NOVS has 1. Strong Leadership Team. 2. Support from world class investors Babson Capital, Mass Mutual, Jefferies, Fortress, RAS, FBR. 3. Solving two very big proven problems which are mandated and supported by REGULATORY changes. MUST listen to recent interview with Steve Haslam CEO of Streetlinks.com at http://link.backlight.tv/growindian/videos/streetlinks-expansion-1020.html
IMHO this interview documents SL plans on adding 150 to the current 400 employees in Indianapolis = 550 employees in Indianapolis and are in addition to the 250 employees in Tampa, FLA for a total of 800 employees (so adjust my calc in previous post by 150 x 300k/head or 37.5M gross revenue + 162M = $200M just a bit ahead of the 750 they expected at the start, (NOVS acquired Streetlinks years ago the co was doing almost Nothing in Revenue and only had a handful of employees), One other observation, LISTEN to the interview and ask yourself - His Steve Haslam perfect CEO at the right place at the right time or what? Imagine you can buy this company NOVS that owns Cash Loan 1. 88% of Streetliinks 2. 78% of Adventtax.com 3. Rights to continued cash flow that will continue from the portfolio thanks to FEDs announcement to keep FFR rates at 0% for the next two years. The multi billion portfolio WAC wt aver coupon is about 700 bpts and the cost is 25 bpts off 2 month libor for a spread of est 675 bpts now along with deep PMI that can cover losses, REPLENSISH over collateralization pools WHICH is an ASSET of NOVS again a hidden asset since the GAAP assumptions do not recognize that OC pools are owned by NOVS shareholders. 4. DTA of about $324M mostly of NOL BUT will continue increasing as TTD temporary timing differences are produced as the portfolio unwinds, aka pays down. 5. Other investments they add to the above. this is just an est. Let say the cash flow from portfolio is offsetting most of NOVS corp SGA so let us look at AFS. AFS three earnings streams are 1. Settlement Products the AFS alternative to RAL (refund anticipated loans that lenders like HSBC, JP Morgan, and others have been banned from thanks to lenders like FDIC and IRS eliminated tools critical to the RAL business. THIS up coming tax season will be the first with these two conditions). Market size per IRS is 2010 61M EROs filed e returns. Can AFS with their partners absorb 5% of these = 3M SP x 18.51 per 10Q unit analysis = 55.5 M gross revenue. Another way to look at it AFS ERO base (per 10Q AFS produced 90 SP for each ERO) grew yr over yr from 350 to 3800 if they grow at half that rate 19,000 ERO sign up for 2012 tax season x 90 1,710,000 SP x 18.51= 32M so we are looking at between 32M and 56M 2. Earnings stream will come from the bluehand cards see www.mygetitcard.com for this discussion let us assume 0 since Lance Anderson CEO and John Thompson, President are going after the low hanging fruit aka SP. 3. Small Dollar Banking Loans again note my last comment, but suffice it to say 2. and 3. absolutely have earnings potential for the future. AFS gross margins and earnings potential I believe is far higher then SL I think probably closer to 40% but let assume 30% x low side 33m = 12.6M + SL 25M above = 37.7M x DTA tax free adjustment 1.35 = 51M / 90 M common shares EPS of .57 cents x 20 pe = $11 PPS (I is hard to find comps since AMC business is new thanks to mandates by Frank Dodd ACT and HVCC stds adopted by GSE. What PE will Mr. Market provide for NOVS? Here are a few factors IMHO will influence the outcome; Frank Dodd ACT mandates the solution thus reoccuring revenue, AFS earnings come from a proven very large market (how much money is spent on RAL in the past, how bad to LMI or Non Banked 60M want to avoid the 400% APR solution from PAYDAY LENDERS? There are 22,000 combined locations across the USA of PAYDAY lenders, one public traded and located in KC GDOT NTSP PE are 33 x EPS).