GSKY

Publicly traded companies mentioned herein: ECN Capital Corp (ECN CN), Fifth Third Bancorp (FITB), GreenSky Inc (GSKY), Regions Financial Corp (RF), Union Bankshares Corp (UBSH)

Highlights

The presenter is short shares of GreenSky (GSKY), stating there is a “misunderstanding” of GSKY’s business model by Street analysts and most investors. He thinks GSKY’s accounting methodology has made it difficult for analysts to properly evaluate a “mismatch” in revenue and expenses stemming from balancing loan origination commissions and the underlying credit risk born by GSKY. Optically, GSKY has strong upfront revenue and good cash flow, but current models do not appear to take into account potential losses that GSKY is liable for. By the presenter’s model, GSKY shares have over 50% additional downside from the current $15 level. Should credit losses accrue and funding partnerships deteriorate, GSKY could have over 90% downside, in the presenter’s view.