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No. of Recommendations: 1

I don't have any real information other than what's publicly available, but there is some useful public information.

They list a downturn in the US Economy as a major risk to their business, because if personal bankruptcy rates go up, that usually is not a good thing for their collection abilty as their collection dollars are unsecured and it's usually the secured dept that is collected first. This may also be a factor in the current stock price.

A couple of other points that may be worth noting:

1) There hasn't been any real Insider buying reported in July and August, despite the big drop in the stock price. They have however issued a bunch of stock options to the management team. So theoretically they should be well incentivised to drive results, especially the new COO who recieved around 118K options in August.

2) The PE firm (Quad-C) that brought AACC public sold a chunk of stock in early July at $18 and change. They probably know a good deal about this business and chose a nice time to realize a return. They still own a lot of stock and have seats on the board, so if I'm right and the business model is in trouble they will be looking for ways to fix it.

It should be interesting to see how they perform in the next two quarters and specifically if they're able to make marked improvements in their operational efficiency that will hold for the long term. This is what I'm trying to determine, as I believe that's the decision point for a long term investment. There's certainly alignment with the management team, through stock options, and their investment partners to make this happen. I have a hard time saying that the company is undervalued until I feel confident that their business will be able to grow and generate returns over the next ten years.

Again, I'm interested in any thoughts on my comments here.

Lastly, there is some scuttlebutt about AACC's business practices on the Google Finance message board, but I tend to heavily discount that information.

Good Luck.
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