The 2014 All-America Research Team: Consumer Finance, No. 2: Moshe Orenbuch
< The 2014 All-America Research TeamMoshe OrenbuchCredit SuisseFirst-place appearances: 0
Total appearances: 10
Team debut: 2005Claiming the No. 2 position on this list for a fifth year running is Credit Suisse’s Moshe Orenbuch, who “does tremendous deep-dive research on his companies,” in the words of one portfolio manager. Orenbuch maintains that the prospects for U.S. consumer finance companies are “generally good, as a moderately recovering economy should allow for improving growth while credit remains stable at historically good levels.” These conditions, as well as steady interest rates, benefit credit card companies in particular, including his preferred name in that space, Discover Financial Services of Riverwoods, Illinois. Discover is cheaper than competitors American Express Co. and Capital One Financial Corp., explains the analyst, and is growing faster than Capital One while returning more capital to shareholders. Additionally, the provider will perform well even when interest rates begin to rise, he notes, because most of its borrowers typically don’t pay their balances in full and therefore accrue interest on their bills. Orenbuch also touts Springleaf Holdings, an Evansville, Indiana–based direct lender to nonprime customers. The bank’s significant branch presence is posting attractive returns, he says, and management is undertaking deals to enhance shareholder value. A recent example is Springleaf’s August announcement of its sale of a real estate portfolio that will “generate a lot of cash,” he adds. “People are excited about what they might do with that.” Finally, the researcher recommends that investors overweight a trio of education financing companies: Lincoln, Nebraska–based Nelnet; and SLM Corp., or Sallie Mae Bank, and its separately traded loan servicing and asset recovery arm, Navient Corp., both of which are headquartered in Newark, Delaware.