Asta Turns Red Ink into Black
During hard economic times, lots of people fall behind in their debt payments or must renege on their financial obligations. That's where little-known Asta Funding (ASFI ) comes in. Asta buys those receivables, or unpaid debts, from banks, finance companies, and other service providers. Asta pays a penny to 36 cents on the dollar, depending on its evaluation of the chances of collecting the distressed debts. Its net income rose from $8.5 million, or $2.16 a share, in fiscal 2001, to $10.3 million, or $2.38, in the year ended Sept. 30, 2002.
Herbert Hardt, a partner at investment firm Monness, Crespi, Hardt, rates Asta a strong buy and expects it to earn $2.65 in 2003. He sees the stock, now at 14, at 30 in two years based on a multiple of 12 times his 2003 profit estimate. A big rival, Portfolio Recovery Associates, trades at 20 times estimated 2003 earnings, he notes. In 2002, Asta bought $1.4 billion worth of receivables for $31 million, and Hardt expects it to spend about the same this year. Current receivables total $3.8 billion.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial