If you remembered my October 17 entry, I mentioned the price in gold and how I expected it to rise. Quiet whispers using the “I” word (“inflation”…shhhh!) will also mention that precious metal that tends to fare better when the dollar value goes down.
With that in mind, one might expect to hear stock tips on gold mining companies, or gold and other precious metal ETFs. One might want to check out sites that discuss gold investing, such as www.kitco.com or www.financialsense.com. However, with a bit of shock and awe (and not a good “awe” I might add), I learned that in this peculiar economy where credit card defaults are at an all-time high, the stocks investors are taking a second look at are those of (gulp) debt collection companies.
For real.
Slate.com reported this week – citing last weekend’s Barron’s (which is available on line by subscription only) that some debt-buyers are reeling in upwards of $3.00 for every $1.00 they spend buying debt. Two companies in particular, Portfolio Recovery Associates and Asta Funding both out performed the S&P 500 in the past twelve months.
For real.
I wish I had this visual of several office pools, lined with cubicles, the smell of fresh (albeit bad) coffee brewing in the air, with well trained collectors calling people during reasonable hours and in a friendly and respectful tone, entering into payment plans with people struggling with debt. Unfortunately, I know better. So when I see these facts, and when I see that these companies are managing to reap more than a 200% return on their investment, and I know that even most retail stores have only a 100% mark-up, I am forced to stand quietly and ponder.
How do they do it?
I cannot speak for the two companies mentioned in the Slate article, but I know how some of them do it. They do it any way they can, even if it means breaking the rules, or breaking the law all together.
I have just posted a substantive article on the firm’s website on the need to amend the rules of civil procedure in Massachusetts (check out your own local rules of civil procedure, you might have the same rules that need fixin’ that we do). I believe there is a loophole that debt collectors are exploiting to get the biggest bang for their buck. And I also wonder if the rules were amended to close this loophole, if it would still be worth it to own a few shares of these companies? Or, might such loopholes be just the fuel that gives them the edge over the S&P?
Huh, I wonder.
Related posts:
- Maryland Debt Collectors Indicted
- NY AG Seeks to Vacate 100,000 Judgments
- Dirt-bag Debt Collectors.
- Battling Debt Collectors
- A Call for Reform (Another One)
Tags: Debt Collectors, Inflation