I just finished listening to the 1st quarter earnings conference call for Portfolio Recovery Associates, a major debt buyer and collector that trades publicly on the NASDAQ Stock Exchange.
Chairman, president and chief executive officer Steven Fredrickson made the following comment:”Portfolio Recovery Associates kicked off 2011 with record financial results, driven by significantly higher first-quarter cash collections on our portfolios of defaulted consumer debt.”
Highlights from the call:
- Net income for the first quarter of 2011 was 23.1 million, a 56% increase from $14.8 million in the same period a year earlier
- Cash collections increased 40% to a record $166.7 million in the 1st quarter of 2011 from $119.2 million in the year-ago period
- 1st quarter revenue was a record $111.8 million, up 34% compared with the same period a year ago
- The company purchased $1.49 billion of face-value debt during the first quarter of 2011 for $107.9 million
Also noteworthy is that the majority of their purchases in the 1st quarter of 2011 focused on fresh charged-off debt as opposed to more aged debt the company has focused on in the past. When asked about this, the ceo commented simply, “that’s where the value is.”
We could not agree more. Fresh charged-off credit debt offers the optimal combination of risk and reward and is our primary focus here at Ropay Asset Investors.