Roger
Business Owner, Former Assistant Research Professor
Capital One is making the same argument for subprime auto loans that was made for mortgages in 2007. It says it is not worried about lending to subprime borrowers because repayment terms can stretch to 10 years, lowering payment-to-income ratios so low-wage consumers can afford $100k vehicles. x.comÂ
Carvana's and Credit Acceptance's losses from rising auto-loan delinquencies will take time to surface, because lenders let borrowers miss payments and extend the loans, an extend-and-pretend approach. This answers @lifelong72 asking whether the companies will eat the losses. x.comÂ
CarMax's plan to sell more affordable models to subprime buyers overlooks that such a business needs to be subsidized. The strategy comes alongside bad earnings that sent the stock down 15%. x.comÂ
Capital One's stronger credit and improved net-interest and non-interest revenue make its 9x earnings and 1.1x book valuation appealing for a quality card business with a global payments network. Operating expenses were in line. x.comÂ
Credit Acceptance faces pressure because subprime car buyers are running out of money. Its EPS growth has come largely from buybacks, with operating cash flow flat over five years, per another investor's review, and lending businesses like this are very hard to analyze. x.comÂ
Large-cap banks such as JPMorgan and Carvana are exposed to a coming credit crisis that war headlines are distracting investors from. The private debt market keeps imploding, and troubles at JPMorgan, Morgan Stanley, BlackRock and Deutsche Bank are symptoms of a broad debt-market problem. More esoteric debt such as subprime auto loans is likely to come under scrutiny next, which is why the short positions remain. x.comÂ
Capital One's Discover integration is delivering scale that is paying off for shareholders, earning an A grade. Q3 net revenue rose 6% as interest income and fees climbed; despite a slightly higher credit-loss provision, net income rose 11% and continuing-operations EPS increased 16% to $5.62. x.comÂ
Carvana and CarMax face a day of reckoning from negative equity in auto loans. Buyers with 72- or 84-month loans re-enter the market before their loans are paid off, a mismatch between loan length and ownership behavior that sets up negative equity. Incentives on new cars are also trending up. x.com x.comÂ
AI agents will erode credit card banks' pricing power. Since the GFC, uncompetitive card issuers have raised rates disproportionately in hiking cycles and barely cut them in easing cycles. Agents will let uninformed consumers refinance at much lower rates and make card points costlier as consumers optimize rewards. Medium term, that is net negative for JPMorgan, Citigroup, Capital One, American Express and Bank of America, and net positive for unsecured personal lenders such as SoFi and Upstart. … Show more
Capital One trades at a historic trough multiple even though the business is performing well. Booking Holdings, Celsius, CDW and Talen Energy are in the same position. x.comÂ
Pagaya's 8.875% 2030 senior notes are the best self-help credit among the high-yield bonds reviewed, still priced far outside normal B risk at about 71.5 despite real liability improvements. Pagaya refinanced a costlier term loan, cutting about $40M a year of cash interest, and repriced its revolver. 2025 adjusted EBITDA rose 76% to $371M, with $410-460M guided for 2026, and ABS access held up. The bond needs genuine rerating, and Pagaya stays tied to consumer-credit and securitization risk. … Show more
