@radarcorp888 (on twitter) offered some good counterpoints to the ADS bull case that he gave me permission to share:

[Love your work. Re your ads pitch. I think it will be hard for them to keep their yields up as they grow rec 10-15% over the next few years. A lot of the growth in the last few years have been due to cobrand. lower yields on those (better quality customers, lower late fees etc)….Not enough “small” customers left to make a diff to grow at mid teens. Also have to assume they lose old customers due to price. Also holdco is massively levered. Limited div capacity from bankco up to holdco because of capital ratios. Actual leverage is higher than 1st look….some ex employees say company reached further down the barrel in terms of credit quality to keep growth high the last couple of years. Credit costs going up would be a function of 2013/2014 trough AND an overall worse quality loan book. Hard to prove either way from the outside.]

the leverage concern is worth taking seriously and something i should have spent time on in the post. assuming they use the epsilon sale proceeds to de-lever still leaves $3.9bn of pf recourse debt against ~$1.5bn of ebitda. they could choose to de-risk the balance sheet further (devote more sale proceeds to paying down debt or use free cash flow), but there will be a trade off on buybacks and/or portfolio growth (re: latter, to sustain low-teens portfolio growth, they will have to set aside ~$400mn/year in capital to maintain their t1 cap ratios).