Maverick Capital and Santander Consumer
Maverick Capital increased its position in Santander Consumer USA Holdings (SC) by more than $70 million in stock. The company accounts for 4.44% of the fund’s portfolio in 4Q14.
Another consumer finance company in Maverick Capital’s portfolio is Northstar Realty Finance (NRF). Northstar accounts for 0.52% of the iShares U.S. Real Estate ETF (IYR). It accounts for 0.03% of the iShares Russell 1000 Value ETF (IWD).
Santander’s Q4 net income surge
SC reported Q4 net income of $247 million, or $0.69 per diluted common share, up 117% from the year-ago quarter. Net income for full year 2014 was $766.3 million, or $2.15 per diluted common share.
Tom Dundon, Santander’s chief executive officer, stated in the company’s earnings release, “We are pleased to report strong results both for the quarter and for the year, well ahead of our objective set at the beginning of last year with core EPS growth of 18 percent. The annual results included strong origination volumes, growth in the serviced for others portfolio and industry-leading efficiency despite an increase in regulatory and compliance costs. In 2015, we will continue to focus on optimizing the mix of retained assets versus those sold and serviced for others, continuing our presence in prime auto and unsecured consumer markets and efficiently funding our business.”
Stable credit performance
In its 4Q14 update, Santandar gave highlights of the company’s stable credit performance, stating, “Current portfolio performance consistent with retained mix and typical seasonal patterns of deterioration in the second half of the year.” It further added, “Allowance to loans ratio decreased to 11.5% from 12.1% quarter-over-quarter, primarily driven by positive model impacts and a decrease in months’ coverage versus prior quarter.”
SC optimistic about Chrysler agreement
Chrysler Capital is a joint venture between Santander Consumer USA Holdings and Chrysler Group. It began operations in the United States in 2013. As part of this deal, Chrysler Capital offers prime and subprime retail loans and leasing through Chrysler dealers. It also offers construction loans to dealers. The deal allows Chrysler to be more competitive, especially in terms of leasing. Santander’s management is very optimistic about its deal with Chrysler.
Santander faces investigation into subprime lending
Santander and its peer Ally Financial (ALLY) are facing investigation by the Department of Justice (or DOJ) for subprime lending. In a regulatory filing, Ally disclosed that it has received a subpoena from the DOJ asking for information regarding its “subprime automotive finance and related securitization activities.”
About Santander Consumer USA Holdings
Santander Holdings USA Inc, a wholly owned subsidiary of Banco Santander, SA (SAN), owns about 60% of Santander Consumer USA Holdings. Santander Consumer USA Holdings (or SCUSA) is a full-service, technology-driven consumer finance company focused on vehicle finance and unsecured consumer lending products.
SCUSA began originating retail installment contracts in 1997. It has a serviced finance portfolio of more than $41 billion as of December 31, 2014, and has more than two million customers across all credit grades. The company is headquartered in Dallas, Texas. It has 4,400 employees and ~800 vendor-based employees at multiple locations in the United States and the Caribbean.
In the next part of this series, we’ll take a look at Maverick Capital’s position in Crown Castle International Corp. (CCI).