Yet Another Value Podcast - Kyle Cerminara on deSPACing OppFi with $FGNA

Episode Date: July 8, 2021

Kyle Cerminara, President of FGNA, discusses his thesis for deSPACing with OppFi. Key topics include comparing OppFi to its closest competitors, how FNGA and OppFi arrived at their valuation, and addressing different regulatory risks for OppFi.Kyle's twitter: https://twitter.com/kcerminaraOppFi / FGNA's SEC filings: https://www.sec.gov/edgar/browse/?CIK=1818502&owner=excludeChapters0:00 Intro1:30 OppFi overview9:40 Comping OppFi to Upstart16:35 Why are Katapult and Affirm part of OppFi's comp set?19:00 OppFi's valuation22:10 Why did OppFi agree to a deSpac at this valuation?27:45 How going public gives OppFi a bigger microphone29:35 Discussing negative headlines around FGF35:25 Why did FGNA send out so many LOIs?40:00 How did FGNA and OppFi handle the wait between the LOI in December and the definitive deal in February45:20 Will banning "rent-a-bank" impact OppFi?49:00 Discussing OppFi's ~30% charge off rate50:50 Interest rate caps and pending litigation55:20 Why didn't FGNA get a PIPE for the OppFi deal?58:10 Discussing OppFi's management and Joe Moglia1:06:45 Kyle's closing thoughts1:09:15 Bonus question: how will reopening impact OppFi?

All right. Hello, and welcome to the Yet Another Value podcast. I'm your host, Andrew Walker. And with me today, I'm happy to have Kyle Serminara. Kyle is the president of FGNA and I think a bunch of other stuff and kind of the FG stuff. Kyle, how's it going? It's great. Thanks for having me, Andrew. Appreciate it. Hey, I appreciate you coming on. I know this is a busy time. The company we're going to be talking about FGNA and Opi, getting towards the tail end of the deal, but we'll get there in a second. Let me start this podcast the way to every. podcast, and that's by pitching you, my guest. I'm actually not going to give you, I'm not going to pitch you this time. I'm going to turn to our mutual friend, Mike Mitchell. The two of you kind of are the godfathers of Lumber Twitter at this point. And I believe I heard Mike say on a podcast or on Twitter or something at some point, I only bet on two people, John Malone and

Kyle Cermanara. So if it's good enough for Mike, it's good enough for me. It's working out well for him so far. So really happy to have you on the podcast. And happy to dive into the company we're going to talk about today. The company is op-fi. They're going public through a merger with FGNA, a SPAC that you are the president of. I'll just disclose everyone. Obviously, you're the president of FGNA. That means you've got a vested interest here. Nothing on here is investing advice. Everyone should do their own diligence. Lots of filings with lots of details on opt-fying FGNA. I'll point everyone to that. But that said, you know, you're different, a little bit different because you're the sponsor of a SPAC. That means you're committing a lot of capital to

merging with the company. So to start, I'm interested. You guys could have chosen hundreds of different companies. What was it? What is up by and what was it about it that attracted you to them for a de-spac? Sure. So, you know, as you said, there's a lot of opportunities out there. And, you know, we spent a lot of time looking at, you know, a bunch of different companies across the financial services and fintech sectors. You know, our view was that, was that, you know, that, you know, we wanted to have a large addressable market. We wanted to have something that was, you know, close to all of our areas of expertise, but that would provide for a platform for, you know, significant growth.

So ultimately, you know, we looked at a lot of different companies. And, you know, Joe and my and our team love to bet on management. we found the management team of OpFide to be led by Jared Kaplan to be unique and different. And, you know, as we started to look at it, you know, we didn't get into this with the idea that, you know, doing high APR loans was exactly the business that we were, you know, interested in. And I think that, you know, as we approach the investment, you know, Op5 was originally called Opelones. That was their initial product. And, you know, we went to them with the idea that we'd really like to expand this to more of a platform place.

Like this, you know, in order for us to be really interested in investing and spending our time and really committing our SPAC effort to this company, we wanted them to be, you know, focus on this. As we went, as we did our diligence on the company, they had already made plans to transform into Op-Fi. We had independently come up with the name Op-Fi. They had come up with the name Op-Fi separately from us. And if you go back in their board minutes, you know, a year earlier, they were already planning to sort of diversify from just a pure consumer lending business into consumer lending, saving, and investing. So we really thought that there's a huge opportunity, an untapped need here. in the lending side and that, you know, our skill set, you know, my partner, Joe Muglia, was the chairman of C of Tide Ameritrade for 19 years. We thought that we could bring a lot to the

table to help them grow beyond that. And then importantly, we said, like, let's make sure that we're paying a multiple of earnings, a multiple vivita that was consistent with what the business is today so that as we grow into the future, we get a lot of that upside, you know, for investors. So I think we structured a transaction that was a very reasonable valuation. It's a company that's been profitable for five years. It's a company that has grown rapidly north of 50% revenue growth for the last five years. And we thought that with the core cash flow in the business, that we could use that cash flow to expand into these other savings and investing products.

And our team certainly having built TD Ameritrade from 2001 to, selling it in 2020. Charles Schwab certainly has the expertise to help them expand beyond just a lending platform. Perfect. Perfect. And I have, I will say this is a really interesting deal in company and you can tell because we've done, I've done podcasts on Spotify, on Netflix, like these giant companies. And this is actually the company I'd say that I got the most questions and responses for. I think no fewer than 50 people reach out to me with, you know, I'd say 25 bull questions and 25 risk factors and stuff questions. So I've got tons of stuff here. But I think the first thing to talk about, so if you laid out high APY loans, can you talk a little bit more about the

typical customer that Opi is working with? And obviously the high APY loans is a headline number. But I think the company pitches that, hey, you might not be looking at it correctly if you're thinking only on the high APY number. So let's talk about those two things real quick. Yeah. So I think that there might be a misperception around, like, what the typical customer is for OPFI. I think that, you know, when we first started looking at the company, we said, oh, this is, you know, this is, you know, aggressive lending or this is lending to lower income people. It's actually not, you know, lending to lower income people. It's lending to what OpFi calls the everyday consumer, the everyday consumer being, you know, average household income in the $50,000 range.

many of their, many of their borrowers have a six-figure income, right? So it's not necessarily a low income borrower. It's a borrower that has, for whatever reason, been locked out of access to the banking system, whether that's a missed payments on previous loans or something happened in their past, but they now need access to credit and they don't have it. And that's a very high percentage of Americans. I was actually, you know, a very high percentage of consumers in the U.S. do not have access to credit, and I was surprised by the statistics. You know, many Americans owing paycheck to paycheck. Many Americans are in a situation where they have less than $1,000 of savings, and many Americans, like, quite frankly, don't have an option for lending. There are, you know,

worse options, higher APR options. I think you may have gotten some questions about some of those types of lenders that, you know, have a physical retail presence. They're the, they're the types of lenders that you might see, you know, in different neighborhoods that, you know, someone goes in for a loan. The difference that we found, as we went through our due diligence on the company, was that with many of those types of lenders, it's almost their incentive to keep the borrower in that position for a long period of time because they have recurring customers to come back and get a loan again and again at a very high, you know, several hundred percent APR. The difference is that Opportunity Financial or Op-Fi, you know, works with the borrower

to graduate them to a better, a better product. And I think that's part of the platform that we want to grow to other lending products, to other savings and investing products, is to really repair these people's credits, you know, after, you know, taking out an op loan, being in a position to graduate to an Op5 credit card, which the companies announced that they're rolling out over the next few weeks. And being in a position to take out other types of lending products, perhaps participate in a mortgage for their first purchase or, you know, helping them work towards savings and investing. And if you look at, for example, SOFI, like I spent a lot of time looking at the history of SOFI and how they got to where they are. And, you know, through 2015,

SOFI was a pure student lender. You know, the only thing, you know, the origins of SOFI was that it started out as a company that made student loans and made them more accessible to students. And through 2015, they started to develop, they took in a lot of venture capital money and started expanding into other things. You know, in 2015, they first made some consumer loans and beyond that went into mortgage. and then over the years have become what SoFly has become today. We had a vision for UpFi,

and I think that our team should have quite a bit of credibility and expanding into some of these other products to take what has been a very profitable, very credit-focused, technology-focused platform and build upon that cash flow and start to work with these borrowers to expand into other things, to make them more of like a membership model where they're sticking around and becoming customers of multiple products. That's perfect. And it's interesting you mentioned SOFI in the transition to the transition for OPI from just kind of providing not the payday loan, but the shorts from high APY loan into a whole suite of financial products.

Because I think the other company that you guys have compared yourself to as the best comp that a lot of people look at, you address the elevate and the physical lenders, but the other company that people look at, is Upstart. The ticker there is UPST. I just pulled up their graph. You know, these guys, they IPOed, I think right after the Op-Fi, F-GNA deal was announced in December, and the stock is just an absolute screamer since then. So maybe could you compare and contrast, not on the valuation, we'll get to valuation a second, but just on the fundamentals and business model, what are the similarities and differences between Upstart and Op-Fi, and why is Up-Sart the best comp for them? Yeah, and, you know, I think that whenever you do a comp analysis on a company, you spend a lot

of time thinking about, you know, how do you value this company? And, you know, we spent time thinking about, you know, some of the companies you mentioned, the anovas and the elevates and the Kuros and others in terms of thinking about, like, if we were to compare this to those, how would, you know, how would this trade? You know, those companies have, you know, a very different business model than output, but there's some similarities, too. So we had to take. that into consideration. It's not like their business model is completely different. They do have some similarities. They do, you know, some of the differences are that they have a retail presence. They have, you know, the retail presence that we talked about. They have, some of them

have higher APR. Some of them don't have the credit discipline or the growth. Yeah, but they're all very different. Upstart, you know, uses a very similar, you know, banking model to make make loans to subprime borrowers, but they're making them to just under prime borrowers. So they're not in the credit spectrum, op loans or opt-fies customers are lower in the credit spectrum, probably about 50 to 100 points on the FICO score lower than an upstart customer. But at the same time, you know, everything else about Upstarts model is very similar. So Upstart's making a average loan balance of about $5,000, as my understanding. Opfiz is more like $1,500.

Opfai is making a, you know, typically is like an 11 or 12-month loan, whereas Upstart is making a five-year loan. And then the real key difference, I believe, is that Upstart is selling their loans. So, you know, from a balancing perspective. And I think that's a real major difference. And we've been pushed a lot on this and said, like, why don't you become. If you say you want to be like Upstart, why don't you make the full transition and sell all of your loans the way Upstart does? And the way I understand it, so I'm not a representative of Upstart and I'm just using publicly available information from Upstart.

But the way I understand is that Upstart is selling about 97% of their loans and only retaining about 3% of them on their balance sheet. They say that they don't maintain any credit risk. I'm not familiar with how one sells a loan without maintaining any credit risk, but that may be the case. And they're recognizing basically a gain on sale for the five years of income. They're taking some portion of that up front rather than, you know, over the life of the loan. So we, you know, our loans are shorter in duration. You know, on average, an opt-by loan will last about four and a half months. They're priced out to be about 11.5-month loan, but many times they'll pay off sooner.

So if we were to do the same thing, we basically be selling these loans that we know we're going to be paid on over a four and a half month period, you know, in week two of the loan origination cycle, you know, for a instant gain on sale, theoretically to run a leaner balance sheet and to run a balance sheet that looked a lot more like Upstart. So, you know, the difference is that upstart trades at much higher multiples has exhibited, you know, better growth through, you know, through the COVID-19, you know, pandemic and some of the, you know, some of the stimulus that has been given out by, you know, by the government. So they've been able to grow through that better than O'PFI has. You know, the stimulus has certainly slowed down some of OpFiles growth, you know, and that's definitely, I think, a key difference. Another difference is that, you know, Upstart is now expanding into other ones. They recently made an acquisition to go into auto finance. I think we plan on doing many of the same things that Upstarts doing. But I think if you look at, if you really spend some time on Upstart, you really get that technologies in their DNA, their former Google guy.

you know, I have not spent time underwriting their algorithm, but I spent a lot of time on OpFICE algorithm, and I have great confidence in their algorithm. At the same time, I'm sure that Upstart has a very successful algorithm. They are using that as a mechanism for which to grow in consumer loans, in auto loans, and in other lending products, very singularly focused on lending products, whereas I think over time, OpFi will expand into other things that are not lending products,

such as savings products or investing products. And I think that over time, you know, the comp set will over time evolve for OpFi to look into include SOFI. But, you know, saying that we are very similar to SOFI today, I didn't think was very credible. And maybe saying that we're very similar to Upstart today is incredible. So I think that's something that we should, you know, at least hash out. But, you know, somewhere in between where upstart trades and where the, you know, some of the other names that you mentioned trade, I think was the right mix.

And I think we tried to have the acquisition priced at the, at the very low end, you know, certainly not anywhere close to where upstart is. So our view was that we, that we're getting a lot of the upside potential of an upstart or perhaps in a firm or even a catapult, which is, is more. subprime leasing, you know, point of sale leasing, that we were getting upside to their valuation, upside to a firm's valuation, which is not subprime. A firm is more, you know, super prime leasing and upside to upstarts valuation. But we were, you know, positioning in it as like, look, we're currently trading at a consumer finance like multiple. And if we get a fintech multiple over time, there's, you know, significant upside to the, to the company. Perfect. And you mentioned a firm and Catapult, and I'm somewhat familiar with them as well. So I just wanted to ask, obviously, they're online. As you mentioned, Catapult is mainly lending to subprime. But those are, you know, point of sale, buy now, pay later companies. I got some questions on this. I was a little curious to. Why are those guys a good part of your comp set?

So we, you know, we actually looked at that sector as a potential area that we may want to go into. And quite frankly, it's an area that OpFai could eventually expand into as well. But, you know, when you're ultimately making a loan or a lease to someone in this, you know, in this sub-segment, they're making a decision that they need money, right? So they either need money to go to the doctor or fix their car or to buy something online. And ultimately, money is, you know, fungible. And if they're buying a refrigerator online and they're making the decision to borrow money to buy it or to lease it, you know, point of sale, you know, the point of sale leasing, it's really a financing alternative, lease versus buy. And, you know, I felt that, you know, Catapult is very focused on point of sale leasing. They actually have a partnership, I believe, with the firm where if a firm denies you on a leasing application, you then get referred to Catapult. And I think it's like a joint application process and partnership with them. But ultimately, it felt like a very singular focus. And I think that they, you know, they're very good at what they do from what I can tell. I think they've

been a great management team. And I think Catapult, you know, I have nothing but good things to say about Catapult and a firm. But at the same time, you know, we felt that we would like to do other things besides just point of sale easing. There's not, there's no reason why Op. I can't get into Point of Sale Easing, but there's also no reason why we can expand to many other products and make them all very profitable. Yeah. And on Catapult, you're exactly right. A lot of their business is kind of, I call them the affirm rejects. And I, you know, I know some people who are very bullish on Caterpult. And I've always looked at that and wondered, well, if they're just taking the affirm rejects, isn't there a huge risk? It's not all their business, but it's a lot. Isn't there huge risk that

eventually a firm just decides, hey, we'll just underwrite them as ourselves. But that's neither here nor there. Let's turn, you mentioned a couple times. You even said, hey, we wanted to price this at the low end evaluation to leave a lot of upside. So I want to start on the bull side. Let's talk valuation because it is a low multiple. I think there's a lot of upsides at him peers. So let's start. there, and then we'll turn to kind of some of the pushback on valuation. Absolutely. Yeah. So, you know, when we looked at it, we said, all right, you know, is this a fintech company

or consumer finance company? I think many people will have, you know, the same questions. I think ultimately the way they, you know, they derive their loans, you know, through technology, you know, this is not a brick and mortar business. It's a technology business that's very scalable. many of the reasons why people like fintech companies is because of the operating leverage you get through technology where you don't have the brick and mortar, you know, aspects of it. I think that, you know, I think that we tried to look at the valuation on the side of this is, you know, what do all consumer finance companies trade at? what do some of the very high-end financial technology companies trade out?

And let's not set the acquisition price as a value that makes you concerned about the downside dramatically because we have, you know, at five times EBITDA, you're really not paying that much of a different price than some of the other names that you mentioned. If you look at their balance sheets, many of the other ones have significantly more debt on their balance sheets, which you need to include in the, you know, EBD, but multiple, obviously, you know, P.E ratio, you know, we've thought a lot about, you know, how much earnings one could get if they expanded the balance sheet dramatically. And, you know, that the fact that Opfai currently has a fairly unlevered balance sheet relative to some of the, the lower end peers that you

mentioned, I think, you know, shows that it should trade at a higher PE multiple because it's just all of that growth is ahead, right? So they basically have five years of ahead that is not currently reflected on their, you know, in their leverage ratios. They could, you know, expand dramatically just by leveraging their balance sheet the way some of the, some of the other peers that you mentioned did and their, you know, their earnings would go up dramatically and therefore, you know, assuming that they, they underwrote their loans appropriately. At the other side, if some of these other companies are priced off of multiples of revenue,

you, you know, they're really training at very high multiples. So if you look at, you know, we looked at if, if OpFi traded at a similar multiple to some of these other peers, it's not hard to get to price targets in the $30, $40, $50 price range or even higher. You know, that those are, those are assuming that they traded a fraction of the multiple of EBDA or a fraction of the PE ratio or a fraction of the, you know, the peer group multiples revenue. Now, there's obviously going to be arguments about how each of those companies derive their revenue and how they derive their earnings. And I totally appreciate that. But all I'm saying is that, you know, we price that accordingly. Perfect. And that brings me perfectly into the next

point, right? So you guys are getting to set a low valuation. And I think the first question would be, why is up by and the selling party selling here? Because, you know, this is a company, if I'm remembering correctly, they've only taken in 15 million of equity since they were founded in 2012. They did 50 million in net income or kind of the equivalent for after you just for taxes and everything for them because they were private company. I don't think they were payments on taxes. They did 50 million of earnings in 2019 and 2020, right? So this is a business, 15 million in and they're doing 50 million per year. They didn't need the equity, right? And here, they're taking a lot of cash. They're rolling over 60%. They're going to own over 60% of the

company, but they're taking a lot of cash out here. So I think a lot of people are looking at it and saying they don't need cash and they're getting a big cash out, kind of why did they agree to do this deal at a really low multiple? Yeah, and I think that those are great questions. And like I was most convinced when I spent some time with the family behind it, the Schwartz family who, you know, at this point, you know, owns close to 100% of the company and post this transaction will own 60 to 70% of the company depending on, you know, whether the earn out kicks in or not. But ultimately, you know, they are reducing their stake in order

for a company to go public that's 100% owned by one party, you know, someone needs to sell shares, whether that's the company selling shares or the founding family selling shares. Someone needed to sell shares here, you know, in order for the public to own shares. You know, we, I was very convinced in spending time with the Schwartz family that they were doing this for the right reasons. One, that they want to see this company be a much more successful and larger company. It's already been tremendously successful since they founded it in 2013 and have grown it since then. And like you said, they put in, you know, about 50, you know, less than $15 million of capital and are getting extraordinary returns on their capital.

But at that, you know, so they don't need to sell to get, you know, great cash on cash returns right now. Like they're going to, you know, if they own 100% of this business, and the company continues to grow the way it's grown. They'll be generating hundreds of millions of dollars of free cash flow and that can all be dividend to the family if they end 100% of it. So I understand from the selling, you know, the seller's standpoint, why sell? And I think that one of the most compelling points they made was like we want to recruit

and, you know, we think Jared's a superstar CEO, but we want to recruit some of the best talent. underneath them, around him, and in order to incentivize employees, we want them to understand a pathway to them owning equity in the company and that equity being more valuable for their efforts. So I think that's one, that was one really important point. They're still going to own, as I mentioned, 60 or 70 percent of the company. But at the same time, they're going to be in a position to incentivize and bring in some really key talent to build some of these other areas of the business, whether that's on the investing side, on the savings side, to, you know, really

incentivize people with, with significant stock ownership in the company. So I think that's an important point. Two is, I think that, you know, this is an industry where they are very passionate about what they do. The name of the company is Opportunity Financial and, you know, or OpFI. And an opportunity, like, they're very passionate about giving people an opportunity that doesn't, that don't currently have an opportunity. And I know that there's, been questions about regulatory risk and some of these new, you know, some of the new actions taken by the government. But I think that having the megaphone of a public company to talk about some of these

things is important because there really is a key difference between, you know, the way they underwrite and make loans to people with the intent to not be predatory, with the intent to help people out of their current situation and graduate them to better products and to a better situation, but still offer them a product that they currently, you know, are not being offered, while at the same time, you know, to be able to have it, you know, to be able to expand into some new and interesting, you know, verticals on the savings and investing side, you know, perhaps more rapidly with with a public currency. So I think that, you know, we'll be in a position with a public currency to, you know, to recruit talent. We'll be in a position with a

public currency to bring in, you know, potential acquisitions, if they make sense. You know, under TD Ameritrade's leadership, Joe Muglia made, you know, under his leadership at TD Ameritrade, you know, Ameritrade made 11 acquisitions, all very successful acquisitions, and then ultimately the 12th deal was to sell to Charles Schwab for over 20 billion. You know, I was an investor in Ameritrade over the years. Like, M&A is not for everybody, but Joe is extremely good at M&A. and the Ameritrade team was very good at it. We have several members of the Ameritrade team on our board

and have senior advisors to our spec. And one can only expect that over time, more and more of those people will ultimately be a part of OpFI as we help them grow. Perfect. And I want to come back to that management team in the Joe and Jared Lincoln section. But you said something in there that struck me as kind of interesting.

You said they want to be public to have a bigger microphone for when they're kind of talking about these regulatory concerns and shaping policy and that type of stuff. And that struck me as interesting. I get it. And I've heard something similar before, but what about being a public company gives them a bigger microphone than being a private company? Is it just, is it easier for them to get on Bloomberg? Or is it a little more respected when you call someone up and say, hey, I'm the CEO of OpFi. It's trading publicly. Then I'm the CEO of OpFi. It's a, you know, $500 million company that's private. Yeah, I've been involved in, and I don't.

I don't know if the exact number is, but 10 to 13 public companies over my career. And I found that there's something about being, you know, New York Stock Exchange or NASDAQ listed that really gives you a certain level of credibility. This is going to be, you know, approximately billion dollar market cap company. Hopefully we grow significantly over time and it becomes a much larger company. There'll be, you know, Wall Street research coverage. And we already have, you know, D.A. Davidson and Northland have already picked up coverage. There'll be other Wall Street firms, my guess, is that pick up coverage over time.

I don't know which ones those will be, but I would imagine that as a public company, we will attract research coverage. There will be, you know, more people talking about the company, you know, the opportunity. You know, it doesn't make sense for a private company to go on CNBC or Bloomberg and talk about their company, you know, when there is nothing to talk about if they're not publicly traded. like, you know, the, the venue available to a public company is very different than the venue available to a private company. And I think just getting out and talking about some of the

issues that are important to this company is going to be very real as a public company. So that was one of the things that was important to them. And I think it's going to be, you know, valuable to talk about these issues. Perfect. All right. Let's move into some, again, I got a lot of feedback from people that said, I like the valuation. I like that they struck the deal right before Upstart went public and Upstart went up five X. And this is kind of still at the same price. So I think there's a lot. But a lot of people were hesitant on a couple of spaces. So let me address a couple of those. I think the first and most common I did, there was a pretty negative story about fundamental global that came out last

year. You know, a lot of people Googled and said, hey, what's the deal with this? So I just want to toss it over you. How would you respond to people who are kind of looking at that? So, you know, I've been, I've never really been in the, you know, spotlight. Like, I've always kind of played low, low key with my career. You know, I started my career at Tiro Price and then I went to work for Steve Cohen after that. And, you know, when I worked for Steve, like, you know, we didn't speak to the press. We didn't talk to anyone. We were very, you know, fairly low key.

Like, Steve's, I think, taken on a different pathway now that he owns the New York Mets. But, you know, so when I started from. Fundamel Global, with Joe Muglia, we really tried to stay under the radar screen. We executed, you know, very well on many things. We actually built a wealth management company called Capital Health Advisors. And, you know, when we found Capital Health Advisors, it had, you know, something like, you know, sub-100 million dollars of assets for management. I think it was like 30 or 40 million of assets under management.

Fundament Global ended up owning 50% of it. you know, we, we helped them grow dramatically over a short period of time between 2013 and 2020. Fundnamoggle no longer owns capital wealth advisors. We actually distributed our stake to the members, and then I sold my stake personally in 2020, back to some of the other partners. And the point of doing that was that we would be highly focused on what we do really well. We knew that we were going to start doing specs and that in doing so, you know, that would require a tremendous amount of my time. And I felt it wasn't fair to the guys that were running capital health advisors for me to continue to own a large stake. We had helped them grow

to about two billion of assets. And I think that they'll continue to grow. But, you know, we, for whatever reason, I think we attracted some, you know, negative publicity. around this idea that, you know, we were managing, you know, several billion dollars of, you know, high net worth money. And I'm not sure why that was controversial. Like I, you know, we've, I've managed institutional money my whole career. You know, when I was at TRO price, you know, almost everything that we managed was institutional when I worked for Steve. Obviously, if there's a higher bar to manage than working for Steve Cohen, I'm not aware of it. You know, Steve is, is the, you know, the highest bar that I know of in terms of, you know, scrutiny around the people that he recruits

and works with. And I worked with it, you know, I worked for, I was the sector head of a Tiger Cobb called Highside Capital that, you know, had around $5 billion of asset center management had spun out of Maverick. All of our assets were, you know, almost all of our assets were institutional. So, you know, I had this view that if we were going to build a asset management business. I wanted to build it with my capital, with Joe Muglia's capital, with our friends and family's capital. And over time, we would expand beyond that if we thought it made sense. So we did expand. And, you know, like, ultimately, my partners really want to continue growing. And my view was that, like, I like managing my money and Joe Mugley's money and, you know, sort of a

smaller niche of friends and families' money. So I'm much more focused on returns than on on, you know, growing assets under management. So, you know, Fundama Global is now, in around 100 million of assets rather than the several billions since we've spun out that wealth management business. And that's what I'm going to focus the next few years on is sort of, you know, really high-intense returns. If you look at, you know, over the last 12 months, we've really focused our portfolio on a few key investments.

All of those investments have done extremely well. You know, I don't want to talk to returns because, you know, I don't want to talk to returns because that might be considered advertising. But, you know, you can look at the companies that we've filed 13Ds on. Ballantine Strong is up several hundred percent this year. You know, over the last, you know, 12 months, BK technology is up several hundred percent since, you know, last year. Green First Forest Products is up, you know, several thousand percent.

You know, we've had a great, great year. This has been the best year of my career. The other best year was 2008. So I had a fantastic 2008 when I had, you know, I had, you know, been asked to be featured in some of the things like the Big Short and other things. And I declined because I ended up moving to North Carolina and just really didn't want to take a lot of credit for some of the things that we, you know, that happened during the sort of global financial crisis. But, you know, I wasn't looking for publicity. I attracted some, and ultimately, you know, I've now become, like, slightly more, you know, public because of that. So, you know, I have a Twitter account now that has several, you know, six, seven thousand followers, and I've started doing things like this, just so people, you know, I have nothing to hide.

If people want to ask me anything, they're welcome to. And I don't think that, you know, criticism is such a bad thing. If people want to criticize, like, we'll learn from it and we'll grow. Perfect. Okay, well, let's move back to FGNA and Op-Fi. So another question I have, and this is more me than other people, but I think it's a good one. So I've looked at tons of SPACs, right? And I think you and I've talked offline.

I think you've seen some of the stuff I both love SPACs and I'm highly skeptical of them. And the first thing that jumped out to me in FGNA's background is six LOIs outstanding before you guys sent an LOI and ultimately struck a deal with OPI, right? And my biggest worry was SPACs, you know, the incentive structure for a sponsor is get a deal done because of a sponsor can get a deal done pretty much no matter how good or bad it is, they're going to make multiples of their money and it's going to be millions of dollars. So when I look at a proxy and I see six out of the lies, my first thought, and I've told you this offline, so you know this, is these guys were just trying to get a deal done. So why was this not these guys were trying to get a deal done and you guys actually kind of found a really good deal and not fine?

So I think that as a, you know, as a buyer of, you know, when you respect sponsor, you have a window of opportunity to get a deal done. And, you know, as a seller of a business, you often will explore, you know, multiple parties, right? So, you know, we, you never know as the buyer if you're going to, you know, you know when you're the seller that you're going to likely end up with a buyer. if you run a sales process, you know, assuming you have a good property to sell, right? So many of the sales processes we looked at, whether that be from companies that had hired an investment banker or for companies that hadn't hired an investment banker. Like we spoke to many companies that were not working with investment bankers or we're not, you know, entertaining a sales process at the time.

Maybe they were pursuing venture money and they wanted to see what they were intrigued by the concept of the spec. we found a lot of really exciting companies and they were not in direct competition in any way with what OpFi does. They were, in many ways, fintech companies, but they were not companies that were in the same line of businesses as OpFi. So we found some very interesting companies. We presented letters of intent that we felt were fair and reasonable to other companies. And in some cases, those companies ended up trading away. Many of them are public companies now that you would be familiar with. That, you know, some of the, some of those six LOIs were public companies that

you'd be familiar with that are well-known, you know, companies that ended up selling to us back. that are fintech companies. So, you know, you can sort of take your guess of a handful of companies that have done that, and you'd probably be right if you sort of read the description. And, you know, for whatever reason, they traded away. Maybe we weren't going to pay the same price. Maybe we didn't have the same chemistry or whatever.

But we were very serious about each of those opportunities. And, you know, I think that, you know, we were very happy that we were able to get a deal done with OpFi. So, you know, in each of those cases, you know, a few of the companies ended up spacking, a few of the companies ended up taking venture money, and we still are, you know, are talking to them about future, you know, like maybe down the road will end up doing a deal with them. They're not ready for spec, right? Like they took a series B or a series C in a venture round, you know, a couple hundred million dollars

and down the road, they'll be considering us back. Really exciting companies, we wouldn't have made an ally to any of them if we weren't interested, but opt-fly was it was the right place, right time, right valuation, right management team, stars aligned, and it was the right deal for us. So that's why we moved forward with it. One thing I have heard, and I believe you guys have publicly said, so I can say you're probably going to launch a couple more SPACs. I mean, FGF has a SPAC incubator at this point, so I don't think this is unknown news.

But one thing I have heard from a lot of serial SPAC sponsors, and this ranges from small sponsors to go read the Persian square transcripts and look at what Bill Ackman is saying is they say, hey, we looked at a lot of companies. And for one reason or another, we couldn't get a deal done with them in this first SPAC. You know, maybe we had too much money. Maybe we didn't have enough money. Maybe we just weren't getting the right bids. They weren't ready to go public, whatever. But we feel really good that we struck some relationships with some really cool companies. And that's going to be a real help to us in the second SPAC. So nothing really to add on there. Let me to, I said earlier that you guys struck the deal with up by in December, and I was kind of off there. Your proxy reveals you struck the LOI in December, and then you announced the deal in February. That's when you kind of dot the I, sign the tease, everything. And that is interesting because you strike the LOI, then Upstart goes public. Stock goes parabolic after the IPO. You and I've talked about earlier in this podcast, how Upstart probably the best comp. They go parabolic, and then you guys announced the deal in February. And what's really interesting to me there is the valuation hasn't changed from December to February. So how does, on both

sides, how is that negotiation look when your best comp is kind of going parabolic and you guys managed to keep that same valuation? So, you know, it's a great question. And, you know, from, I've done a lot of mergers and acquisitions over the years, Joe Mobley has done a lot of mergers and acquisitions over the years. Larry Sweats has done a lot of mergers and acquisitions of the years. And one of the things you learn from doing M&A is that from, you know, I read a lot of this on Twitter. Like, people seem to think that, like, companies can just wake up and snap their fingers and then all of a sudden their deals down.

Like, M&A is extremely... They think M&A is just like buying a stock, right? Like, you wake up today, I want a little more. I want a little less. Yeah, it is so complex. MNA is so complex. And I think people really underestimate how complex mergers and acquisitions are. You know, and LLI is just that.

It's a letter of intense, right? There's distance between a letter. of intent and signing a definitive agreement. Like, so many letters of intent never go to definitive. And I think that's important because when we signed the LOI in December, that was our intent was to do that deal at that valuation. And that was the Schwartz's and Opfe's intent was to sell to us. I think the character of the family and the character of us was that two or three months

later, fast forward to February 10th, the SPAC market was incredibly hot, and Upstart was on fire. So the comp group was on fire. And, you know, they probably could have tried to negotiate a better evaluation. We were concerned about that. We may have walked away from the deal if they did, but that was a concern. And they decided to, you know, move forward with the deal that we had agreed to. And I think that that really shows a lot of character on their side that this was the deal we agreed to. This is the deal we're moving forward with.

Obviously, that was February. This is now. Many of the comps are still doing very well. In fact, some of the less technology-focused companies like the ones you mentioned earlier as potential comps have all performed, many of them perform very well. their stock prices have increased, like a Nova stock has done very well, you know, Kuro stock has done very well. So many of their stocks have gone up. At the same time, the upstarts and the affirms and the others have done extremely well. And then you say, well, why is FGNA's stock price still at, you know, around where we priced the deal back in December and then February and then

now? And I look at it and I say, well, you know, I think it's probably deal uncertainty. It's questions around, you know, having $200 million in trust. It's questions around, you know, getting through the DSPAC process. And, you know, I spoke to the upstart underwriters, you know, extensively around the upstart IPO process. And I was actually surprised to find out, you know, how cool the upstart IPO was initially, meaning that I think it didn't price it, it didn't price at the high end of the range or even above the range.

It wasn't, like, massively oversubscribed. I think it actually priced maybe at the lower end of the range and was sort of, you know, a much better performing stock than one would think based on how the, you know, if you were looking at the supply demand of the IPO, from what I can, from what I understand from the underwriters, I certainly wasn't one of the underwriters, but that's just my understanding and speaking to the underwriters is that they, you know, they wouldn't have guessed that it would be so strong, so fast, on how they press the IPO? Yeah, you know, upstarts a different animal, different beasts, obviously, but upstart IPO versus a SPAC. But I have noticed, and I've written about this, you and I've talked about this, a lot of SPACs, it does seem, once they kind of get to trust value or a little bit under, they almost get, I don't know why, but they almost get pinned there. And then once the deal happens, like, it does make some sense to me. You'll see a SPAC close, and a lot of times the stock will drop because it was just a bad SPAC. I've seen that happen before,

you know, the sponsors will call everyone up and be pleased. don't redeem, do it as a personal favor, and the stocks at six. And you're like, oh, gosh, I got, but I've seen a lot of specs where the spec deal goes through the ticker changes in the next day, the stock's up 20, 30, 40 percent. You know, you saw it with skin, a couple others. And I don't know what's driving it. Why somebody looks and says, hey, one day before the spec deal closes, I don't want to buy this at 10, two days after the stock's at 13, but now I'm really eager to buy it. I'm not sure, but something happens. Let me turn to the two other big wrists here. And those are regulatory.

And we got a lot of questions. And I think the first and most obvious one is Congress just enacted. Biden just signed, I think last week, basically banning rent-a-banks. And a lot of people were really curious because Op-Fi does partner with banks a lot for these loans. A lot of people were really curious on the rent-a-bank side, how that's going to impact Op-Fi. Yeah, and I think it's a great question. So if you look at the origin of the law that was just signed by Biden and by Congress, it really undid. a law that was put into place late in the Trump administration. I think it was, you know, going off memory, I think it was like October of 2020, the true lender rule was put into place. I think that's what you're talking about, the true under rule. So, so ultimately, you know, go back to October 2020, you know, that rule was put in, you know, that law was put into place. And now, you know, fast forward to June 2021 and, you know, a very, a very, you know, a very, you know, a Biden administration, you know, undoes what the Trump administration did. And, you know,

this is happening across multiple things, not just in, you know, true lending. It's happening across many of the laws that Trump put into place right before he left the White House. But focusing on this one, because it's the relevant one to OpFI, you know, I think that, you know, OpFi certainly had a wonderful and fantastic business before October 2020, and post-October 2020, the business didn't change, right? So putting the law in place didn't really have any impact, and undoing the law won't have any impact from, you know, from everything that I can tell, you know, through our diligence,

this should have no impact on the company. If it did, we would, you know, we would be very concerned about it. But, you know, we certainly have spent a lot of time on this issue. And ultimately, you know, OpFi is not actually the lender in this situation. It's the bank that's making the loan. OpFi owns an economic interest in each of those loans. And the way the deal is structured is that the federal bank has the, you know, has the right to make those loans across all 50 states.

And that's exactly what they're doing. And if you think about that, it really makes you understand, it's also a key difference between, you know, Opfiz model and some of the other models you talked about, like where they're actually a fintech business, you know, being compensated through an economic interest in the lending structure, you know, if for some reason that would change, you know, there's no reason why you couldn't change the servicing fee or you couldn't change something. else, you know, ultimately they're providing a service to these banks that is valuable and the way they're being compensated now is appropriate. But ultimately, you know, we've talked about,

well, maybe we'd get a much higher multiple if we change the servicing structure. There's a lot of really interesting things to think about that, you know, aren't necessarily driven by the true under rule, but just by, hey, like, would the public markets perceive this differently if you, you know, restructure things into a fee or into other things. So there are, there are other ways to, to, to skin the cat. And I think that we're, we'll evaluate all those as time goes on. That's perfect. Let's turn to the other. And I think there's two different places to touch on this here. First, you know, lots of questions, the charge off rate here, about 30% of loans are charged off. I think lots of questions on the accounting as you guys go from a, as Opuy goes from a

private company to a public company. I think they have to shift. So I'll just let you talk about, you know, people see 30% charge off rate and they say, oh my God, that's insane. And I'll let you talk about that and the accounting and then I'll have a couple follow-ups on that. So when I see 30% charge-off rates, I say, well, well, clearly with a 30% charge-off rate, we need to price this loan appropriately, right? So in order to have a 30, you know, the idea of, you know, trying to cap interest rates at 36% across the nation should be a non-starter because you're basically saying, let's just not make any loans to anyone, right? Because to any of these borrowers, they don't deserve a loan. You know, the statistics

are the statistics on the charge-offs. And, you know, I think that OpFi is pricing these loans appropriately. They're not, you know, they're not, you know, pricing them at 400% APRs. They're pricing them between 50 and 160% or whatever the numbers we use in our presentation are. But, you know, on average, it's slightly above 100% APR. And, you know, it's very profitable at a 30% charge off rate. There's other expenses, you know, that you need to factor in besides the charge off rate, but that's one of the key ones. Perfect. And I think your mention of the APR comes great to maybe my final question, then I'll turn it over to you for last thoughts. You know, the APR rate, there's lots of talks about limiting the APR rate, legislation to limit the APR rate.

And I think also, you know, this is in the proxy. I think it was page 281. There's a DC, the DC Attorney General sued you guys for, I think it was for charging two of an APR, if I'm remembering correctly. I can't remember the exact crux of the lawsuit. But so I just wanted to get your thoughts on both the lawsuit risk and if you can speak to it, both the lawsuit risk and the just risk of what would happen if Congress passed law that said APRs can't be higher than 25% because 30% charge of rate, 25% APR, you can tell pretty quickly that's not going to work out. Yep, exactly.

So, you know, I'd rather not go into too much. duties on the lawsuit. They are what they are. Opfyes put out a public response that I think I shared with you and is available to see what their public response is. So I feel very- If we can get a public link, I'll include it in the show notes so any listeners can see that response. I think that's the company's response should be my response. So that's their response to the lawsuit. You know, as it relates to a nationwide you know, cap on interest rates. Um, you know, ultimately the bank lobby is extremely powerful. And, um, you know, the credit card business has been historically a very profitable business.

They're, you know, outside of APR, there's other things that you charge on, on a credit card, whether it be interchange from spending or annual fees or late fees or other, other aspects. And, you know, the idea of credit cards are not, like the credit card industry is not going away, right? And over time, the OpFiCard is rolling out in the next few weeks, as I mentioned, over time, I believe our credit card business will be very significant to the company. It's meant to be a graduation product, meaning that we have a very good, you know, intelligence on a lot of these borrowers. We know which ones are, you know, charging off and which ones are not charging off. So it makes sense that if you have a, you know, if 30% are charging off, that means 70% are charging off, that means 70% are not charging off. And if 70% are not charging up, those are really good customers that you may

want to make a credit card, you know, a long-term credit card relationship with. And I believe that that long-term credit card relationship will ultimately become a very significant part of the company over time. We haven't, we haven't modeled that into the estimates because I think the management is very conservative, you know, from that perspective. Like, we are modeling a lot of the, you know, current business rather than, you know, new products. A lot of SPACs will roll out, you know, we would have, you know, a savings product and an investing product. Like, you know, we'd have, like, you know, crypto trading in our, in our estimates. And we don't have any, you know, we don't have crypto trading in our 2020, uh, EBITDA number. Um, I'm over here laughing because

we've talked how many SPACs have you seen, hey, we don't have a product now, but in 2024, we're going to have more sales than Amazon. This is going to be gangbusters. I'm just laughing because you're so right. That's what I mean. Well, because, like, we have a lot of products that we do plan on rolling out. We've put them in the investor presentation, but we haven't put, you know, those types of things into our, into our, you know, EBITDA projections because they're not, you know, they're not products yet. Like, once they become products, then it makes sense to sort of roll them out, you know, once you have a good, a good timeline on it. But I think the management was appropriately conservative. They've, they've been debt, debt capital markets.

funded and internally funded, you know, over time. So the debt capital markets tend to be, you know, more cautious around, you know, covenants and things like that. So they've been very careful. And I think that that's sort of going to be the pathway forward. You know, my hope is that we, you know, we sort of out, you know, we perform well over time and hopefully outperform, you know, some of those expectations over time. And if we do that, you know, we will, we will, you know, sort of command the respect of the public capital markets and get a much higher multiple over time. So.

If you've got time, I've got two more questions and then I want to give it over to you for closing thoughts before we wrap this up. I've got as much time as you want. Fantastic. We're going to go four hours here, guys. But no, first question, you know, this is another one. This is a deal coming without a pipe. And the SPAC market has obviously evolved a ton over the past month, right?

You guys announced this deal in February that was right at the height of SPAC mania. I mean, you had, you had pre-deal specs that were trading for $14 or $15 per share, which, you know, that was a 50% premium to trust, which is insane. But I'm sure you guys did have the option to do a pipe in that market. You chose not to. I don't know, you know, maybe you're getting down. Maybe you're happy with it. But could you just talk about why no pipe in this deal and why you felt comfortable with that? Yeah.

So if you go back to the conversation we had about, you know, the LOI in December, the comp group, you know, really trading favorably and February when we announced the deal. There's no doubt that we did announce the transaction and start the process of doing a pipe. And we had a lot of interest in that. And I think the investment banks that we were working with said, like, you know, this will be five or six times over subscribed if you want to do a several hundred million dollar pipe. So it was the time to do a pipe and we could have done one. And at the same time, I sort of walked you through, you know, the valuation and the comps and sort of the Schwartz family and opt by honoring the original deal. And that was important to them and it was important to us. And honoring the original deal was important to them, you know, selling another several hundred million dollars of stock would have at the valuation that we did this transaction would have changed, you know, their ownership.

and they would have been selling a lot more stock at a price that maybe they thought was too low. And we didn't want to put them in that position, and they decided that they didn't want to take the several hundred million dollars that we could have placed. And I think that's fine. I think that ultimately, you know, if we end up with $200 million in trust or $240 million in trust or $175 million in trust or whatever ends up being, you know, the less that we have in trust, the more. for, you know, the existing shareholders alone, like we'd like to have as much in trust as possible. But I don't think that, you know, given the valuation that the deal was done at, I don't think that there was a very strong desire to sell a tremendous amount of more stock at that price. I think if the stock doubles, you know, over the next 12 months, maybe there'll be

an interest in selling a little bit more stock. But I just think that that selling stock at $10 was not, you know, the family's or off by his strong desire. Perfect. All right. My last question here, and this is such a softball. So I just need you to get ready to load up and just really swing at this one. But I do feel like it's important. You know, you mentioned Joe, CEO of TD Ameritrade about two decades.

Good, great track record there. I really like Jared. I just wanted you to touch a little bit more on Joe and Jared before we wrap this up because I do feel like they're a key part of this story on both ends. yeah so um and you know i can talk about this for a half hour or for five minutes so let me try to fit it into five minutes and it'll probably be a little longer but you know let me start with joe and then i'll get to jared so joe and i met in 2001 um he had taken over as the CEO of TD of Ameritrade before it was TD Ameritrade i was an analyst at teora price joe and i were texting about this last

night because I think he was trying to get somewhere on the phone last night and wasn't able to get them. And I said, well, if it was me, you'd be texting them and saying like, hey, you know, I called you 15 minutes ago. Give me a call. And he's like, well, Kyle, when I met you, you were 24. So I felt like I could treat you differently than this other person. But the situation, you know, I met Joe when I was very young. I was an analyst at Tiro Price and ultimately a portfolio manager there. We made a very large bet on on Ameritrade. You know, it was a $700 million market cap. And, you know, Joe had had certain, you know, Joe's a man of his word.

He had certain things that he really wanted to accomplish with Ameritrade. And he had a tight timetable to, you know, timeline to accomplish all of that. So he really set out to, you know, cut costs, grow revenue, consolidate the industry. and, you know, sort of, you know, make Ameritrade a much larger company. And that's exactly what he did. We became the largest outside shareholder, you know, the Ricketts family who now in the Chicago Cubs were the founding family and they obviously owned a lot of the stock. But as a public shareholder, we were the largest outside public shareholder.

And we owned the stock for a long period of time. I got to know Joe very well. I probably spoke to him during that time three, four, five times a week. as his largest outside shareholder. And fast forward to some of the deals that he did. He executed flawlessly on an acquisition of a company called Daytech back in 2002. He bought national discount brokers. He bought a few other companies.

And then ultimately, TD Waterhouse was for sale. TD Bank started talking publicly about their desire to do something strategic with TD Waterhouse. It was rumored that E-Trade would be doing something. And, you know, I really started pushing Joe Harden saying, like, you really need to merge with TD Waterhouse. And it's like, if you feel so passionately about this, you know, talk to my board about it. So, you know, in 2005, I wrote a letter to the board of Ameritrade and talked to them about why it would make sense for them to merge with TD Waterhouse. They invited me to speak to their board. In February, I think it was like Thursday, February 10th, 2005, I spoke to their board.

and, you know, told them why I thought it made a lot of sense to, uh, to merge. And, um, that deal was done, you know, it was a historic merger, you know, sort of second to the Charles Schwab merger, uh, in the financial services industry, but it was a historic merger for the company that really diversified them. It took away a lot of the, you know, any bear case of like, well, what happens if commissions go to zero? And Joe sort of, you know, the stock went from, you know, when we first, you know, found the company, three or four dollars a share, went to $26 in a couple year period, but it went from 10 to, you know, 26 in a couple of weeks. And they paid a $6 dividend and Joe was, you know, very well liked by Wall Street.

You know, he was a great communicator. He was direct. He was honest. You know, he didn't beat around the Bush. And I think he was great as a public company CEO from all those perspectives. You know, Joe ultimately ended up deciding that he would become the chairman of the company. and pursue a football coaching career, which is odd. But he took over coaching.

He first started working with the University of Nebraska as a volunteer assistant coach, executive advisor to the head coach, and sort of spent a few years working 80, 90 hours a week, almost like interning as a volunteer coach. And then he was offered the office. opportunity to become the head football coach at Coastal Carolina University, which at the time was, you know, a Division I, AA team. They were not bowl eligible. They were, you know, had to losing seasons. And he came in and he turned the, you know, the organization around

dramatically had a huge impact on it, you know, implemented all kinds of really, you know, interesting leadership principles at the company, and elevated the football team to where last year, they went 11 and O. They became Division 1. They were ball eligible. They played in a bowl game. You know, the BYU, Coastal Carolina football game ended up being sort of the most watched college football game on, you know, on ESPN in the last five years. Big time, you know, big time turn. And sort of just to give you the example of like the impact Joe has had on organizations, you know, not just a merit trade, but also on on any organization, it doesn't matter what they do, he has an enormous, enormous impact on organizations. And with that, you know, I think

that was really important with OpFi. So when we found Jared, Jared sort of checked all the boxes of like incredible CEO. He's young. He's aggressive. He's talented. He has the mindset of an investor. So he thinks like an investor, you know, he has a private equity background. He was a private equity investor. He then, you know, got into some leadership roles as an entrepreneur of a company called Insurion, which was a fintech insurance business. And then he was offered the opportunity in 2015 to become the CEO of OpFi. And he did. And he's done a tremendous job growing it. But, you know, unlike many investors, like myself, you know, being at the top of the list, like he is very, he's an extraordinary leader of people. So, you know, I've seen it with OpFi,

the way he handles his team, the way he handles the organization. He's great at leading people. So he thinks like an investor, but he's just extraordinary at leading people and he's got a great strategic mind. I think that Joe is going to be critical with the transition to, you know, public company life, how to speak to investors, how to handle, you know, the role as a public company CEO, which is very different than the role as a private company CEO. I think Joe's main role is to work with Jared, you know, as often as Jared thinks he needs to think through all the different strategic decisions of the company, to think through, you know, M&A potential, to think through key hiring decisions. I think key hiring decisions are going to be critical here. If you think about the platform that they have today versus the platform that I've articulated, you know, some of the hires that we could bring in could be very meaningful. meaningful to the company in terms of naming someone to help us grow a savings business or an investing business. That could be very critical. And if you think about Joe's Rolodex from Merrill Lynch

or from TD Ameritrade over a 19-year period running TD Ameritrade, I think we're going to have a lot of opportunities to bring in some really exciting people that have worked with Joe in the past or that Joe knows in the industry. And I think that's going to be, you know, just, you know, very helpful to apply. Yeah. Look, again, that was a softball. But I will just say, you know, as an outsider, again, lots of bold questions, lots of very questions. But to me, just looking at a company that Jared's the CEO, if he stepped in 2014, 2015, they grew it to 50 million annually in after-tax income with 15 million in equity capital in a couple of years. I mean, just that, it's very impressive and it's really cool. And again, Joe, having Joe over it to kind of help him with maybe

M&A opening the Rolodex up and stuff, but just, you know, again, softball question, but I wanted to make sure we drove that whole point on. Kyle, it's been an hour and 15 minutes. We've talked out a lot. There's a lot more we could talk about, but I just want to make sure that we've hit everything that you wanted to get out there. Are there any risks that you think are floating out there that we should have addressed? Are there any upsides that you think we should have addressed that we didn't really hit? Anything else you wanted to talk about? Well, you know, I do think that you know, if you look at the core business of OpFi, you know, I understand the opportunity and I understand the risk. I think we've talked about, you know, much of that today. Like,

this is a business that has grown dramatically over the last five to ten years, very consistently. I think it has great growth prospects in its core business. I think that the valuation that we put on the company is very reasonable relative to some of the, you know, the less technology-oriented peers. is very, you know, very, very undervalued relative to some of the really high-tech pairs. So, you know, we don't believe, you know, we're not pounding the table saying like, hey, we should be trading at, you know, $150 a share or $100 a share today, you know, because we're a pure, you know, you should give us the exact same multiple as upstart today or the exact same multiple as a firm or so-fi today.

However, you know, if you look at a company that has, you know, significantly more, you know, bit odd than some of these companies, but is trading at like one-tenth of the market cap, then you say, well, maybe there's some room for the stock to double or triple or quadruple before it gets to fair value. And then you look at all the other things that we could do and that we didn't price in, you know, to the earnings estimates. And you say, well, man, they were fairly conservative. Like, maybe there is upside to all those different things. I understand the risk that people are concerned about. I think that they're real risk and that you have to put some probabilities on some of these things.

But I think you also have to trust that every business has risk. And we looked at businesses, for example, that have payment for water flow as a key component of their business. Like, what if the government just eliminates payment for order flow? Like, then what? I mean, some of these businesses, like payment for order for is like the whole business. So, you know, I don't hear like people like that worried about like payment for water flow going on way and eliminating, you know, like 80% of like some of these companies are like revenue and earnings.

As someone who's looked at Virtue Financial a lot, I can promise you that there are people who are thinking about payment for order flow and all that sort of stuff. Let me ask one question. One last question that popped in my head. I'm very curious. I think the answer could be interesting. 2020 credit trends at OpFi and a lot of these lenders, Upstart grew a lot, but, you know, the elevates and all these guys, credit trends were good because their customers got lots

of stimulus checks, they were able to pay down. I think credit trends were probably the best they've ever been, but they actually had trouble generating loans, right? Because their customers got lots of stimulus checks, so they kind of didn't need this insurance. So when you look at 2020 and we're moving, we're in 2021, countries reopening, the stimulus checks are wearing off, how do you think about how much of a kind of COVID reopening play opt-fi is? You know, do you think it's, they've got the customer relationships as the stimulus wear down. There's going to be tons of demands for loan. Does it take time to gin that up? Is it no, you know, it's kind of going to be business as normal? How do you kind of look at that?

You know, I think it's, I think it's pretty fast. So I think that there's no doubt that these stimulus checks have had some impact on, on one demand and significant, you know, impact. But I do think that as we, you know, as we exit, you know, I, I traveled this weekend and, you know, the world is back. like airports are packed, people are eating out. I mean, it is backed the way it was. And, you know, as these stimulus checks sort of come to an end over the next few months,

you know, I think there's going to be, you know, a desire to spend, but there's going to be a need for, you know, some way to get the access to that money to do so. Perfect. Perfect. Well, Kyle, this has been super interesting. FGNA, despecking. I think next week is it July 14th is the despeck day? or that's the date of the shareholder meeting, if I remember correctly?

14, 15, 16. Yeah, I don't have it in front of me, but yeah. Something around there. So FGNA, despaqing next week, we should have Op-Fi trading by the end of the month. So anyone who's interested, you've got now to go research them as a SPAC. It'll be Op-Fi in a couple weeks,

but I'm looking forward to this switching from SPAC. It's a normal company. I'm looking forward to following the company going forward. Looking forward to talking to you about FGNB, FGNC, all the, what is, Adel, FI, or whatever the other SPACs are. So just looking forward to having you back on in the future and appreciate you coming on. Hey, man, you have so much energy.

I really appreciate you having me on. This has been great. And, you know, I've been watching your other shows. And it's been great to see. So thanks for having me on. Appreciate it, Kyle. We'll talk soon. Yeah.

All right, talk you soon. Bye.