Short seller Brad Lamensdorf Says LendingClub Is Just The Tip Of Trouble For Lending World

Brad Lamensdorf says the LendingClub’s fallout is just the start for major trouble in the lending world.

Lamensdorf has held a major short on the LendingClub (LC), which ousted its CEO, the board saying it found problems in practices plus what it called the CEO’s lack of disclosure. Its stock plunged.

Lamensdorf, who co-manages the short only Ranger Equity Bear ETF (HDGE), says while the zero interest rate has helped the economy, it now appears to be prompting highly aggressive measures through the lending industry.

LendingClub Corp
Chart via S&P Capital IQ

Lamensdorf calls auto finance the new subprime. The auto industry is bulging with new cars for sale, he says, and there are a huge number of three- and four-year auto leases coming due next year.
“This will crush the price of cars,” he said.

Then there’s the housing market: mortgage rates are near zero. Yet new home sales are historically weak. “It’s the cheapest it’s ever been to buy a home and the housing industry can’t find buyers,” said Brad. “How come?”

HDGE top shorts include: OneMain Financial Holdings, Inc., (OMF) which provides unsecured and auto-secured personal loans, and Cooper Tire & Rubber Company (CTB), the auto, truck, motorcycle tires, and inner tubes maker.

LendingClub by most measures is the biggest and most successful in a wave of online lenders that have blossomed since the financial crisis – bad news ahead?

LendingClub

Major HDGE shorts:

Ticker Name Weight
CAJ CANON INC-SPONS ADR

-3.86%

GRUB GRUBHUB INC

-3.37%

CERN CERNER CORP

-3.21%

SIG SIGNET JEWELERS LTD

-3.14%

KMX CARMAX INC

-3.09%

OMF ONEMAIN HOLDINGS INC

-3.00%

CTB COOPER TIRE & RUBBER

-2.84%

DWRE DEMANDWARE INC

-2.80%

EFII ELECTRONICS FOR IMAGING

-2.68%

HBI HANESBRANDS INC

-2.66%

Shares are bought and sold at market