I ran across a news story about a debt buyer which has an office here in Minnesota, Jefferson Capital Inc. The news story said that the company wanted to issue stock. I took a look at the prospectus and found the following:
During the three months ended March 31, 2025, we invested $175.2 million to acquire receivable portfolios, with face values aggregating $2,757.4 million, for an average purchase price of 6.4% of face value. The amount invested in receivable portfolios increased $73.8 million, or 72.8%, compared with the $101.4 million invested during the three months ended March 31, 2024, to acquire receivable portfolios with face values aggregating $1,519.4 million, for an average purchase price of 6.7% of face value. During the year ended December 31, 2024, we invested $723.3 million to acquire receivable portfolios, with face values aggregating $9,837.1 million, for an average purchase price of 7.4% of face value. The amount invested in receivable portfolios increased $192.4 million, or 36.2%, compared with the $530.9 million invested during the year ended December 31, 2023, to acquire receivable portfolios with face values aggregating $14,828.5 million, for an average purchase price of 3.6% of face value.
In other words, they buy a debt for less than a dime on the dollar. So, if they can collect even one-fifth of the amount of the debt, they have about tripled their money. It must cost them something to collect the debt so maybe they only double their money.
This may help explain the aggressiveness of some debt collectors.
