Questions I’m asking myself about the $CACC short thesis.

(thread)

CC: @greenycapital @johngaltier45 @FZucchi @PlainSite @tonythearena @AnalystDC

In a ZIRP environment, why am I shorting anything? Isn’t this like doing gymnastics into oncoming traffic instead of walking on the sidewalk to the finish line?

Is the Risk:Reward of shorting $CACC asymmetric in favor of reward, or am I biased by my desire to win a bet against (what I view to be) a predatory lender?

While certainly unethical, are any of $CACC’s origination practices actually violating the law? If so, will they result in more than a slap on the wrist? Is anything illegal in 2020?

While 40 attorneys general and the CFPB sounds intimidating, am I overestimating the end result of these inquiries? When will it play out? And how many squeezes will happen between then and now?

Is relying on regulation as a catalyst in today’s market not completely insane?

After that 40 states disclosure pushed the price down a measly 2%, is it not safe to assume either the bulls are VERY bullish or the shares are manipulated? Either case = gymnastics into oncoming traffic, no?

$CACC managed to create AAA rated ABS which means TALF money is in play, is it not safe to assume any liquidity concerns are completely erased at this point?

Will $CACC’s recent ABS provide enough cash for share buybacks to help elevate the price as insiders sell? (Or even in absence of insider selling).

Insiders have sold a lot, but they still own 16%, roughly $1.3 billion of a $8.4b mkt cap. Are they planning a gradual exit strategy to avoid collapsing the price (b/c of low volume), or do they still see long-term value and just trimmed to manage risk ahead of disclosure?

Will Hertz ever liquidate their fleet and will that have a meaningful impact on used car prices, or will continued stimulus support the used car market? Do used car prices even matter given debt traps are the true source (imo) of $CACC’s “value”?

In terms of potential default crisis, @wallstcynic has noted UI is on the edge of a cliff next month at the state-level, but is it not safe to assume federal stimulus will fill the gaps?

Wouldn’t it be political suicide to refuse a deal pre-election? Doe this not give Dems the upperhand, which implies more money to $CACC’s primary customers? The market is clearly pricing in continued stimulus.

F/D I’m short, down 3%, so a paper cut (currently). Held through the run up into mid-fives, but considering letting the white whale go. When I think “path of least resistance” seems like anywhere but here.

A lot to digest, but interested to hear what others are thinking. Thx.