Capital Mindset

Bullish

@sean91237 @HawleyMO The $33 is a performance model so only when the loan goes through. And it’s direct. So it’s $5 and a $33 performance fee. If you go through the bureau it’s $10. Savings on this upfront cost might not be what you save in the secondary market and this pricing is just for mortgages.

@capital_mindset @HawleyMO Isn’t it a lot of money to the banks using the scores? $33 and $10 scores add up when your requesting million of scores. That’s pure profit added to a bank that gets rid of them

$FICO you can't make this stuff up. $10 is such a burden to me when I buy a home I can't stop laughing. @HawleyMO No conversation ever: Person 1: "I was going to buy that $500k home but... you know, I just couldn't make the numbers work." Person 2: "Why is that?" Person 1: "Oh well FICO increased their prices to $10 so now I can't afford it." Person 2: "Don't worry I read that Hawley is fast at work trying to lower the price. its a $500 million burden on a $55 Trillion market. Thats just crazy" Person 1: "Thank goodness they are taking it to FICO and not getting distracted with the 3%-6% agent fees and MLO fees. If he manages to get them to cut the price to $5 again I'll be able to afford that $500k house" Jokes aside, you can huff and puff all you want but for those who've worked in the space you know all too well how much of an uphill battle. The scores segment is made up of the following. Auto, Credit Card/Personal, Mortgage B2B, B2C. Mortgage is roughly 45% of b2b. Assuming a 20% haircut in the Mortgage would roughly impact FICO's scores revenue by 9% as an example. The segment is growing over 20%. For those who are shouting about the regulatory issues with the FHFA, you can better see the overall impact on score revenue. Play with the numbers on any imparement or lack there of in that segment. It looks fine. The next question is the valuation and what do we make of it. I think here its attractive just on what I think it could grow at. I'm looking for mid to low $900s to start building it up more. I really hope the narratives get "bad". Also side note, I received a great comment taking issue with my use of the word "simple" in the post below. I will elaborate. Simple vs complex to me is the amount of risk factors or moving parts. How "complex" or "simple" each individual moving part is, is subjective to the individual investor. Some pople just have more familiarity with things over other investors. To me FICO has clearly identifiable risks. Regulatory which is the more clear, and the more obscure upcomers in fintech. Depending on the person each of these will varry in their SUBJECTIVE complexity.

Is IRAN Causing A crisis? FICO finally interesting, Cloud & Memory x.com/i/broadcasts/1…

I normally wouldn't comment on random price movement but $DAVE just nuked on a large sell at low volume, crashed through some moving averages, and just hit 200D EMA and support level. Bottoms at 1hr and 4hr timeframe RSIs. Looking at being opportunistic here around $190 given good fundamental performance and the recent confirmation and confidence from the management team from my latest interview with them. Your mileage may vary.

@DoubleBench @At50w50882 @HawleyMO @pulte He didn't seem to understand too much about the payment rail networks either when he covered those too.

@At50w50882 @capital_mindset @HawleyMO @pulte It seems like inertia in the whole ecosystem is going to be tough to overcome. Even Hawley’s letter tips off that he doesn’t totally understand the reality on the ground.

$MELI gets talked about a lot, and they deserve it. A fintech giant with an ecommerce giant packed into one ecosystem. The team over at Mercado Libre are the “let’s build it ourselves” kind of people, which is a major reason for their success. A lot of US investors fail to appreciate the complete lack of banking and financial infrastructure that is taken for granted in the West. To grow their market, MELI built out the financial infrastructure to support more customers. In doing so, they became the banking product for all of these underbanked customers, which comes with a plethora of benefits. The main benefit is that NIMs are so high compared to the banks you might be used to seeing in the States. BNPL as a credit product is superior for lenders in almost every way, and we see its deployment more rapidly in markets that did not have legacy consumer credit products. When done correctly, you have tight control over duration and exposure, and given the lack of competition for MELI in these regions, we are seeing them generate a ton of profit here. Finally coming down to a very attractive level can't help but shout this one out here. All that being said. Investors should appreciate the risk that comes with the chaos of Latin American politics. Whatever you're perception of the chaos in western politics, give a big jolt to that and you have real chaos. That being said I lean structually bullish latin america longer term. Current issues for MELI from the last call seems to be the concern around margins. Last year we already saw the start of initiatives on delivery costs to maintain market share. We are also now seeing a push into cheaper products in order to keep the overall consumer demand on platform. Well consider the flyweel that is established here with the fintech platform. Generally I think the earnings in this segment will always be viewed with a healthy degree of skepticism and thats fair. That being said, here can't help but think MELI looks really interesting. We have a small position but I'm currently working through what allocation I'd target (currently targeting low mid single digit %).

@OxeInvesting @HawleyMO 😆

@capital_mindset @HawleyMO Was looking at a $1,400,000 2-bed 2-bath condo. Almost pulled the trigger but after considering FICO costs, opted for something cheaper. More in the $1,399,990 area.

$TSM I remain weary of what an autocrate will do and how we assign rational thinking to what perhaps an irrational actor will act on. The Iran conflict makes me for the time being less nervous owning TSM as I view the Taiwan conflict becoming less and less likely. But again this operates on a rational framework and may not align with what the autocrate whom this rests on is thinking.

@MrMachoMog Gud ebening

@capital_mindset Hello fellow $DAVE whales

Great conversation with the team over at $DAVE check out the full interview on YouTube. Disclosure: we are long Dave youtu.be/nS2NA1bw5Bw?si…

Yes its good to start a position here/add to existing one. I think for folks who have worked in some way or another in credit in the US understand just how entrenched it is. I see alot of folks putting a little too much attention to the regulatory noise from Pulte. FICO won't do the same thing it did over the last decade but presents a good opportunity here.

Yeah, the part people miss is it’s not just a “good business,” it’s a toll booth with absurd operating leverage. I’d only keep one eye on how much of the thesis is true pricing power vs. captive demand from a weirdly entrenched credit system, but if that moat holds, it’s hard to find many cleaner models.

$FICO is just so juicy to ignore here. Thesis is simple: you have pricing power with some multiple of volume as a factor to growth. Long-term rate sensitive only because of the volume question. Needs relatively low capital investment to grow and as a consequence will likely always demand a premium to market. The only long-term risks honestly are these closed-loop underwriting environments from some of these promising fintechs, but even then what they are tackling is not the lion's share of finance. FICO is probably going to maintain its status as the lingua franca of finance. I love the Pulte drama that I've called out several times before. Guy is hilariously attacking this company when they make up such a small % of the cost of a home purchase. To conclude, you get a nice pick up in volumes... well this thing is off to the races. But you don't NEED that to be the case. But it helps alot in the forward return potential.

In my view it’s not. Pulte shouts slot sure but he’s not going to uproot this. I find it hilarious that he is making people think it’s something you just snap out. The cost FICO has relative to the value it’s still nothing. Furthermore the management team themselves if you ask would say margins can keep expanding. Simple vs complex I’d argue is how many risk factors. Understanding an individual risk factor is subjective if it’s simple or complex. Regulatory risk is “complex” if you’re unfamiliar with said regulations. A thesis to me is complex if there are too many things we have to focus on, or too many moving parts that have to go right.

@capital_mindset That’s the 2018-2019 thesis. They used quite a bit of their untapped pricing power and the regulatory environment is much more complicated and uncertain than it was just 12 months ago. Not simple at all imo

@J0632976786296 The price cuts are insignificant the overall difference in price is not worth the haircut you’ll get on the secondary market for these loans.

@capital_mindset How about these tri vendors offering significant price-cuts , $5

there is honestly alot more literature from both primary and secondary sources out there. I've been debating posting commentary on it through X almost as a civic duty to highlight it so people can just read it themselves.

This is not confusing if you read three warfares doctrine. Also its not IRGC behind it. But yes it almost feels like it. Simply read up on PLA army work regulations chapter 2 article 18 title “Three Warfares” - Official PLA political‑warfare strategy using: media/public‑opinion warfare, psychological warfare, and legal warfare. - Embedded in the Political Work Regulations as operational guidance for peacetime and wartime information campaigns. Following that read up on Senate Intelligence Committee – “Countering China’s Malign Influence Operations in the United States” (2024 testimony/report) - Details how PRC state and pro CCP actors use content sharing agreements, paid inserts (e.g., China Daily, Xinhua) and partnerships with mainstream U.S. outlets like Time, LA Times, USA Today, CNN, and Foreign Policy to inject CCP‑produced content into the American information space. - It also describes coercive tactics to induce self censorship among journalists and outlets, including visa pressure, harassment of family, and cyberattacks, which are functionally about shaping an elite informational environment. - Utilization of prominent figures who may not be "paid actors" but help promote messaging through inorganic promotional campaigns - persuasion of key individuals often called "elite capture" that can influence content directionality.

Completely wrong. I told her why this conclusion is wrong days before she published this, and she published it anyways 🤷‍♂️ I will learn from this and lower my expectations from Unicus. 45% loss rate lol. What an idiotic take. For real professionals you would at least look at a number like that and start to think why you COULD be wrong before you draw the conclusion. The obvious error is that what’s kept on the LENDX books is what hasn’t been repaid (defaulted, held at 6% Fair Value of Cost) but all the good loans are repaid and that is removed from the reporting. Hence, you cannot derive a platform’s loss rate from any single report in a vacuum as you’ll get a larger percentage of loans that are bad staying in the older vintages in reports like these. But you notice that in the vintages where the duration is current, the loss rates are fine. I am honestly shocked anyone pays for this quality of research. What she is correct on is the private credit redemption wave happening right now will test whose capital markets programs are swimming naked if they run this type of asset-lite model. That, I will give her. But in this case, Affirm will not be a victim.

@BarnieTaintpipe and @capital_mindset did the most informative interview with the team at $DAVE. Will be coming out this Monday on @capital_mindset 's channel!