Citron Research the is third major short-seller to target BofI Holding, Inc. (NASDAQ:BOFI). Greenwich andKerrisdale Capital did so earlier this year. Below is the latest from Citron, with their short call on BofI Holding, Inc. (NASDAQ:BOFI)
H/T Activist Shorts
Citron on BofI Holding, Inc. (NASDAQ:BOFI)
Bank of the Internet (NASDAQ:BOFI) has been a controversial stock of late, with momentum investors taking long positions, while bloggers point out its rich valuation relative to peers. The stock has nearly tripled since the beginning of 2013.
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But things have changed – for the worse. Citron believes that many investors in the stock may have missed recent developments which have huge implications on the future of the BOFI.
Citron believes that a powerful negative near-term catalyst is going to cause a reevaluation of this high-flying bank stock, and when that happens, all investors should take note.
While the company will deal with its obvious regulatory issues, investors will be stuck owning a bank that has been playing fast and loose with their book, while showing metrics that should concern any investor concerned with a closer examination.
Huge Regulatory Risk to Stored Value Card Competitors
BOFI operates in a unique niche called the Stored Value Card business. There are only three major players in the Stored Value Card space.
BOFI’s pending acquisition of H&R Block bank would make it a major player in the Stored Value space. Last month, The Bancorp Bank (NASDAQ:TBBK) became the second bank to be hit with a Cease & Desist order, causing a 30% selloff in its stock, a loss it has not recovered.
The Government crackdown on the stored value card business is real and not going anywhere. In a banking industry article published TODAY, we read
“I would think this action sends a message to every other prepaid issuer that they better be buttoned up on AML processes and work very closely with their clients,” Colgan said.
Full document below via Citron Research