J.T.

@z9141706349251 I’m not going to reveal all of my research here, but I’m guess this guys knows more than me or Eisman on this particular topic. $FICO

@Hold_Quality This was my thesis on vantage. Is this actually happening?

In case anyone’s wondering what’s going on with $FICO, the market is waking up to the fact that the MBS market is hitting Vantage 4.0 with a penalty/ pricing hit. This penalty costs thousands of dollars over the life of the loan.

@Ross__Hendricks Yep even a few basis points of liquidity risk premium results in a NPV of several thousands dollars. MBS market has no prepayment history on non FICO products. Not to mention FICO has tail risk data with 2008.

$fico bears in shambles

You still have a chance to buy FICO below 2000 today.

@MatteoS42447 All I’m going to say is this: the shorts who say that… 1. FICO had a monopoly because of the government. 2. Lenders only care about the cost of the score. Good luck…

@Hold_Quality Explain how

@henloponker Not entirely: 1. The Inputs are well understood. 2. FICO has proven to comply with fair lending standards which is why it allows lenders to CYA. Lenders can always fall back on the FICO score when asked why they denied credit.

Aren’t $FICO scores a black box as well

@ContrarianCurse @WMangan1190 This assumes rates don’t fall; in that case near term earnings estimates could be low.

@WMangan1190 2.0x peg seems.. fine. I don't find them particularly compelling no. Prob do the 10-12% that earnings gives you and thats it. Why would they re rate to 30x?

Lots of these big name fund managers squatted on $MCO and the likes at 45-50x earnings cause of "business quality" Yea but at that price you essentially are just holding a pile of duration and rates went from 0 to 4.5%

@Divergent7651 FICOs moat is 20+ years of historical data that allows investors to see how different FICO scores behave. This allows for modeling on not just credit risk but also prepayment risk. Additionally, you have to wonder if vantage loans will get hit with a liquidity risk premium.

@Divergent7651 This is already showing signs of occurring as United Wholesale Mortgage is applying a 20-point adjustment to the VantageScore in underwriting, so a 700 Vantage becomes 680 in underwriting.

$FICO killed it in Q2'26. The most regulatorily-scrutinised period in FICO’s history since the 2020 DOJ Antitrust civil investigative demand was simultaneously its strongest absolute-and-growth quarter on record. Regulatory pressure has not translated into measurable operating damage through fiscal Q2'26. Management executed the company's largest single quarter share repurchase in the company's history and demonstrated the rare ability to act decisively and opportunistically to repurchase shares at a deep discount and not just at ATHs like most management teams. FICO benefited from a mix of higher volume mortgage originations, partly driven by a temporary decline in rates, as well as the new $10 per score pricing. Higher volume at the new pricing demonstrated low elasticity of demand and pricing power. Management raised full year guidance and explicitly stated that they do not expect any market share loss from VantageScore. Management's views on market share loss are corroborated by Equifax and Experian FY26 guidance, which assumes no conversion from FICO to VantageScore. This is despite (a) the bureaus' economic incentive to drive conversion which unlocks incremental margin for them on score sales; (b) price cuts to VantageScore from $4 to $1; and (c) claimed cost savings of ~$1B for consumers and originators from converting to VantageScore. The absence of any meaningful Vantage volume after aggressive bureau-level Vantage discounting is the strongest single piece of evidence that FICO’s pricing power is structurally protected by switching costs rather than by any current pricing advantage. The FICO platform business segment is compounding largely independently of the regulatory cycle that is driving the equity drawdown. I estimate that approximately 79% of FICO's operating income is not at risk from the GSE-mandate regulatory scrutiny. This base comprises auto and card B2B scoring, B2C myFICO and indirect channel revenue, non-conforming and non-GSE mortgage scoring, and the entire Software segment (Platform plus non-platform). It is not subject to the GSE mandate and not visibly affected by current regulatory scrutiny.

Most bullish thing I’ve seen for $FICO recently. United Wholesale Mortgage (UWM) ,the largest mortgage lender in the United States by overall loan volume, is penalizing the Vantage score in underwriting.

@BourbonCap United wholesale mortgage is applying a 20-point adjustment to the VantageScore used in underwriting. A 700 Vantage becomes a 680 Vantage when underwriting. Their scores are already being treated as “different”. $FICO

Steve Eisman doesn't seem to have any problem with the current economy but he's shorting $FICO for raising prices "very arrogantly" over 500% in the past few years. I'm glad you're back and healthy, but…WTF Over the past five years, the global economy has been an absolute shitshow. The Fed printed money like total psychopaths in 2021, oil prices surged to $120 in early 2022, and CPI hit 9% in June 2022. Then the Fed raised interest rates at the fastest pace since 2008. On top of that, when things start to stabilize, we get tariffs and then another war. Are you telling me you expect a monopoly like FICO to just sit back and do nothing in response to all of this? Mortgage applications are at all time lows, and the company has every right to raise prices and continue delivering growth

A 20-point adjustment is applied to the VantageScore used in underwriting. A 700 Vantage becomes 680 when underwriting . As long as I see signs that Vantage is treated as second class, I will remain long $FICO.

United Wholesale Mortgage (UWM) is beginning to operationalize the industry’s shift toward credit score competition, rolling out a process that provides both FICO and VantageScore on conventional loan submissions. HOWEVER…

@RobTVDC @em013L If the answer is no because all these risk models need the FICO to calibrate both credit and prepayment risk and to be able to communicate that risk to potential buyers, then FICO probably hits 3000 before 2030.

@RobTVDC @em013L If you have a group of mortgages bundled into an RMBS, will this product provide the same yield if it is full of FICO scores vs Vantage Scores?

$FICO The FICO collapse has been fabricated from the start, it never should have traded down. History: - May 21: FHFA Director Pulte writes on X that he is disappointed in FICO, that cost increases are hitting lenders and consumers Result: FICO is down 33% that week - July 8: Pulte takes his first regulatory action against FICO's monopoly. Fannie Mae and Freddie Mac will begin accepting VS 4.0 Result: FICO down another 22% over 2 weeks - Dec 5: Pulte erases FICO from Fannie Mae's selling guide, and the FICO requirement from Fannie Mae's DU system Result: Down 43% to date More recently, Senator Hawley raised similar concerns in a letter to FICO, citing that FICO's pricing power is hurting the consumer. 1. These actions imply FICO's gold standard monopoly will be regulated 2. Forced competition with VS4.0 will eat away at FICO's market share But the reality is different. - Data shows that the total production expense began increasing before FICO started increasing prices (not correlated). Even after FICO increased prices by 725%, TPE/loan remained static, with no difference (Score pulls make up 0.04% of TPE). - Markup from bureaus and resellers was 1844%(!!) before FICO started increasing prices. Why should a FICO pull have a markup of 1844%? - After a 725% increase in cost per pull, FICO is still by far the minority in terms of overall costs for a score pull (14%), and bureaus still take a 641% markup! VantageScore volumes are a farce, as the bureaus send it along for free with each FICO pull. Despite being FREE, no one is switching over. "Vantage has touted big volume numbers for quite a long time, years, years, and years. I think the big question is who's paying for it, because the answer is hardly anyone. The VantageScores get sent along for free. When a lender inquires at a bureau for a credit file and a FICO Score, they get the credit file and a FICO Score, and they get a VantageScore that they didn't ask for. And so that's the genesis of the big volume numbers that Vantage reports. We're not seeing any share loss at all." - CEO William Lansing, 08 May, 2024 Reiterated in yesterday's earnings call: "You know, when you see the big VantageScore score volumes that VantageScore talks about, you should know that they're largely unpaid for. You know, are they? Is anyone using them? Don't know. Is anyone paying for them? Our sense is not much." FICO remaing the gold standard, with an implied 99% market share. Replacing FICO would mean re-rating of risk portfolios, leading to re-underwriting of millions of historica loans. Get the risk profile wrong, and it could mean billions in unexpected defaults. In addition, the securitization market is built on FICO. Try selling a security with an attached VS, you'll find it quite challenging as no one speaks VS - everyone speaks FICO. The systemic moat is intact, and FICO continues to power on. The price increases are not hurting the consumers and lenders, it's making the line item of pulling a FICO score more transparent, and cutting out insane markups from bureaus. Yesterday's 60% Score growth proved that forcing in VS doesn't affect FICO at all, as no one is switching over to VS even though it's free.

@DrewCohenMoney Given how many people on this website said, “still trades at 40x earnings”… I would say that it wasn’t obvious to a reasonable proportion of investors who glanced at this name.

Wasn’t this obvious? It’s the first quarter with price hikes and the success fees….

$FICO beat on top and bottom estimates. Analysts will continue to get this name wrong because it’s difficult to predict the expansion and contraction in credit. @ariaradnia

@CoorsLightCEO @gordocap18 Then why did synthetic data have to be generated?

@gordocap18 decade+ of VS data for securitization mkt to work off of. fico got greedy