Powertool and Portfolio plus agree with both your observations....

Powertool and Portfolio plus agree with both your observations. Did you both see the following in SMH today? It would certainly explain the share price volume and strength. Great to finally start seeing some publicity about this undiscovered gem.

Big banks hold key to the fortunes of smaller players

Matthew Kidman

WE SHOULD always be looking for a catalyst that works to rerate a stock's value. A change in the attitude of the major banks to lend more freely could act as a catalyst for a handful of listed companies. Since 2008, wholesale borrowers have simply tried to stay alive by keeping funding lines in place. Now the major banks, flush with capital, are keen to lend again.

FSA Group (FSA)

FSA is a niche wholesale lender operating primarily in factoring and residential mortgages. It also provides services such as debt agreements and personal insolvency. The company sources its funds from Westpac ($238 million) and Bendigo Bank ($50 million) and on-lends to companies and individuals. FSA has secured the bulk of this non-recourse funding through to October 2015.

FSA's share price has almost doubled in the past year, supported by a major buyback program. The company earned $8.5 million after tax in 2012 and has forecast 12 to 15 per cent growth in 2013. With a market capitalisation of $65 million it is trading on a forecast price to earnings multiple of just over seven times. FSA also wants to keep paying dividends and a yield in excess of 5 per cent in the coming 12 months is quite possible.

The blue sky for the stock is the desire of the major banks to lend more money to the group. If this eventuated, FSA could increase the size of its loan book by 25 per cent without having to add significant costs. The stock could easily jump towards $1 a share.