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  "documentTitle": "Allied Capital (ALD)",
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  "authorName": "David Einhorn",
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  "presentationDate": "2002-06-17 00:00:00",
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  "notes": "This is a page from a research note by Greenlight Capital regarding Allied Capital (ALD).",
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      "text": "There is no disclosure of BLX's actual financial statements. It is the ideal on-balance sheet/off-balance sheet structure.",
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      "text": "In effect, Allied has turned a potential modest generator of earnings, BLX, into a huge generator of reported earnings. BLX’s most recent securitization document suggests that credit quality has deteriorated. Total delinquencies grew from 3.5% on June 30, 1999 to 14.5% on December 31, 2001.",
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      "text": "Greenlight has had discussions with industry insiders... approximately 15% of the portfolio is in the liquidation phase... 7% of the original balance of loans originated in FY1999 has already been written-off. The same statistic for FY2000 was approximately 1.4% with over 10% of the 2000 loan pool in liquidation.",
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      "text": "In addition, Allied reduced its general and administrative expense by \"transferring\" 37 employees to BLX which further increased Allied’s reported profitability.",
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      "text": "There is no disclosure of BLX's actual financial statements. It is the ideal on-balance sheet/off-balance sheet structure. Greenlight believe BLX is analogous to Enron's Raptor.",
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      "text": "Greenlight believes there is little economic substance to the various tranches of securities owned by Allied in BLX because Allied effectively owns nearly 100% of the upside and 100% of the downside.",
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      "text": "In Greenlight’s opinion, however, this type of activity, left pocket to right pocket, explains why intra-company transactions are eliminated under most accounting systems. Moreover, Greenlight does not know of any finance companies like BLX that are able to make consistent profits when forced to borrow money at 25%.",
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      "text": "23 Business Loan Express SBA Loan-Backed Notes Series 2002-1 Preliminary Private Placement Memorandum, April 26, 2002, p. 49.",
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