Last summer, however, he sold Carite Corp., a chain of used-car dealerships that he founded in 2011. In January he stepped down as chairman of Credit Acceptance Corp., the company he started in 1972 that pioneered extending auto loans to customers with rock-bottom credit scores or none at all. A month after he left, he sold a big chunk of his Credit Acceptance shares for $128 million.
The company didn’t say why Foss sold his shares and declined to comment. Foss didn’t respond to requests for comment. But his exit coincides with tough times for subprime auto lenders in general and Credit Acceptance in particular. Short sellers — investors who bet that a security will fall in price — have become intrigued by the idea that a bubble is forming in subprime auto lending. Bearish bets on Credit Acceptance have risen to about 48 percent of the shares tradeable by public investors, making it the third-most-shorted stock on the Russell 1000 Index of large and midsize companies.
For more news, click below link :
As Inventor of Subprime Car Loans Exits, Critics Smell a Lemon
Prior to these news, on 27 April, Bloomberg reported Wells Fargo & Co. and JPMorgan Chase & Co. have grown more reluctant to make new subprime loans using money from their own balance sheets. Wells Fargo tightened its underwriting standards and slashed the volume of all loans it made to car buyers in the first quarter by 29% after greater numbers of borrowers fell behind on payments. JPMorgan’s consumer and community banking head Gordon Smith earlier this year said the bank had cut its new lending for subprime auto loans "dramatically".
More news, Wells Fargo, JPMorgan Wary of Auto Loans, Pack Them in Bonds
Weekly chart of Credit Acceptance Corp.
The share price has been trading sideway since Oct 2015.
We shall look more on the price chart in the upcoming post.
Source :
1) www.bloomberg.com
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