Value Investors: 1 Asset Manager Trading at a Bargain Price

ECN Capital Corp. (TSX:ECN) appears undervalued and has expanded and diversified relationships with key partners to expand the company’s menu of products.

| More on:
edit Person using calculator next to charts and graphs

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

ECN Capital (TSX:ECN) is an asset manager that owns a portfolio of business services providers operating under a fee-based, asset-light model. Through this model, ECN Capital originates, manages, and advises on prime credit portfolios to a growing network of banks, credit unions, and life insurance companies. ECN Capital originates, manages, and advises on prime consumer credit portfolios, specifically unsecured loan portfolios, secured loan portfolios, and credit card portfolios.

In addition, through the company’s consumer credit card portfolios business segment, ECN Capital also provides certain advisory services, including partnership and marketing services. ECN Capital’s business is conducted through three scalable platform segments that were established with the company’s investments in operating companies.

Growth strategy

During over 40 years of cumulative experience, ECN Capital’s management has pursued a strategy of successfully deploying capital within asset classes that comprise the specialty finance sector. By building robust specialty finance business platforms that have prospered and acting opportunistically to maximize returns, ECN Capital has gained market share and monetized existing business endeavors.

Scaling robust businesses organically and through acquisitions has helped enable the company to competitively position itself against banks and institutional investors. Further, ECN Capital has been effective in designing optimal capital structures that have provided broad and flexible access to debt and equity funding sources.

Service finance

Founded in 2004, service finance is a leading technology-driven portfolio solutions platform focused on originating and servicing short duration consumer financing instruments for a variety of credit unions, pension funds, and insurance companies. The financing is in the form of primarily prime and super-prime retail installment contracts used to finance home improvement projects in the United States, which has historically resulted in low losses for the company’s partners.

Originations are sourced through an established national dealer network through exclusive and preferred programs with high-quality manufacturers in the home improvement industry. Originations are sold to third-party financial institutions without recourse with respect to credit losses. Service finance retains the exclusive right to service all retail installment contracts that it originates, and it earns a non-recourse origination fees with no risk of adjustments for loan performance, interest rates changes, or prepayment.

KG co-branded credit cards portfolio

Founded in 1978, KG has grown to become the premier manager, adviser, and structuring partner to credit card issuers, banks, credit unions and payment networks. KG currently has approximately $27 billion in managed credit card portfolios and related assets. KG also enables institutional investors to participate in credit card and consumer loan portfolios through the credit card investment management platform.

Most recently, KG’s revenue mix has undergone a shift towards higher margin, longer term, recurring revenue derived from the segment’s partnership services and market services segments. The transaction services segment is now more focused on driving incremental partnership services agreements.

In summary, ECN Capital appears undervalued and has expanded and diversified relationships with key partners to expand the company’s menu of products. The company continued to develop dealer relationships in attractive end market verticals that bring vetted dealer networks to drive volume at low cost.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

More on Investing

Workers use a microscope to do medical research in a modern laboratory.

Is Now the Time to Buy Health Care Stocks?

Health care stocks are on the up, but does that mean you should go ahead and buy anything? In short:…

Read more »

Volatile market, stock volatility

2 Volatile Stocks to Hold for a Decade

The market is full of opportunities for investors. But does that opportunity include some volatile stocks to hold?

Read more »

Arrowings ascending on a chalkboard

1 Under-the-Radar U.S. Stock to Buy in August

Canadians on the hunt for an undervalued and under-the-radar U.S. stock should consider Match Group Inc.

Read more »

Woman has an idea
Dividend Stocks

2 Low-Risk Growth Stocks Paying Great Dividends

These top TSX dividend stocks give investors exposure to interesting growth opportunities.

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

These two simple TSX stocks have everything a long-term investor looking to dollar cost average into a position wants right…

Read more »

A golden egg in a nest
Dividend Stocks

Millennials: No Excuses! Start Saving for Retirement Right Now.

Millennials, we need to stop complaining and start bragging. We're great savers, so it's time to start investing in TSX…

Read more »

Value for money
Dividend Stocks

3 UNDERVALUED TSX Stocks to Buy in August

Here are some attractively valued TSX stocks for the long term.

Read more »

A young man throwing and catching his daughter above his head
Dividend Stocks

Parents: Double Your CCB Payments This Month!

Parents can use those CCB payments to their benefit and double them this year month after month -- no waiting,…

Read more »