Tag: OMF

OneMain Holdings (OMF): a misunderstood subprime lender, but waiting for an entry point

Idea introduction Consider the following question: what would you pay for a company that produces ~30% returns on tangible equity, possesses a durable competitive moat, and is growing ~5-10% (leading to ample reinvestment opportunities)? With only those facts, you’d probably say ~20-25x earnings. If I clarified that this company is cyclical and moderately levered but comfortably profitable at the bottom of the cycle, you would become more conservative and might suggest something closer to ~15x mid-cycle earnings. If I further clarified this was a subprime lender, most would probably laugh me out of the room. The brave might suggest ~8x […]