Sahm Adrangi Talks the Decline of St. Joe Company

In 2011, Sahm Adrangi garnered significant recognition for his role in shorting several prominent Chinese businesses, while simultaneously exposing them for fraudulent practices. Since that time, Mr. Adrangi’s name has been commonly associated with short-selling, and recently, his company, Kerrisdale Capital, released a report signifying their intentions regarding the Florida-based land development business, St. Joe Company. St. Joe Company was recently valued at $1 billion, with many excitement accruing concerning their plan to further commercialize the Panama Beach area, creating a retirement destination. Despite these prospects, Sahm Adrangi estimates that this over-hyped and over-valued company is, in fact, only worth about 60 percent of the publicized valuation. The gross misevaluation is coupled with a number of other concerns, including that status of their largest shareholder, as well as stagnation regarding the commercial development of the Panama Beach area. While the Panama Beach area has garnered significant hype in recent times, in all actuality, much of St. Joe Company’s real estate that has yet to be commercialized, is located in remote, and often, swampy areas. This significantly reduces the appeal of St. Joe Company for the foreseeable future.

According to Sahm Adrangi, St. Joe Company is also experiencing a number of issues with their largest shareholder, Fairholme Fund. Today, Fairholme Fund holds 22.7 million shares of St. Joe Company, but with the arrival of new regulations presented by the Securities and Exchange Commission, they could be forced to liquidate 10 million shares by the end of the year. In Sahm Adrangi’s estimation, this is a virtual impossibility, particularly considering that there are not enough trading days left in the year to allow this without negatively affecting the price of each share. Bruce Berkowitz, the chairman of the board at St. Joe Company, as well as the fund manager for Fairholme Fund, presents another problem, as his dual role in each company presents a conflict of interest. If he and the two other dual role board members decide to step down in order to forgo any sanctions, the stock price could face a sharp decline.
http://www.worth.com/qa-short-seller-sahm-adrangi/

Greensky Credit creates new business model for lending

GreenSky Credit has been operating since 2006. It was in that year that David Zalik, a child prodigy and serial entrepreneur, had an idea that would potentially allow merchants to increase their sales on big-ticket items by billions of dollars each year. Zalik knew from operating a previous e-consulting business that merchants like Home Depot, Benjamin Moore and other sellers of high-end home remodeling, furniture and other items often lost sales due to the simple fact that customers were not competent at assessing the likely price tag on jobs they wanted to do.

The solution Zalik came up with was to facilitate true instant loans at the point of sale. But unlike other forms of retail financing, like in-store financing or installment plans, the loans that Zalik envisioned would be able to be approved at the job site or on a sales call. With this idea in mind, he founded GreenSky Credit in 2006. The model quickly proved itself.

Unlike other fintech startups, GreenSky Credit does not keep any loans on its books. In fact, it doesn’t even really originate loans. The only thing that GreenSky Credit does is line up customers with its partner banks. This incredibly simple model might be easy to write off as being trivial, being an already saturated market or not having a large enough total available market. But Zalik’s genius lay in seeing the huge potential that still existed for high-end loans on niche retail products for customers with excellent credit.

The majority of GreenSky Credit’s customers have excellent FICO scores, usually above 700. This means that the risks that banks incur on these loans tends to be minimal. It also means that from the customer’s perspective, GreenSky can make highly enticing loan offers. Usually, the loan offer that the merchant makes to the customer through the GreenSky interface involved no money down, no payments for a year and zero interest for an introductory period. Zalik says that the vast majority of customers pay back their loans in full before the higher rates and payments kick in.

All told, GreenSky is currently valued at more than $4.5 billion and is murmurring about a possible IPO.

 

https://cardconnect.com/partner/greensky