downright awful Q3 resultsChesswood barely eeked out a profit this quarter despite cutting expenses by 25%. Also, worth noting that the Stage 3 Allowance declined about $10MM q/q, This is despite Loans classified as Stage 3 and 2 increasing (both in absolute terms and as a percentage of total loans - total loans contracted). Not only that, the 31+ Day Delinquency that they disclose is increasing very rapidly. US segment has not seen this high a deliquency since 2010 (i think), when they were a super sub prime lender.
I would be shocked if they reported a profit in Q4. I anticipate book value to decline next year. Interest rates could help next year, but the securitizations are still rolling over into higher cost funding as is the Canadian facility.
Let's face it - Chesswood went HAM on growth throughout 2021 and 2022. Most finance companies are acknowledging that those vintages (esp. 2021) are performing poorly. Receivables have an average term of 40(ish) months. The next two years will be very challenging for this company and we haven't even seen a broader recession. There is a reason that they entered this "JV" with WAFRA despite only owning 5% of the JV and having to offer WAFRA warrants.
I sold my shares between $8 & $9. I think this stock COULD get interesting again at some point, but not now.