Member Info for alwayswrong

High BigB...good to see you again...yes the fundamentals appear sound...suggest though that you just Google Amigo complaints...you will get several threads showing a growing awareness of debt problems identified by management charities, (see debt camel) and claims companies all drawing attention to the significant loans Amigo made with little or no regard to ability to pay...the 1st quarter results said that the ombudsman was upholding more complaints...actually the figure is 83% of them and the claims are growing at an alarming rate.. I hope Amigo isn't seen as the next target after Wonga and Quick Quid to pursue...
Interested to hear your thoughts..
Wow..the share price finished higher today for the first time in two weeks...

Beev..having read up on Amigo and Debt Camel and the Financial Ombudsman service you are right to be worried about the regulators...customer complaints against Amigo have increased quite considerably ...currently around 240 for the Ist half of 2019 and 83% of complaints resolved were in the customers favour with refunds of interest and interest of 8% on the refunds being required...their £2 million provision might well have to be significantly increased going forward...This is a worrying trend.

Sorry Yuri I forgot to add that on 11th June the share price was £2.87 and the Richmond holding was valued at £800 million...that was probably why they wanted to sell at that point....now the share price is £0.585 and their Amigo holding is only worth £198 million....would you be selling at this point or trying to buy back the remaining shares and take it private again..
When Amigo was floated at 2.975 the founder became a billionaire on paper and entered the richest 100 people of Britain list...he wasn't on that list for long , based on the share price performance since then...

Hi Yuri....Google major shareholders of Amigo loans and you will see the FT factsheet detailing the major shareholders...they are Woodford Investment management with a holding of 4.99% and 9 other I.I's with further holdings of around 6% in total...
For some reason The Richmond Group don't appear on the list..don't know the reason why not, unless for some legal reason they are not classed as a major shareholder or Investment institution ..

Yes agreed, let's wait and see...

Out of 890,000 share sales today , almost 500,000 were after 4.30 at a surpressed share price .this is proving a regular trend...
Yes the half year results are due a week on Thursday...let's wait and see if there is a helpful and complicit negative spin put on them..

Hi Mike..

I agree with you that the fundamentals as at Quarter 1 will support the current dividend...Can't help thinking that they will use the half year accounts to unleash a raft of large provisions so that they can attempt to bury any bad news alongside the events in the wider sector and choose this time to review the dividend....Yes Woodford yet to sell here...don't understand why he didn't at the last fire sale...clinging on possibly ?
My mind is still locked into what BigB said on here about a week ago about keeping the selling price artificially low and gradually reducing it, till there are no optimists left, then executing a deal to take it back private again...at a much reduced price...
Why wouldn't they do that given their dominant stake, or are there any safeguards in place, on a real time monitoring basis, to prevent it ?
The SP ended lower again today ..must be about the tenth in a row...not substantially , more of a slow but steady trickle ..This share has been selling off steadily since the recent high of 80p ...with no bounces..
Aren't you worried by that Mike ?

Mike H...Woodford still holds 4.99% of Amigo... There was 20% of Amigo held by institutional investors until last week before Invesco all but pulled out , now only 10% of Amigos shares are held by Institutional investors..it is worth noting , however, that none of the other 9 institutional investors liquidated their holdings...that does though pose the question..where did the other 60 million shares that were sold on the day go to and for that matter, who bought Invescos shares ?
For some reason the shares held by the Richmond Group don't classify as institutional holdings and don't appear in the lists of major shareholders from what I can see, unless you can enlighten me .
Yes the sector is out of favour but Amigos share price is well undervalued on any fundamental basis , based on information currently in the public domain so I cannot hazard a guess as to what is really happening underneath it all...what do you think is happening Mike H or anyone else on here ?

I assumed it was a rogue post so I didn't bother to reply.

The worry I have with Amigos trades is whether there is an organised and orchestrated move downwards in price to make existing shareholders pack up and sell.
My reason for saying this is that Anyone who has AT ANY TIME bought Shares in Amigo and held on to them has lost money ..the minute the share price moved upwards a sell happens to bring it back down again to its lowest (and declining) price levels.....I hope I am wrong...

BigB...the share price is still trending downwards...at a lower rate than before but it is still happening...your "follow the trend" principle has applied in this instance, can you see any reversal occurring ?

Points taken Yuri and you might well be right .
Obviously 0% would send them into administration , and at the other end of the scale , charging 1000% would send them into administration too as evidenced by Wonga and Quick Quid , so the optimum interest rate lies somewhere in between..For me a one size fits all interest rate for all borrowers is a bit of a blunt instrument and so could be adjusted to reflect the relative status of the guarantor , as in whether they are a homeowner, tenant etc ..like some of their competitors do...I agree though one rate is simple , easy to understand and profitable..it's whether a lower rate would be more profitable for the reasons explained..it's obviously a debateable point and I don't feel too strongly about it.. You can't take away the fact that Amigo already holds the lions share of the market so they can't be doing that much wrong.
Take a look though at the "Laffer curve" as applied to the optimum rates of income tax that the U.S. computed back in 1974 under the Ford Administration, which would earn the government the most tax revenue.. It is an interesting theory that worked for them at the time ..I don't know if it is still being used..

Also you are right about the guarantors , because if they were a solid guarantor then there would be no defaults , rather than the 30% current run rate..
I still think there is an optimum APR which would be lower than 49% but still high enough to maximise profits, by significantly reducing impairments and therefore also by definition , lowering collection and admin cost , due to the repayments being moderately lower...it would also escape the clutches of the regulator..
I like to call it , 'extracting the maximum amount of feather from the least amount of clucking' .

Thanks MikeH...you are so right about us all thinking the minority relates to the majority...people are ten times more likely to report a complaint than they are to make a complinent which skews opinion.....
If you look at customer reviews, most are positive..likewise the reviews from employees are mostly positive especially regarding their amazing restaurant where they can get cooked meals for £1.. however there are bad reviews too and I can't help thinking that bad reviews are valid and justified, whereas good reviews are somehow contrived..
Also, we can relate it to ourselves...if we are not feeling well and have a few symptoms , we can Google them and convince ourselves that they are life threatening..
The one huge advantage that Amigo has over non finance companies such as for example building contractors, is that it only takes one contract to incur a huge loss with a building contractor and the shareholders can be wiped out completely.. but with companies like Amigo , they have hundreds of thousands of different customers and whereas some will default , most of them won't and at 49% APR they are well protected against those that don't...of course though as always, nothing that is good and lucrative lasts forever.. things change and Amigo will be no different...the aim is to sneak in and out again before that happens...ATB...

I read a Guardian article which was critical of payday loans really , but guarantor loans too, and referred to a 100 % cap limit max or 0.8% interest a day, being brought in on payday loans some time last year.
Stella Creasey, a labour MP is equally critical of Amigo and others and wants it to apply to guarantor loans also due to lots of letters of complaints she receives from guarantors..
I don't know how to link articles but if you Google it you will find the article last year...these aims take time to enact but may well come from the regulatory review.
I have also read with regard to IPF and their european business, that some East European countries are intending to limit interest amounts to 75% of the principal although I am not sure if this relates only to payday loans but read their regulatory notices and they cover it..
I think by any measure that 49% is high where a guarantor is involved and it's only a matter of time in my view before regulation is enacted...I am just hoping to move stealthily in and out of Amigo with a 50% profit on my original investment before that happens, but I am down 20% ATM and today was yet another day of ending with a lower share price..despite earlier gains...I am bemused...

I am bound to ask...would you borrow money from a lender called Amigo ??

Beev....sorry, what was it I wrote.?

Mike H...You make lots of good points ..my concern relates to Amigo no longer being a growth share...flat revenue and declining margins...the Irish business isnt significant enough to change this..maintaining the dividend would mean paying out more than 50% of earnings , which I am not sure is sustainable even with a low capital business, due to the need to constantly invest to attract new borrowers...the bulk of the interest (and therefore the revenue) is earned in the early years of repayment of the loan..
The regulatory pressures relate to the desired regulatory doctrine that the total interest charged out on a loan shouldn't exceed the principal amount borrowed which it does with amigo within 4 years...
Right now though I would settle for a day where the share price rises, which it hasn't since last week..

Armada...On LSE website I calculated that of the last 60 trades, 70% of them were shown as buys, but in the respective statistic showing the values of buys and sells then more value was sold than bought , but as has been proved on here those statistics are unreliable..

I agree Bee, I think the dividend will revert back to what it was, i.e. 35% of adjusted EPS..which I am forecasting to be around 17p for the year giving a revised dividend of around 6 pence...which is still reasonable and would attract an SP of around £1.00 ... I think this is a fair fundamental value given the diminished margins , resulting from substantially increased impairment levels, admin and collection costs and forthcoming regulatory pressures to reduce APR's on loans backed by guarantors..
I hasten to add that this is MY fundamental value and is based on my estimates.. of course the market price will disagree with that , either way, as it is at the moment. .
This opinion is expressed in good faith and in absence of the interim results due for publication on the 28th..
As always though DYOR...

Bee...Well if they did buy, they would have got a 20% discount on the distressed sale plus build up their stake for a subsequent engulfment of the reduced remainder...
How tight is the secrecy surrounding the half year results ?..do you think the II's involved in these transactions did so in full knowledge of what will be reported two weeks tomorrow..?
My view is that leaks happen, either intentional or otherwise, given the wide swings that happen, usually in a favourable direction , in the run up to the results and I wish they didn't..

MikeH.. I agree, a sale of 25% of the stock doesn't make sense unless there is some form of double counting somewhere...maybe where Richmond acts as an intermediary in some way and buys only to sell on again or similar elsewhere...can't see buys and sells both being recorded as separate transactions otherwise buys would equal sells which they don't .. more importantly though is what happens from here .
I am hoping other I.I's have entered the fray to demonstrate their faith in the future..