share in 2015. Even at the ridiculously low PE multiple of 17, that would project to a share price of 17 x $16.17 = $274.89 per share….which is higher than my sale target.

So what are you waiting for? Go down to your auto dealer, get a loan and satisfy some of that pent up demand and buy a car. Then drive home and buy some CACC stock and pay off your loan!

I am HUGE!!

$$$MR. MARKET$$$
www.mrmarketishuge.com
Last edited by mrmarket; 08-15-2015 at 01:53 PM.
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I am HUGE! Bring me your finest meats and cheeses.

- $$$MR. MARKET$$$

[Louetta]

He visited the Virgin Is... Oh, wait, I used that one.

Congratulations Mr. Market. Kindly cough up one or more new picks.

[jiesen]

Wow, yes, a HUGE day for CACC yesterday! I'm out as well, at 270 with my 15%! Thanks for this awesome pick, $$MM!! You are HUUUUUUUUUUUUUUUGGGGGGGGGEEEEE!!!!!

Now, let's see another 2 dozen winning picks, so there can be meats and cheese for all when we see 100 in a row!

[say33]

Hello, Mr. Market,
I've hesitated a lot to bring this up, because I, too, love cheeses and meats, especially those of mamma-ls, sorry for the bad joke. But, as the saying goes, I like you a lot but I like more the truth, and we are all grown-ups and not childish admirers of the Mr. Huge persona, anyway.
And the truth is that, from 2012 to present, your compounded portfolio, dividends included, yields a 111.42% return with a 16.25% max. drawdown. Real good but not huge, I daresay: in the same period and conditions, SPY gives 114.07% and 10.09% max. DD.

Nevertheless, for the long run, I trust your method over my own, and since January I'm following your entries with part of my capital, just hoping that, in the probably-not-so-bullish-time-ahead, you will be able to outperform hugely the markets. At last? again? as usual? Whatever.

So, it's thanks and good luck for you and fingers crossed for me.

Greetings from Spain, EU.

[mrmarket]

Hello, Mr. Market,
I've hesitated a lot to bring this up, because I, too, love cheeses and meats, especially those of mamma-ls, sorry for the bad joke. But, as the saying goes, I like you a lot but I like more the truth, and we are all grown-ups and not childish admirers of the Mr. Huge persona, anyway.
And the truth is that, from 2012 to present, your compounded portfolio, dividends included, yields a 111.42% return with a 16.25% max. drawdown. Real good but not huge, I daresay: in the same period and conditions, SPY gives 114.07% and 10.09% max. DD.

Nevertheless, for the long run, I trust your method over my own, and since January I'm following your entries with part of my capital, just hoping that, in the probably-not-so-bullish-time-ahead, you will be able to outperform hugely the markets. At last? again? as usual? Whatever.

So, it's thanks and good luck for you and fingers crossed for me.

Greetings from Spain, EU.

Thanks for the feedback. Your numbers are incorrect. Best of luck.

[billyjoe]

We don't know all rhe variables. Just enough to determine Mr.Market is HUGE!

----------------billy

[say33]

My numbers are wrong..., we don't know all the variables...

To answer or not to answer, that is the question.

Well, I prefer not to.

Just remember:

In the markets, sometimes it's winning, but mostly it's whining.

The verb to win is like the verb to love, very hard to conjugate: the past is never simple, the present is only indicatif, the future is always conditional.

I'll be around. Behave.

[mrmarket]

My numbers are wrong..., we don't know all the variables...

To answer or not to answer, that is the question.

Well, I prefer not to.

Just remember:

In the markets, sometimes it's winning, but mostly it's whining.

The verb to win is like the verb to love, very hard to conjugate: the past is never simple, the present is only indicatif, the future is always conditional.

I'll be around. Behave.

Glad to have you....good luck!

[Karel]

My numbers are wrong..., we don't know all the variables...

To answer or not to answer, that is the question.

Well, I prefer not to.

Just remember:

In the markets, sometimes it's winning, but mostly it's whining.

The verb to win is like the verb to love, very hard to conjugate: the past is never simple, the present is only indicatif, the future is always conditional.

I'll be around. Behave.

A general remark: it is not very useful to give numbers like the ones you presented without giving some insight in your assumptions and calculations. SPY is the easy one here, but an assessment of the returns and drawdowns of $$$Mr. Market$$$’s picks as a portfolio is complicated. To calculate them directly from the table is impossible. You would need to construct a portfolio and run all trades (and make assumptions doing those things) to get close.

By way of a welcome

[mrmarket]

I would also add that this website, and associated stock picks, has been around since 2003. If what we were slinging was just hash, my guess is its longevity wouldn't be sustained over 14 years.

[say33]

Ah, you’re forcing me to answer after all. I didn’t want to, main reason English not being my mother language.

As briefly as possible:

My Mr. Market portfolio is constructed from scratch in a spreadsheet from 2012/01/23. Then passed onto a Google Finance portfolio to account for dividends.

My assumptions are the standard: A 14 equally weighted position portfolio. Gains fully reinvested, dividends excepted. No commissions considered.

The mentioned returns are those given by Google, which are totally reliable (and corroborated by my Excel sheet). The maximum drawdown is calculated from the equity curve presented by Google, so a good approximation.

In this period, Mr Market portfolio presents results similar to a SPY position opened with all the capital at the close of the last day of 2011. The principal reason for not beating it is that Mr. Market is rarely fully invested, in terms of Days in market * Dollars in market:
The portfolio needs initially time to be constructed position by position.
When a position in closed, Mr. Market doesn’t open a new position immediately.
Finally, Mr. Market rarely has 14 open positions simultaneously, for whatever reasons.

These facts go against the portfolio rentability in this bullish market. With another type of market, we’d probably have a completely different story.

A way of increasing the product Days * Dollars in market is to assuming a portfolio with a smaller number of positions. My sheet allows to do that and see the results (only, rigth now, without dividends and until the end of 2016). Assuming an 8 position portfolio, the return would be 155.84% (without dividends) versus 93.96% for the SPY (with dividends). Happier now Mr. Market?

Bottom line? Mr. Market does beat the market but not massively under any market condition.

Enough. Just a little message to Karel by way of thanking his welcome:

Not knowing well our trade, we shall make it with respect.
To bury our dead as we must,
anyone serves,
anyone,
but and hardened old grave digger.

Behave and hit the banners.

[mrmarket]

Ah, you’re forcing me to answer after all. I didn’t want to, main reason English not being my mother language.

As briefly as possible:

My Mr. Market portfolio is constructed from scratch in a spreadsheet from 2012/01/23. Then passed onto a Google Finance portfolio to account for dividends.

My assumptions are the standard: A 14 equally weighted position portfolio. Gains fully reinvested, dividends excepted. No commissions considered.

The mentioned returns are those given by Google, which are totally reliable (and corroborated by my Excel sheet). The maximum drawdown is calculated from the equity curve presented by Google, so a good approximation.

In this period, Mr Market portfolio presents results similar to a SPY position opened with all the capital at the close of the last day of 2011. The principal reason for not beating it is that Mr. Market is rarely fully invested, in terms of Days in market * Dollars in market:
The portfolio needs initially time to be constructed position by position.
When a position in closed, Mr. Market doesn’t open a new position immediately.
Finally, Mr. Market rarely has 14 open positions simultaneously, for whatever reasons.

These facts go against the portfolio rentability in this bullish market. With another type of market, we’d probably have a completely different story.

A way of increasing the product Days * Dollars in market is to assuming a portfolio with a smaller number of positions. My sheet allows to do that and see the results (only, rigth now, without dividends and until the end of 2016). Assuming an 8 position portfolio, the return would be 155.84% (without dividends) versus 93.96% for the SPY (with dividends). Happier now Mr. Market?

Bottom line? Mr. Market does beat the market but not massively under any market condition.

Enough. Just a little message to Karel by way of thanking his welcome:

Not knowing well our trade, we shall make it with respect.
To bury our dead as we must,
anyone serves,
anyone,
but and hardened old grave digger.

Behave and hit the banners.

I understand your analysis, but it really only represents a fantasy portfolio. Your analysis does not represent my actual portfolio. There were actually very lengthy periods when I did own 14 positions (since 2003). You can find each of those trades since then on this forum, but I wouldn't recommend trying to reconstruct another fantasy portfolio. Suffice to say if you are satisfied with your personal returns, you should be happy. I am very happy with mine

[Karel]

Ah, you’re forcing me to answer after all. I didn’t want to, main reason English not being my mother language.
[etc.]

Forcing was not on my mind, and why would anyone not want to give the procedure and assumptions? They are often necessary to interpret the result and interesting in their own right. I am happy you felt encouraged to post this.

I hope you enjoy your time here.

[say33]

My brain given some time for recovering from all that englishness, let’s try and shake the tree a Little, once again.

First, thanks for all your good wishes.

Karel, when I said to Mr. Market “your compounded portfolio, etc.”, what assumptions might normally be? Always 50% cash (just for beers) or over-invested in Cheeses and Meats companies and under-invested in Dietists and Anal-ysts?

Mr. Market, of course it’s not your actual portfolio, but I can’t accept calling it a fantasy portfolio. It’s a standard portfolio based on all your picks, with your entry and exit prices, and its results, in terms of return and drawdown, are the standard way of evaluating and comparing systems and strategies. Yours, with your own money management, may be much better, but much worse, too.

Saying you have a record breaking number of winners in a row make us all very happy, but says little about what we can expect following your entries. For starters, whether we’ll be beating the market or not.
Your system need numbers, especially so if you don’t follow the mainstream ‘run the winners and cut the losers’. And a little more numbers I’m going to give you, right now.

From 2002 to 2016 - a 15 year period - the rentability of the standard 14 equally weighted Mr. Market portfolio has been 173% plus dividends. That of the S&P500, 93%.
So, the standard portfolio has almost doubled the market return. It beats the market square, but, greedy as we are, maybe we were expecting a little more?

About the impact of the number of positions in the portfolio:
The 14 position portfolio yields 173%, plus dividends.
A 12 position portfolio yields 287%, plus dividends.
A 10 position portfolio yields 502%, plus dividends.
An 8 position portfolio yields 633%, plus dividends.

And if we set a cap size position of $10,000, for possible liquidity issues:
The 14 position portfolio yields 172%, plus dividends.
A 12 position portfolio yields 277%, plus dividends.
A 10 position portfolio yields 445%, plus dividends.
An 8 position portfolio yields 493%, plus dividends.

For sure, one of the reasons for these values is the number of bad picks each portfolio takes or misses, which is random. However, these are big differences and here it seems to be a pattern and something definitively to think about.

I’ve read all your posts from day 1, twice.
In these 15 years, you’ve open 252 positions and reached 14 simultaneous positions 38 times.
Your average number of open positions has been 10.15.

These are my numbers, good and reliable, that I hope, but honest and unbiased, that I know (remember: not knowing well our trades, we shall make them with respect). If you think they are unacceptably wrong, by all means do present yours, but, please, minimally explained or documented. I’ll be glad to be corrected, because I’m here to gain money if possible, not to annoy you or to play games with you.

Cheers.

[Karel]

say33, I very much appreciated your explanation. No criticism. My only criticism was right at the beginning, when you just threw out some numbers without giving their justification. Now I also like your explanations in your post above.

About assumptions: there are no ‘right’ or ‘normal’ assumptions in cases like these. Only defensible vs. undefensible assumptions. Your assumptions look reasonable, so I have no quibbles with them. Another thing is if they replicate $$$Mr. Market$$$’ real money portfolio. We will never know that, nor should we want to know it. That means that all simulations will be speculation, which is perhaps a nicer word than fantasy.

Also, randomness plays a very important part in short term portfolio analysis and it is best to consider all periods under 50 year as short term. A portfolio might look good or bad just because one stock behaved exceptionally in the right or wrong direction. It is difficult to account for such things.