Intrum and lemmings

All,

Please find our updated analysis on Intrum here.

- The market has once again shown its love affair with "Cash EBITDA" - two wonderfully positive words that mean precisely nothing when put together. Cash EBITDA rose on the back of low investments in new portfolios and so leverage on that metric fell. But this is should be no sign of improvement to creditors.

- The company has also announced the completion of its 80/20 servicing JV with Piraeus Bank. This is the way forward for these players as it removes revenue streams from the savage competition among debt purchasers for portfolios.

- Levered FCF was as negative as ever.

Thought:

- With noobs as focused on a metric like Cash EBITDA, little can go wrong for Intrum idiosyncratically. Its biggest risk comes from the failure of other players with less complacent funding. That might shine a light on the industry at large. Until then, Intrum can manipulate their main performance figure any way they like. What could possibly go wrong?

We are still not shorting this name and likely won’t be for a while.

Wolfgang