ECN Capital (ECN-T)

We still think it is interesting as speculative buy but would not add. We have additional comments posted this morning.
Insiders own 9% directly and 14% via holding companies.
Through third parties, ECN originates prime and super-prime consumer loans for housing and RV purchases as well as for inventory financing and floorplan loans.
With concern on recession and higher interest rates, demand for such loans saw a significant drop in the quarter.
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. They announced a special dividend of $7.50. The stock should have moved more on this news. Shares can be bought for the dividend here. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The stock is still very cheap on all metrics. Considering growth perspectives, current book value and earnings power, it is attractively priced. It also has a strong record of dividend increases. Unlock Premium - Try 5i Free

The company is in transition to get away from taking on direct interest rate risk. He really likes the valuation and it trades below book value. They need to do another acquisition, report faster revenue growth or increase the dividend to really get things going – and he thinks one of those will happen this year.

He held it in the past. It trades at around 0.9 times book ($4.40). They are selling down divisions at or above book. They have a lot of acquisitions but deals are not as cheap as they were. He prefers EFN-T.

Steve Hudson is an entrepreneur who has grown and sold companies before. This is trading below its NAV, and is buying back stock. They had an investor presentation this week basically saying look for the 1st quarter to be pretty exciting in terms of acquisitions. They’ve made some acquisitions and dispositions. Has a great balance sheet. Thinks they will be very, very active. A leasing/finance company with low interest rates in a strong economy, trading below its asset value. A pretty safe bet for the next year. Dividend yield of 1%. (Analysts' price target is $5.00.)

It was a spinoff of Element Financial. He buys when it dips below $4. They are getting into lending for home renovations. They are quite undervalued. It remains to be seen how fast they can grow the company from here. There is some good long term value creation in the name.

(A Top Pick Sept 6/16.) Split into 2 companies. ECN Capital (ECN-T) was up 21%, while Element Fleet Management (EFN-T) was down 11%. He likes both.

Had owned this before the split and did okay on it. CEO couldn’t consolidate the fleet business more aggressively and there wasn’t a lot of growth, so he split the companies and then proposed the structure. Thinks it was completely full of conflicts of interest. The investment community is supporting this because the CEO is a wonderful guy in promoting things. Sold his holdings, because he won’t invest in companies where he doesn’t have confidence in the management team. This has been a massive destruction of shareholder value.

A recent spinoff from Element Financial. The stock has had a hard time getting anything going. However, the valuation of the business looks compelling and is something he is watching. It should improve if you believe in his thesis that the economy is improving in the US. This is a name that should do well in that environment. He is a bit cautious on this, but is following it.

He likes this. It was a spin out from Element Financial, which split into 2 companies. About 80% of the value went to Fleet and 20% to this company. Almost all the analysts were of the view that this should be priced on a Price to Book, so if you say it is worth at least BV, which is approximately $4, it should trade up. They recently sold some rail assets, which went for about 1.2X Book. With that, you could get up to about $6 for this. Also, there are a couple of catalysts coming up in January to move some of their rail assets into a third-party vehicle, which will put a revaluation on those assets.

Recently bought the stock. This is the 1^st day that Element Financial shares are formally split into 2 companies, ECN Capital (ECN-T) and Element Fleet Management (EFN-T). Thinks both are undervalued. He tends to do this in terms of the Price to Book ratio. The BV is more or less about $4, so if you assign a Price to Book ratio of 1 to 1.25, you get a price of $4-$5 for a share price. Both companies are looking to do some acquisitions which could transform things in the next couple of quarters, but both assets are attractive right now.