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Prescience Point Unleashes Tweetstorm On Credit Acceptance

Prescience Point Unleashes Tweetstorm On Credit Acceptance

Credit Acceptance Corp. (NASDAQ: CACC) got caught in a tweetstorm by Prescience Point LLC, which credits itself for its short recommendations and proficiency in unraveling shady plots of muddled companies.

Through a series of tweets, Prescience suggested that the squeeze in Credit Acceptance is the best opportunity to sell a red flag-ridden stock. The short seller said it is short on the company, with a price target of $90, way below the currently traded price of $206.50.

Prescience said it estimates a $1 billion gap between dealer holdback paid and what the company should have paid. Accordingly, it believes the crux revolves around portfolio program.

SEC, Firm Responses

Based on a response letter from the SEC, the firm said the company may not be accounting for purchased loans in compliance with the GAAP. The firm also highlighted the fact that sell side analysts have also begun to question the company's accounting practices, going by the queries raised by Credit Suisse in the company's most recent conference call.

None too pleased with the transition from higher yielding portfolio program to traditional lower yielding purchase program, the firm said the company's business model is deteriorating.

Additionally, Prescience referred to the insider selling in the counter, as about $104 million worth of shares were sold by insiders in 2016.

At time of writing, Credit Acceptance was slipping 1.72 percent to $205.54.


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