logicandinertia wrote:

You accuse the poster of being overly positive Yet you seem to think that the recession has just started and things will only get worse.  If you seriously think this, then you should be nowhere near a small cap alternative lender.  Just short the XLF and wait for things to implode.  

Chw reversing a chunk of Q1 writedowns in the quarter immediately after, despite record breaking unemployment and GDP drop isn't horrible.  The economy will recover from here, especially with the govt firepower thrown at it .  Just a question of how quickly or slowly.  Law of large numbers dictates it.  

The company's collections have stabilized and they have a nice chunk of Prime credits.  They have stated outright that they expect to be profitable for the remainder of the year.   So book value will grow .    If they can find other sources of low cost funding , dividends could restart.   

sometimes, credit should be given for a company handling a once in a generation event reasonably well and I feel chw is doing fine.   Things could have been a whole lot worse.  

The business model has paid out $7.20 in dividends per share over the past decade.  And I presume some positive changes  will be implemented by new management.  

If they remain profitable and book is around $8.75 per share (and will grow), then will it go back to sub 50 percent of book value?   Sometimes, price and value has to be factored into "sky is falling" commentary .  I'm a buyer at 50-60 percent of book value ...I think the massive liquidity thrown at this market and the receding covid conditions will fuel the economy in the fall.  Just my opinion.  

if you are very bearish , buy the derivative shorts, or staples, utilities or even the long bond.  Stay away from illiquid small cap lenders.   

good luck.  

Its cheap for a reason and recession has just started. Value trap. Good luck