It’s interesting the way a company can completely fly under the radar until a special purpose acquisition company (SPAC) is mentioned. A case in point would be LM Funding America (NASDAQ:LMFA), as Wall Street didn’t seem to care much about LMFA stock until a SPAC spin-off was announced.
In actuality, I’ll admit that the SPAC angle does make LM Funding America more interesting as an investment.
On the other hand, even without the SPAC, LM Funding America shares could be a good investment and portfolio diversifier.
After conducting our due diligence, we just might discover a financial sector company with surprisingly robust shareholder value. So, let’s get started with a quick look at the stock’s recent history.
LMFA Stock at a Glance
Not all financial-sector stocks are affordable. However, LMFA stock should easily be able to fit into portfolios of just about any size.
At the end of 2020, the shares were available for around 67 cents apiece. In hindsight, we know that the stock price and the trading volume would explode in the new year.
And that’s precisely what happened when LMFA stock shot up to a 52-week high of $4.89 on Jan. 11. Were the buyers able to get the stock above $5, which is the cutoff point for penny stocks in the U.S.?
Alas, the bulls couldn’t seem to get the stock above $5. After a cooling-off period, the stock is trading at $1.27 on the afternoon of March 30.
Bulls should target the $3.50 mark before setting their sights on the all-important $5 level again. Clearing those resistance points could signal the beginning of another significant run-up.
Turning Debt into Cash
If you’re seeking to diversify your financial market holdings with something different than your usual banking stock, LM Funding America might be worth a look.
To put it simply, LM Funding America helps condominium and homeowner associations collect debts. Evidently, the company has more than “14,000 collection events under [its] belt.”
Without the assistance of LM Funding America, association owners might have to hire attorneys to collect unpaid debts.
Attorney aren’t cheap. And association owners may be forced to pay lawyers regardless of how little money was collected from the delinquent party.
LM Funding America, which seems to mainly operate in Florida, claims to be able to turn debt “into instant cash,” while resolving collection issues.
It’s not difficult to discern how this would be strongly appealing to frustrated association owners. As the company explains, “Your association pays nothing out of pocket to LM Funding, and we pay all legal fees and costs on behalf of the Association.”
Thus, LM Funding America is redefining the debt collection process for association owners — and apparently, helping to cut costs and reduce headaches.
Launching a SPAC
Based on what we’ve learned so far, you might find LM Funding America to be worth investing in. Or, you may be seeking something more exciting. Nowadays, few things excite Wall Street more than SPAC announcements.
If you’re wondering why LMFA stock shot up like a rocket in early January, here’s the likely cause; on Jan. 8, it was revealed that an indirect subsidiary of LM Funding America filed a SPAC registration statement.
That indirect subsidiary is known as LMF Acquisition Opportunities (NASDAQ:LMAO) (And yes, what a great ticker).
The exact details aren’t known about the SPAC acquisition target. It is known, however, that the SPAC plans to target companies in the financial services and fintech sectors.
In late January, LM Funding America closed its initial public offering (IPO) for LMF Acquisition Opportunities. That event seemed to give a boost to the LMFA stock price.
What’s next for LM Funding America? Hopefully, more details about the spin-off SPAC and more positive developments to galvanize stakeholders.
LMFA Stock: The Takeaway
Maybe you like SPAC’s, maybe you don’t. Either way, LM Funding America can appeal to investors with differing viewpoints.
And even if you’re not into SPACs, LM Funding America stands on its own as a financial sector company with an interesting business model.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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