Atlanticus Holdings: 9% Baby Bond Is Attractive For Income Investors

2025-03-27 17:54:35 ET

Summary

• Atlanticus Holdings showed significant growth in 2024, with operating revenue surpassing $1.3 billion and net income rising to $87 million.
• The company’s balance sheet strengthened, with loans growing to $2.63 billion and cash reserves nearing $500 million, enhancing shareholder equity.
• Despite economic risks, Atlanticus maintains strong liquidity with $800 million available, ensuring stability and ability to cover debt obligations.
• Baby bonds remain a solid investment, yielding over 9% to maturity, as Atlanticus is well-insulated from insolvency and can honor its debt payments.

Introduction

Atlanticus Holdings ( ATLC ) is a consumer credit company that specializes in a niche base of customers who would otherwise have difficulty obtaining credit. Along with common shares, the company offers a preferred share ( ATLCP ) and two baby bonds ( ATLCL ) ( ATLCZ ). Back in January, I discussed the higher yielding ATLCZ and advocated for a long position. While baby bond prices have risen slightly above par, ATLCZ is still yielding over 9% to maturity and remains a good choice for fixed income investors....

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