The Misfits: World Acceptance Corporation (WRLD)
Even companies that leave investors with a sense of moral unease can have a fascinating story.
There are numerous reasons why I decided to avoid making Misfit Alpha a stock recommendation service and focus instead on profiles of companies. One of those reasons was that I knew some of the companies I profiled may be a little controversial. Despite its benign name, World Acceptance Corp (NASDAQ: WRLD) is one of those somewhat controversial companies worth discussing.
As one of the nation’s largest small sum lender, it falls into a category of companies where investors will turn their noses. Issuing uncollateralized loans to below-prime borrowers (FICO scores below 700) falls into the same category as payday lenders, car title lenders, and pawn shops. Consumer advocacy groups and even the Consumer Finance Protection Board have sometimes accused these businesses of predatory lending practices. World Acceptance Corp has, under previous leadership teams, done some things that many investors wouldn’t want to be associated with.
Despite some business practice malfeasance and significant accounting rule changes, World Acceptance Corp’s returns have doubled the S&P 500 since going public in 1991.
From an operational and financial perspective, there are several quirky things to explore in this alternative finance company. So, let’s dig in.
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