Big Investor Bets on Car-Mart's Success

by Marty Cook  on Monday, Jan. 6, 2014 12:00 am  

William H. "Hank" Henderson, president and CEO of America's Car-Mart Inc. of Bentonville.

Hecht said Car-Mart is in a tough market made tougher by the increased competition. Hecht thinks times should continue to be tough for Car-Mart, which is why Stephens downgraded the stock.

“In my opinion, they’re not going to be able to grow as much,” Hecht said. “Those [other] lenders come in every few years, and they get blown out. They lose money and then they leave. We’re in that part of the cycle.”

Williams said Car-Mart’s long-term focus pays off in this regard. Making a quick profit is enticing, but making risky loans will eventually lose money and hurt a company’s bottom line.

“We’re braced for a continuing tough market from the financing side,” Williams said. “Others are just looking for some yield. It’s a bad deal for everybody for the customer to default.”

This is where Car-Mart’s major stockholders are an advantage, Hecht said. The backers won’t panic, allowing Car-Mart to stay the course and ride out the market turbulence.

“I would never advocate shorting Car-Mart,” Hecht said. “Their stockholders are not going to roll over and sell out. That really helps establish a good base. You’re not going to have people puke it out at the wrong time.”

Williams said Car-Mart is in a tough business, selling cars to people whose finances are not always stable or robust. That makes Car-Mart’s stability critical. “We’ve done a pretty good job in a very tough environment,” Williams said. “There’s a lot of risk in it. We take a lot of risks on folks.”



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