Score One for Leucadia

At the height of the credit crisis last year, more than one commentator talked about how some companies were going to make boatloads of money through bold investing. Count Leucadia National Corp. among the bold.

In its most recent earnings report, Leucadia (ticker: LUK) reported that its investment in AmeriCredit Corp., the subprime auto lending, climbed in fair value to $446.3 million on June 30 from $249.9 million at yearend 2008. Leucadia, which purchased about 25% of AmeriCredit on Dec. 31, 2008, for $405.3 million is in the black on the investment. On the revaluing of its investment for earnings purposes, Leucadia has made a modest $41 million. AmeriCredit is trading at just shy of $17 a share today, valuing Leucadia’s stake at about $558.3 million, meaning that if Leucadia were to sell its ACF stake today, it would reap about $153 million, a gain of about 38%.

But Leucadia would be foolish to sell its position at this point. Take a look at AmeriCredit’s most recent investor presentation. It rightly points out that (Slide 13) that “HSBC, Triad Financial, legacy Wells Fargo, Nuvell/National and Fireside, among others, have exited subprime auto finance space.” Additionally, AmeriCredit’s loan portfolio deterioration is starting to ebb — and that is before the credit markets truly are humming again for auto-backed securitizations.

At this point, Leucadia is playing with house money. A bold investor would continue doing that.

Read a transcript of AmeriCredit’s most recent earnings call here.