Credit Acceptance Corporation
Thesis
Credit Acceptance is a lender of last resort for consumers with poor credit looking to buy cars. The company has a unique model that aligns its interests with car dealers, allowing it to effectively manage risk and maintain high returns on capital. Despite being lumped in with other subprime lenders, CACC's disciplined approach and strong management team make it a compelling investment opportunity.
Did it work?
The long thesis on Credit Acceptance produced a +5848.9% return, an extraordinary ~59x gain that decisively validates the pitch. The core thesis dynamics — a disciplined lender-of-last-resort model with dealer alignment, high returns on capital, and strong management — would have been borne out by compounding of this magnitude. Even without knowing the exact time elapsed, a return this large confirms the thesis played out regardless of horizon.