Thanks for your thoughts hilly_sandman. You make some valid...

Thanks for your thoughts hilly_sandman. You make some valid comments and as we all know stock values are always open to the vagaries of assumption, estimate and sentiment otherwise I suspect we'd all be putting our feet up with a free cash machine at our finger tips

I agree with most of your thoughts. The fact that the company is attempting to rectify and add incremental earnings streams, a positive, tick. Being a company that does the right thing again is very important in this space and if this isn't lip service and their vendors agree then definitely a tick. Access to PDLs on a basis not dictated by price alone, but differentiation and service, is important and can provide competitive advantage. Incidentally the differentiation and avoiding overpriced debt is the same story PNC has been telling for quite some time (I will declare I am a holder of PNC) and for at least as long if not longer than CLH. The competitor pool is only about 4 to 5 deep (CCP, CLH, PNC, Bayercorp [private] mainly as far as I'm aware). I would conjecture they all think they weren't buying as much when it was expensive and that the competitors were. Nonetheless if true then this may equate to some margin expansion in coming periods, which would definitely be a positive. The other positive that CLH appears to be making is a shake up and improvement in collection efficiency. It hasn't come through in the numbers yet, but if it does will start to change the value equation. As I've noted before I find their past collection costs as a proportion of revenue too high for my liking for a company that is fairly established in the market with reasonable scale already.

However, I personally don't yet see the evidence to support the statement that others have been overpaying and CLH hasn't been. If you look at the PDL multiples that have emerged over time for CCP and also the newer PNC then they actually appear better than CLH and the multiples are harder to mask than revenue and earnings for these companies as they are based on cash flows. This would suggest that CLH has actually been collecting in cash less per dollar invested than the other two. Whether they collect less, pay too much, focus on the wrong debts first etc. I don't know but that's what the numbers tend to show. However, new trends in these metrics do take some time to work through so I think the next 12-18 months will be very telling in this regard and will confirm or deny the improvements that have been cited. If there is marked improvement then there is upside potential, which could mitigate the risks I see surrounding the balance sheet asset value, which as mentioned I personally feel is higher than I believe the past supports.

While in danger of sending others to sleep, if I get time and your interested, I'll post a couple of examples about how effectively the price paid for the debt on purchase is amortised through the revenue line in the income statement based on CLHs accounting policy (there are some slight differences between the competitors but they all still need to forecast future cash flows).

Thanks for your comments hilly_sandman, if the statements you make work there way through then those holding currently I think will be happy, although to be sustained I feel will need runs on the board though. I personally still don't see enough margin of safety for me and see the stock as fully priced at present.