Cash Store Financial Services Inc. (CSF.TO)

Starting to look cheap. He is short the stock. The problem is that there are regulatory issues with provinces and cracking down on total returns. Secondly they said they don’t keep loans on the balance sheet, but when loan delinquencies increase third parties will require bigger spreads in interest rates. Investors should look at it like the loans are on the balance sheet.

Very checkered history over the last 10 years. Not comfortable as a long strong franchise to own. You have to be careful.

Pay day loans. Has shown tremendous growth. Fairly valued at 8X trailing EBITDA..

Payday loans. Likes the company and its underlying securities. Trades at about 10X fully taxed earnings for the fiscal year ending June/10. Expecting earnings to move up towards the $2 range by June/11. Clean balance sheet.

Revenues and earnings were up 14%-16% last quarter on a year-over-year basis. 4% yield. Company bought back roughly 20% of stock in the last 18 months. Trading at about 6-7 times forward earnings. Federal government passed bill C. 26 last year, which effectively decriminalized the payday loan industry. This should drive down its interest expense over the next 5-6 quarters.

A payday lending business. Government changed the rules that had impacted low-cost financing. They had paid about 20% to finance their business and he expects in the new year they will have less than 10%.