OK, you can thank me later, but I just spent the last hour listening to Asset Acceptance’s 2nd Quarter Earnings conference call via a webcast (yeah, it’s public). It’s an hour long and if you want to listen to it, here is the link.

Webcast - Asset Acceptance Capital Corp. Second Quarter 2008 Earnings Conference Call, Tuesday, August 5, 2008 10:00 AM ET.

Some Interesting Highlights:

• 2nd Quarter was “challenging”
• The availablity of Charge off paper (defaulted credit card debt) continues to grow as economic conditions continue to get worse
• Other Junk Debt Buyers (JDBs) are having cash flow troubles; decreased competition makes this paper cheap.
• Because of the increased supply of charged off portfolios, Asset Acceptance is snatching them up on the cheap; Asset Acceptance averages paying 3.38 percent of face value of the debt (that is, 3.38 cents on the dollar). And they’re buying them up aggressively.
• Asset bought 65.3 million dollars of papers in 52 portfolios in with a face values of 1.9 billion dollars. 31 of the portfolios were purchased for 6.3% on the dollar.
• Cash collections are down, phone collections are down, but legal collections and portfolio purchasing are way, way up. Doesn’t sound like a successful business model to me.
• The new CEO is planning on ramping up legal collections even more.
• Legal collections keep Asset Acceptance profitable
• Not really surprising, but Asset Acceptance has a huge problem with turnover and retention. Even so, they averaged 939 in-house collectors with plans to expand by 500 more within the next 1-2 years.
• Implementing new programs to retain employees like increasing bonus programs
• Each representative collected on average $45,538 in Q2 (that’s north of 180k collected per rep, per year)
• They’re implementing new, more efficient, evil-sounding skip tracing and data mining processes over the next couple of months to locate debtors.
• Stimulus checks had little ability on their ability to collect

So what to take from this? They’re buying more and more accounts, getting better and better at finding you, and plan on taking more people to court over the debts they purchase.

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