It is right at support but there is something that is affecting the entire sector - the "big 3"
Cash America (CSH): -10%
EZCORP (EZPW): -12%
First Cash Financial Services (FCFS): -12%
I would assume something is happening in Washington D.C. in terms of payday loan legislation but I don't know. The problem with these stocks is they all have payday operations so you are stuck with that business, along with the pawn shop business you actually want to own. If any reader happens to see something cross a wire or an analyst report feel free to email me or add a comment.
I added a small touch back here ($14.90s) from what I sold yesterday (I targeted $15 as a nice place to buy back my position - just didn't expect it to happen within half a day) since the drop has been so severe, but will hold off further until I see what the "news" is ... someone knows something. And that someone is not me.
EDIT 12:10 PM - my crack staff of analysts (err, readers) already responded - the apparent reason can be found here in the comments section.
EDIT 1:50 PM - more info from AP (Mark's note: time to see how influential payday lenders lobbyists are)
- Shares of payday lending companies EZCorp Inc., Cash America International Inc. and First Cash Financial Services Inc. slid Wednesday amid growing expectations that President-elect Barack Obama will tighten regulations on the industry.
- In an investor note Wednesday, Sterne Agee analyst Henry Coffey Jr. highlighted a written statement from Obama about the incoming administration's economic plans, including a pledge to "cap outlandish interest rates on payday loans and improve disclosure."
- The statement also says Obama plans "to extend a 36 percent interest cap to all Americans" and "require lenders to provide clear and simplified information about loan fees, payments and penalties."
Long EZCORP in fund; no personal position
4 comments:
TM.. I caught EZPW's drop on the CNBC ticker and followed it to what I believe to be a market driven short term low... (We'll see tomorrow as I bough at the last 2 minutes before the close... ). Earlier today I did go on Yahoo and found no news, or even valid opinions on the chat board. The issue of potential legislation did arise, but I feel that isn't a real issue (yet?) as Obama and Congress should be a little busy with other more pressing issues.I suspect it's just a "three day market up, one day drop, so let's book our profit thing"..
I do agree with your linked comment on the absurdity of 30% interest rates though. Seems to me it's bad enough that the banks are taking cash out of the taxpayer's wallet, yet turning around and sticking it to them again. Likewise, I never could see the point of raising a credit card rate if someone is unable to make a payment. It would only serve to guarantee a default in my book...
jegan
Well.. On a positive note, I'm up $20 after hours.. And have a pretty tight stop.. Not to say I won't overshoot it anyway. So here's the deal:
----News clip ----------------------
Sector Snap: Payday lenders fall on Obama proposal
Payday lenders shares drop on Obama proposals to tighten regulations
* Wednesday January 7, 2009,
Sterne Agee analyst Henry Coffey Jr. highlighted a written statement from Obama about the incoming administration's economic plans, including a pledge to "cap outlandish interest rates on payday loans and improve disclosure."
The statement also says Obama plans "to extend a 36 percent interest cap to all Americans" and "require lenders to provide clear and simplified information about loan fees, payments and penalties."
Coffey wrote that the incoming administration's intent to regulate payday lenders "is clearly unambiguous."
Payday loans are short-term, unsecured loans offered to cash-strapped consumers that typically mature in two weeks or on the borrower's next payday. The loans are often priced at a fixed-dollar fee, but the underlying annual interest rate is usually near 400 percent or more. Obama's proposed 36 percent cap would effectively ban current industry practices.
Coffee cut his ratings on shares of EZCorp. and Cash America to "Neutral" from "Buy."
------------ And this from Banknet360--------
Does EZCorp Have a Texas Problem?
Posted by JJ Hornblass on Jun 17 2008 08:15:25 PDT
The company has 182 stores in Texas, more than in any other state.
The issue is a lending program it maintains with Integrity Florida Funding LP and Integrity Texas Funding LP. Integrity Florida Funding in Greenville, S.C., is what got EZCorp in trouble with Florida regulators. Essentially, Integrity made small loans, short-term loans of $100 to $1,000 through EZCorp’s pawn shops and EZCorp collected the loan fees. In one case, the interest and fees, which the State of Florida determined were loan payments, amounted to an APR of 626.34%.
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..... My, my. my! And I though ]t bankers were thieves.. jegan
so how is all this really going to affect the small mom and pop pawn shops that charge 22% intrests?
i agree payday loans should be cut but not the pawnshops cause they wouldnt be able to survive and alot of people would be out of work(employees,police officers that pickup pawn slips.occ people that regulate pawnshops not to mention utility fees that would be lost when they close down.
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