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LeonYeo

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0勋章

2021-12-30

Great ariticle, would you like to share it?

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2021-12-23

nice one

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2021-12-23

yea

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2021-12-23

great

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2021-12-23

sigh

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2021-12-23

nice one

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2021-11-01

looking forward of it

SoFi Technologies: The Bank Charter Will Change Everything

2021-08-02

nice

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2021-08-02

nice one

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2021-08-02

well done

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2021-08-02

nice one

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2021-08-02

nice one

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2021-07-21

nice one

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2021-07-21

good luck

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2021-07-21

keep it up

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2021-07-21

oh noo

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2021-07-21

well,done

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2021-07-16

Nice one..

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2021-06-22

Nice one

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2021-06-22

Nice one

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at ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/692338503","repostId":"2195637674","repostType":2,"isVote":1,"tweetType":1,"viewCount":1140,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":691495611,"gmtCreate":1640225950836,"gmtModify":1640225958507,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3561715931247718","idStr":"3561715931247718"},"themes":[],"htmlText":"nice one","listText":"nice one","text":"nice one","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/691495611","repostId":"1134708540","repostType":4,"isVote":1,"tweetType":1,"viewCount":720,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":691492657,"gmtCreate":1640225919990,"gmtModify":1640225957569,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3561715931247718","idStr":"3561715931247718"},"themes":[],"htmlText":"yea","listText":"yea","text":"yea","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/691492657","repostId":"1102948040","repostType":4,"isVote":1,"tweetType":1,"viewCount":737,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":691496853,"gmtCreate":1640225898169,"gmtModify":1640225956493,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3561715931247718","idStr":"3561715931247718"},"themes":[],"htmlText":"great","listText":"great","text":"great","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/691496853","repostId":"1128124450","repostType":4,"isVote":1,"tweetType":1,"viewCount":612,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":691496050,"gmtCreate":1640225885592,"gmtModify":1640225956300,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3561715931247718","idStr":"3561715931247718"},"themes":[],"htmlText":"sigh","listText":"sigh","text":"sigh","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/691496050","repostId":"1173043963","repostType":4,"isVote":1,"tweetType":1,"viewCount":695,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":691405550,"gmtCreate":1640225663170,"gmtModify":1640225663335,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3561715931247718","idStr":"3561715931247718"},"themes":[],"htmlText":"nice one","listText":"nice one","text":"nice one","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/691405550","repostId":"1183786099","repostType":2,"isVote":1,"tweetType":1,"viewCount":712,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":849727950,"gmtCreate":1635778649608,"gmtModify":1635778649669,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3561715931247718","idStr":"3561715931247718"},"themes":[],"htmlText":"looking forward of it","listText":"looking forward of it","text":"looking forward of it","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/849727950","repostId":"1121970113","repostType":4,"repost":{"id":"1121970113","pubTimestamp":1635777543,"share":"https://www.laohu8.com/m/news/1121970113?lang=&edition=full","pubTime":"2021-11-01 22:39","market":"us","language":"en","title":"SoFi Technologies: The Bank Charter Will Change Everything","url":"https://stock-news.laohu8.com/highlight/detail?id=1121970113","media":"Seeking Alpha","summary":"Summary\n\nThe bank charter is SoFi's biggest catalyst and will have measurable effects on its margins","content":"<p><b>Summary</b></p>\n<ul>\n <li>The bank charter is SoFi's biggest catalyst and will have measurable effects on its margins, membership, and marketing.</li>\n <li>Analysis of the timeline of previous fintechs who have received bank charters suggests that the bank charter approval should be in the near future (within ~6 months).</li>\n <li>Other fintechs' valuations have exploded after receiving a national bank charter and SoFi will follow suit.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/be5f0375691db5a55bbdccb1c7d4f9f1\" tg-width=\"1536\" tg-height=\"1170\" width=\"100%\" height=\"auto\"><span>georgeclerk/E+ via Getty Images</span></p>\n<p>SoFi Technologies (SOFI) is finally seeing a return to a reasonable value after its unwarranted price drop following Q2 earnings. At the time, I highlighted that&nbsp;the price drop gave investors a tremendous opportunity to open a position or average down. Since the publication of that article, the stock price has increased more than 40%. That is an excellent return, but there is still huge upside to investing in this major growth fintech. SoFi’s growth story is only getting started. SoFi’s biggest catalyst is obtaining a national bank charter, and this article will explain why a bank charter will accelerate their already impressive growth.</p>\n<p><b>Introduction to the Bank Charter</b></p>\n<p>SoFi investors cannot seem to stop talking about the bank charter or trying to decipher when it will be approved. Despite the excitement surrounding this catalyst, I do not think that everyone understands the whole picture of what the bank charter can and will do for SoFi. As a chemical engineer, I am a numbers guy at heart. I’m the type of person that gets excited about putting together spreadsheets and numerical analysis and breakdowns. I will cover how I think the stock price will react to bank charter news and of what we know surrounding the timeline for approval below. However, one of the things that I most enjoy about investing is that it is a blend of analytical analysis and human emotion. The narrative of a stock often has a significant effect on its share price because there is a large human element involved and humans are not emotionless automatons. I want to start with that narrative, breaking down charter’s effects on three different parts of their business: Margins, Marketing, and Members.</p>\n<p><b>Bank Charter's EffectsMargins</b></p>\n<p>The effect on SoFi’s margins is the easiest to quantify. Owning a bank charter allows SoFi to use their deposits to finance their own loans. Lending is SoFi’s biggest source of revenue and profits. Right now, they have to borrow money from third-party banks to finance the majority of their loans. These third-party banks charge somewhere around 2-2.5% interest (200-250 basis points) to use their money. As soon as SoFi obtains a bank charter, they can use the deposits from their members to finance those loans. That means their cost of capital goes from 2% to what they pay their SoFi Money members in interest (currently 0.25%, but more on that later). This improves their margins. Additionally, answering to and being regulated by a single entity (the OCC) is easier than being independently regulated by 50 individual states (which is what SoFi currently has to do). This cuts down on administrative costs. Most people are familiar with the following slide from their investor slide deck, but it is worth putting here again.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/119616a3edb8d0ebe95b81b2035ae3d8\" tg-width=\"640\" tg-height=\"360\" width=\"100%\" height=\"auto\"><span>Source: SoFi Investor Presentation</span></p>\n<p>EBITDA is a measure of earnings. The dark blue bars are their earnings without the bank charter, and the light blue bars are incremental earnings they get because of their expanded margins. So in simple terms, between now and 2025, the bank charter is worth about $1B in profit margin between now and 2025 with current revenue. Profitability, free cash flow, cash on hand, and a whole host of important financial parameters will get a big boost with the bank charter.</p>\n<p><b>Marketing</b></p>\n<p>The second key aspect about the bank charter is that it allows SoFi to have more effective marketing. A national bank charter gives them legitimacy. SoFi Money deposits are already FDIC insured, but that is through partner banks. As one of the first Fintech companies with a bank charter, SoFi will have a cachet and credibility that will help them stand out from their peers. That credibility and legitimacy is all well and good, but when people are making a financial decision, the most important factor is usually how it affects their wallets.</p>\n<p><b>Personal Loans</b></p>\n<p>When you type “personal loan” into Google, the first website that pops up (after the paid advertisements) is Bankrate's website and it looks like this:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/dbb8aec2a4f3327da227b1942cf93687\" tg-width=\"640\" tg-height=\"701\" width=\"100%\" height=\"auto\"><span>Source: Bankrate</span></p>\n<p>You’ll notice that SoFi is among the top results. Their product offering ties for the lowest APR, most flexible terms, and max loan amount. What would happen if they could drop their APR by 0.25% or 0.5%? Anthony Noto gave an&nbsp;interview&nbsp;about the effects of the bank charter. Speaking specifically about loans, he said “my cost goes from two percent to fifteen [basis points]. I could give that all back to you in a lower interest rate on that loan, or I can give you a higher interest rate on your deposits, or I could drop it to the bottom line. So we’ll do a combination of those things.” In other words, there are three things ways that SoFi can use their lower cost of capital. They can use it to lower the APR on the loans they offer, they can give a higher interest rate to SoFi Money accounts, or they can use it to improve their margins,. According to Noto, they plan to do all three. SoFi already has such low costs that they are tied for being the lowest cost provider with their current cost of capital. After the bank charter, SoFi can simultaneously drop their APR to attract more customers while expanding their margins. If you are looking for a personal loan and you find that bankrate page, but now SoFi’s APR is 4.75% or 4.5%, that is almost certainly going to be the first link you click. SoFi will have gained another member into their sticky system.</p>\n<p><b>Student Loan Refinancing</b></p>\n<p>Let’s try the same exercise with the phrase “student loan refinance”. Again, after scrolling past the paid advertisement results, the first result is a NerdWallet page where you will find the following graphic:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/635b349a2dd5ef591acbf1cdf8e7e937\" tg-width=\"640\" tg-height=\"510\" width=\"100%\" height=\"auto\"><span>Source: NerdWallet</span></p>\n<p>Again, SoFi’s offering is tied for the lowest rate available. If they use a portion of their lowered cost basis to offer even better rates, they will hoover up an even greater portion of the student loan refinance market.</p>\n<p><b>SoFi Money</b></p>\n<p>The second option that Anthony Noto mentioned was that SoFi can give you a higher interest rate on your deposits. This is in reference to a SoFi Money account, which is similar to a checking account. Currently, SoFi offers 0.25% interest on the balance in the SoFi Money account. Because SoFi is not a nationally chartered bank, they have to send your deposit to a third-party FDIC-insured bank. Once SoFi has their bank charter, they are free to give their members whatever interest rate they choose. The best high-yield savings accounts on the market right now give 0.5-0.6% APY:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/bc09da4ea8f9c7b30ddfe1d37bb0a677\" tg-width=\"640\" tg-height=\"550\" width=\"100%\" height=\"auto\"><span>Source: NerdWallet</span></p>\n<p>SoFi can easily disrupt this market by offering a better product and a better interest rate. As I mentioned before, SoFi Money is akin to a checking account. It is liquid and you can spend the money in the account with a debit card or withdraw funds from an ATM. These high-yield savings accounts do not have that same liquidity. To access the money, you first have to initialize a transfer to a checking account, which typically takes 3-5 days. Banks do this on purpose to increase friction between you and your money in these higher yield accounts so that you move it less frequently. Anthony Noto is on the record as saying that this practice is not necessary in the modern banking world. SoFi will be able to offer an account that gives you the flexibility of a checking account with an interest rate that surpasses high-yield savings accounts. I believe they will do so to incentivize their members to move all their money into a SoFi Money account. Remember, the greater the total value of their deposits, the better their lending margins will be.</p>\n<p>A bank charter allows SoFi to offer best-in-class products for student loans, personal loans, checking accounts, and savings accounts. Their home mortgage loans and home refinancing products will also become even more competitive. Marketing becomes much easier when your product sells itself. Additionally, each new member and each existing member will be adding more to the bottom line than ever before.</p>\n<p><b>Members</b></p>\n<p>The bank charter also makes things better for existing and new members. This will make their product offerings even stickier than they already are. Right now, SoFi has to sweep the deposits from SoFi Money, SoFi Invest, and their other financial products into partner bank accounts. It is frustrating, for example, that moving cash from your Money account to your Invest account takes 2-3 days. This is because they have to move it from an outside bank’s brokerage account to a different bank’s deposit account. A lot of internal friction between their account, investment, credit card, and other products will be removed when they can hold their own deposits, making for a seamless and better user experience.</p>\n<p>Additionally, existing members will also get the benefits discussed in the marketing section above. This means better rates on personal loans, student loan refinancing, mortgages, and more interest for their deposits. If you are already a member and you see that SoFi has best-in-class loan offerings, it makes it much easier to stay in the SoFi ecosystem for that loan. Cross-selling is a key feature of their long-term strategy, and having more competitive products makes it easier and more attractive for members to stay with SoFi for all their financial needs. I, for example, have my emergency fund in a high-yield savings account but would gladly move it all to SoFi Money if they had slightly higher interest rates.</p>\n<p><b>Bank Charter Timeline</b></p>\n<p>I am not Nostrodomos nor do I claim to know the inner workings of the Office of the Comptroller of the Currency (OCC). I have no idea when the bank charter will be approved. However, there are some definitive dates that we do know and that we can compare with previous fintechs who have been granted a bank charter. Also, there are some fun breadcrumbs that SoFi seems to be leaving that indicate that the process is moving forward.</p>\n<p><b>Previous Fintech Timelines</b></p>\n<p>Varo, Square (SQ), and LendingClub (LC) are the three fintech companies that have received bank charters. There are two type of charter applications. The first is a de novo application, which is the creation of a new bank. The second is a change of control application, which is where one bank acquires another bank that already has a national bank charter and takes over their charter. Varo and Square went through the de novo process whereas Lending Club went through the change of control process through their acquisition of Radius Bank. The timelines were as follows:</p>\n<p>Varo – Received&nbsp;preliminary approval&nbsp;on September 4, 2018 and&nbsp;final approval&nbsp;on July 31, 2020, a period of almost 23 months. Varo was the first fintech to receive a bank charter.</p>\n<p>Square – Receive&nbsp;dpreliminary approval&nbsp;on March 18, 2020 and&nbsp;final approval&nbsp;on March 1, 2021, a period of about 11 months.</p>\n<p>LendingClub –Announced the acquisition&nbsp;of Radius bank on February 18, 2020, filed for the change of control on April 27, 2020, and received&nbsp;final approval&nbsp;on December 30, 2020, a period of about 10 months.</p>\n<p><b>SoFi Bank Charter Timeline</b></p>\n<p>SoFi’s application started as a de novo application and they received&nbsp;conditional approval of their bank charter application&nbsp;on October 27, 2020. However, on March 9, 2021,SoFi announced an agreement&nbsp;to acquire Golden Pacific Bancorp and changed their de novo application to a change of control application. The linked press release states that “The proposed acquisition is a key strategic step in SoFi’s path to obtaining a national bank charter”, so we can reasonably assume that SoFi believed that the acquisition would expedite the bank charter process. The same press release also states that the completion of the transaction is “anticipated before the end of 2021”. SoFi also submitted a&nbsp;CRA strategic plan&nbsp;as part of their bank charter application. That document states that the “The Bank elects to have its CRA performance evaluated under the Strategic Plan option, with a proposed period of November 1, 2021 (or upon consummation of the Bank) to December 31, 2024.” This also indicates that SoFi is prepared to begin banking operations starting in 2021. Based on the Square and LendingClub timelines, and SoFi’s own press release and CRA plan, it is probably safe to assume that the bank charter approval could come any time between now and spring of 2022.</p>\n<p><b>Breadcrumb Trail to Bank Charter Approval</b></p>\n<p>Now we get into the fun speculation stuff. Please note again that there is still a chance this all falls apart and that the OCC does not grant a bank charter. In that case, SoFi stock still has an analyst target of $25. This section is mostly just for fun, so take everything here with a grain of salt. However, if you like to play connect the dots, here are some interesting tidbits you probably want to be aware of. If this is a little too speculative for you, please just skip to the next section.</p>\n<p><b>Convertible Note Offering Bears a Suspicious Resemblance</b></p>\n<p>If you go back to that GPB acquisition press release, you find this statement: “If successfully granted a national bank charter by the OCC and Federal Reserve pursuant to its change of control application, SoFi plans to contribute $750 million in capital and pursue its national, digital business plan while maintaining GPB’s community bank business and footprint, including GPB’s current three physical branches.” SoFi planned to raise $750 M in capital to expand banking if they are granted the bank charter. On September 29, 2020, SoFi offered convertible senior notes to raise exactly $750M. The offering was later expanded to $1.1B. It is an interesting coincidence that the senior note offering raised the exact amount that SoFi said they would raise if granted a bank charter.</p>\n<p><b>Banking Hires and Positions</b></p>\n<p>SoFi is made a very auspicious hire that showed up on LinkedIn sometime in mid-September. Meet Chad Borton, Harvard grad, former Bank President of USAA and currently employed as the President of “SoFi Bank at SoFi”.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9c32b6f73ee4e73ec8c102431d2cc8c0\" tg-width=\"640\" tg-height=\"496\" width=\"100%\" height=\"auto\"><span>Source: LinkedIn</span></p>\n<p>He was included on the SoFi website&nbsp;Management Team&nbsp;page on October 5, although there has been a fairly conspicuous lack of fanfare surrounding his hire as there was no corresponding press release or other announcement. There has not even been mention of it on SoFi’s official twitter account. Besides hiring a new President of SoFi Bank, there have been numerous hires and job listings for roles that would only be necessary if they become a national bank, such as a Angela Smedley, a&nbsp;Senior Compliance Officer, CRA Officer. Only a nationally chartered bank is regulated by the Community Reinvestment Act (CRA), so this position would be superfluous otherwise. Or this current listing for a&nbsp;Bank FP&amp;A Senior Associate. That job listing says outright in the job description that “SoFi Bank is currently in formation and will establish a nationwide fully digital bank with a member-centric approach that provides relevant, fairly priced products throughout life stages and events.”</p>\n<p>Is the Bank Charter Priced In?</p>\n<p>After the recent price movements in the SoFi stock, I am more convinced than ever that the bank charter is not priced in. Here is the SOFI daily chart from the last 3 months:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8af8403dd21b616e4c93e37aff8bf687\" tg-width=\"640\" tg-height=\"360\" width=\"100%\" height=\"auto\"><span>Source: TradingView with my own annotations</span></p>\n<p>You’ll notice that on September 22 and October 11, the stock had jumps of 11% and 13.5%, respectively. Those were each caused by an analyst initiating coverage of SoFi stock with a \"Buy\" rating. Absolutely nothing at all changed about the underlying fundamentals of the SoFi business, but simply because a Jeffries analyst and a Morgan Stanley analyst recommended the stock as a “buy”. This stock has run up close to 40% in a month on the back of two analyst ratings. If analyst ratings can move the stock this much, think of how much something that materially improves everything about the company can move it.</p>\n<p>What Happened to LendingClub’s stock price after obtaining their bank charter?</p>\n<p>We can also compare what happened to LendingClub’s stock price. As mentioned previously, LendingClub received their charter approval on December 30, 2020 and their share price closed that day at $8.37. The share price jumped 26% the next day and was up 37% total a week later. What has truly been astounding however, has been their incredible growth since then spurred by record earnings due to their increased margins. Although they received bank charter approval on December 30, they started operations as a fully bank on February 1, 2021. That makes Q2 2021 their first earnings after receiving charter approval. LC announced blowout earnings driven by greater margins in their lending business and raised future guidance and the stock price blew up 48% overnight. At time of writing, Q3 2021 earnings were just announced yesterday and again the stock skyrocketed going up 33% overnight. In all, since the bank charter was announced, the stock is now up 403% since the approval announcement, as you can see in the one year chart below.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/fcf43842e6ba7cb3c7389d17113dafc7\" tg-width=\"640\" tg-height=\"360\" width=\"100%\" height=\"auto\"><span>Source: TradingView with my own annotations</span></p>\n<p><b>How about Varo Bank’s Valuation with a charter?</b></p>\n<p>Another data point is Varo Bank. Varo is not a publicly traded company. However, their various funding rounds do give them a valuation. This headline pretty much says it all:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/3f9e57304041f5df213c374d43b21f38\" tg-width=\"640\" tg-height=\"1280\" width=\"100%\" height=\"auto\"><span>Source: CNBC</span></p>\n<p>Revenue has tripled and the valuation has gone up 3.6x since they acquired their charter (I know the headline says it tripled, but 700M to 2.5B is actually 3.6x).</p>\n<p><b>Square is the Odd Fintech Out</b></p>\n<p>Square is the odd company out here, but that is for good reason. Both LendingClub and Varo operate as consumer banks and lending is a large segment of their business. Their business models make full use of the bank charter. Square, on the other hand, does not have any consumer lending products at all. They do offer business loans, but it is a very small part of their company. In fact, when you read their&nbsp;press release&nbsp;about obtaining their charter, it kind of makes you wonder why they went to the trouble of getting it in the first place. According to their press release, “We do not expect the bank to have a material impact on Square’s consolidated balance sheet, total net revenue, gross profit, or Adjusted EBITDA in 2021.”</p>\n<p><b>What is Wall Street’s Opinion on the Bank Charter Being Priced In?</b></p>\n<p>Wall Street analysts agree that the bank charter is not priced in. John Hecht of Jeffries&nbsp;specifically said&nbsp;that his $25 price target did not include the bank charter and that the charter would add about 30% in incremental adjusted EBITDA relative to his current base case estimates. Betsy Grasec of Morgan Stanley, who also initiated coverage with a $25 price target, has a bull case price target of $34. The difference between the two cases is that&nbsp;SoFi obtains its bank charter by early 2022.</p>\n<p><b>SoFi Future Expectations</b></p>\n<p>So LendingClub’s market cap had increased 4.8x in 10 months and Varo Bank’s evaluation went up 3.6x in 13 months after receiving charters. It’s also worth noting that LendingClub had already run up from about $5 at the beginning of November to over $8 at the end of December prior to the charter approval. Wall Street also believes there is significant upside with the bank charter.</p>\n<p>I think it is reasonable to assume that SoFi gets a good short-term bump when the approval goes through. SoFi has had a good run recently, but I think it is clear that there is a lot of upside left to capture. If buy ratings can result in double-digit gains, I think a 10-20% jump on the news can be expected. However, I think the bigger gains will be realized over the next two to three earnings reports that occur after the bank charter approval. I expect SoFi to crush analyst estimates and consistently raise future guidance over those quarters as the true impact of the bank charter hits membership growth numbers, revenue, and earnings. If the bank charter comes through this year, I think a conservative and achievable price target for the end of 2022 is $40-$45.</p>\n<p>The most important thing to me that people do not always seem to discuss about the charter is that it fundamentally improves the underlying business long term. This isn’t a catalyst that results in a one-time bump in revenue. This will positively affect every core product SoFi offers, make the ecosystem even stickier, and accelerate member growth (it even positively affects Galileo, although I did not have time to cover that in this article). This change will still be felt 5 and 10 years down the road as SoFi moves from a growth story to a successful fintech bank. SoFi is my highest conviction stock and I believe it will widely outperform the market over the coming years.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>SoFi Technologies: The Bank Charter Will Change Everything</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSoFi Technologies: The Bank Charter Will Change Everything\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-01 22:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4464001-sofi-technologies-the-bank-charter-will-change-everything><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nThe bank charter is SoFi's biggest catalyst and will have measurable effects on its margins, membership, and marketing.\nAnalysis of the timeline of previous fintechs who have received bank ...</p>\n\n<a href=\"https://seekingalpha.com/article/4464001-sofi-technologies-the-bank-charter-will-change-everything\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SOFI":"SoFi Technologies Inc."},"source_url":"https://seekingalpha.com/article/4464001-sofi-technologies-the-bank-charter-will-change-everything","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1121970113","content_text":"Summary\n\nThe bank charter is SoFi's biggest catalyst and will have measurable effects on its margins, membership, and marketing.\nAnalysis of the timeline of previous fintechs who have received bank charters suggests that the bank charter approval should be in the near future (within ~6 months).\nOther fintechs' valuations have exploded after receiving a national bank charter and SoFi will follow suit.\n\ngeorgeclerk/E+ via Getty Images\nSoFi Technologies (SOFI) is finally seeing a return to a reasonable value after its unwarranted price drop following Q2 earnings. At the time, I highlighted that the price drop gave investors a tremendous opportunity to open a position or average down. Since the publication of that article, the stock price has increased more than 40%. That is an excellent return, but there is still huge upside to investing in this major growth fintech. SoFi’s growth story is only getting started. SoFi’s biggest catalyst is obtaining a national bank charter, and this article will explain why a bank charter will accelerate their already impressive growth.\nIntroduction to the Bank Charter\nSoFi investors cannot seem to stop talking about the bank charter or trying to decipher when it will be approved. Despite the excitement surrounding this catalyst, I do not think that everyone understands the whole picture of what the bank charter can and will do for SoFi. As a chemical engineer, I am a numbers guy at heart. I’m the type of person that gets excited about putting together spreadsheets and numerical analysis and breakdowns. I will cover how I think the stock price will react to bank charter news and of what we know surrounding the timeline for approval below. However, one of the things that I most enjoy about investing is that it is a blend of analytical analysis and human emotion. The narrative of a stock often has a significant effect on its share price because there is a large human element involved and humans are not emotionless automatons. I want to start with that narrative, breaking down charter’s effects on three different parts of their business: Margins, Marketing, and Members.\nBank Charter's EffectsMargins\nThe effect on SoFi’s margins is the easiest to quantify. Owning a bank charter allows SoFi to use their deposits to finance their own loans. Lending is SoFi’s biggest source of revenue and profits. Right now, they have to borrow money from third-party banks to finance the majority of their loans. These third-party banks charge somewhere around 2-2.5% interest (200-250 basis points) to use their money. As soon as SoFi obtains a bank charter, they can use the deposits from their members to finance those loans. That means their cost of capital goes from 2% to what they pay their SoFi Money members in interest (currently 0.25%, but more on that later). This improves their margins. Additionally, answering to and being regulated by a single entity (the OCC) is easier than being independently regulated by 50 individual states (which is what SoFi currently has to do). This cuts down on administrative costs. Most people are familiar with the following slide from their investor slide deck, but it is worth putting here again.\nSource: SoFi Investor Presentation\nEBITDA is a measure of earnings. The dark blue bars are their earnings without the bank charter, and the light blue bars are incremental earnings they get because of their expanded margins. So in simple terms, between now and 2025, the bank charter is worth about $1B in profit margin between now and 2025 with current revenue. Profitability, free cash flow, cash on hand, and a whole host of important financial parameters will get a big boost with the bank charter.\nMarketing\nThe second key aspect about the bank charter is that it allows SoFi to have more effective marketing. A national bank charter gives them legitimacy. SoFi Money deposits are already FDIC insured, but that is through partner banks. As one of the first Fintech companies with a bank charter, SoFi will have a cachet and credibility that will help them stand out from their peers. That credibility and legitimacy is all well and good, but when people are making a financial decision, the most important factor is usually how it affects their wallets.\nPersonal Loans\nWhen you type “personal loan” into Google, the first website that pops up (after the paid advertisements) is Bankrate's website and it looks like this:\nSource: Bankrate\nYou’ll notice that SoFi is among the top results. Their product offering ties for the lowest APR, most flexible terms, and max loan amount. What would happen if they could drop their APR by 0.25% or 0.5%? Anthony Noto gave an interview about the effects of the bank charter. Speaking specifically about loans, he said “my cost goes from two percent to fifteen [basis points]. I could give that all back to you in a lower interest rate on that loan, or I can give you a higher interest rate on your deposits, or I could drop it to the bottom line. So we’ll do a combination of those things.” In other words, there are three things ways that SoFi can use their lower cost of capital. They can use it to lower the APR on the loans they offer, they can give a higher interest rate to SoFi Money accounts, or they can use it to improve their margins,. According to Noto, they plan to do all three. SoFi already has such low costs that they are tied for being the lowest cost provider with their current cost of capital. After the bank charter, SoFi can simultaneously drop their APR to attract more customers while expanding their margins. If you are looking for a personal loan and you find that bankrate page, but now SoFi’s APR is 4.75% or 4.5%, that is almost certainly going to be the first link you click. SoFi will have gained another member into their sticky system.\nStudent Loan Refinancing\nLet’s try the same exercise with the phrase “student loan refinance”. Again, after scrolling past the paid advertisement results, the first result is a NerdWallet page where you will find the following graphic:\nSource: NerdWallet\nAgain, SoFi’s offering is tied for the lowest rate available. If they use a portion of their lowered cost basis to offer even better rates, they will hoover up an even greater portion of the student loan refinance market.\nSoFi Money\nThe second option that Anthony Noto mentioned was that SoFi can give you a higher interest rate on your deposits. This is in reference to a SoFi Money account, which is similar to a checking account. Currently, SoFi offers 0.25% interest on the balance in the SoFi Money account. Because SoFi is not a nationally chartered bank, they have to send your deposit to a third-party FDIC-insured bank. Once SoFi has their bank charter, they are free to give their members whatever interest rate they choose. The best high-yield savings accounts on the market right now give 0.5-0.6% APY:\nSource: NerdWallet\nSoFi can easily disrupt this market by offering a better product and a better interest rate. As I mentioned before, SoFi Money is akin to a checking account. It is liquid and you can spend the money in the account with a debit card or withdraw funds from an ATM. These high-yield savings accounts do not have that same liquidity. To access the money, you first have to initialize a transfer to a checking account, which typically takes 3-5 days. Banks do this on purpose to increase friction between you and your money in these higher yield accounts so that you move it less frequently. Anthony Noto is on the record as saying that this practice is not necessary in the modern banking world. SoFi will be able to offer an account that gives you the flexibility of a checking account with an interest rate that surpasses high-yield savings accounts. I believe they will do so to incentivize their members to move all their money into a SoFi Money account. Remember, the greater the total value of their deposits, the better their lending margins will be.\nA bank charter allows SoFi to offer best-in-class products for student loans, personal loans, checking accounts, and savings accounts. Their home mortgage loans and home refinancing products will also become even more competitive. Marketing becomes much easier when your product sells itself. Additionally, each new member and each existing member will be adding more to the bottom line than ever before.\nMembers\nThe bank charter also makes things better for existing and new members. This will make their product offerings even stickier than they already are. Right now, SoFi has to sweep the deposits from SoFi Money, SoFi Invest, and their other financial products into partner bank accounts. It is frustrating, for example, that moving cash from your Money account to your Invest account takes 2-3 days. This is because they have to move it from an outside bank’s brokerage account to a different bank’s deposit account. A lot of internal friction between their account, investment, credit card, and other products will be removed when they can hold their own deposits, making for a seamless and better user experience.\nAdditionally, existing members will also get the benefits discussed in the marketing section above. This means better rates on personal loans, student loan refinancing, mortgages, and more interest for their deposits. If you are already a member and you see that SoFi has best-in-class loan offerings, it makes it much easier to stay in the SoFi ecosystem for that loan. Cross-selling is a key feature of their long-term strategy, and having more competitive products makes it easier and more attractive for members to stay with SoFi for all their financial needs. I, for example, have my emergency fund in a high-yield savings account but would gladly move it all to SoFi Money if they had slightly higher interest rates.\nBank Charter Timeline\nI am not Nostrodomos nor do I claim to know the inner workings of the Office of the Comptroller of the Currency (OCC). I have no idea when the bank charter will be approved. However, there are some definitive dates that we do know and that we can compare with previous fintechs who have been granted a bank charter. Also, there are some fun breadcrumbs that SoFi seems to be leaving that indicate that the process is moving forward.\nPrevious Fintech Timelines\nVaro, Square (SQ), and LendingClub (LC) are the three fintech companies that have received bank charters. There are two type of charter applications. The first is a de novo application, which is the creation of a new bank. The second is a change of control application, which is where one bank acquires another bank that already has a national bank charter and takes over their charter. Varo and Square went through the de novo process whereas Lending Club went through the change of control process through their acquisition of Radius Bank. The timelines were as follows:\nVaro – Received preliminary approval on September 4, 2018 and final approval on July 31, 2020, a period of almost 23 months. Varo was the first fintech to receive a bank charter.\nSquare – Receive dpreliminary approval on March 18, 2020 and final approval on March 1, 2021, a period of about 11 months.\nLendingClub –Announced the acquisition of Radius bank on February 18, 2020, filed for the change of control on April 27, 2020, and received final approval on December 30, 2020, a period of about 10 months.\nSoFi Bank Charter Timeline\nSoFi’s application started as a de novo application and they received conditional approval of their bank charter application on October 27, 2020. However, on March 9, 2021,SoFi announced an agreement to acquire Golden Pacific Bancorp and changed their de novo application to a change of control application. The linked press release states that “The proposed acquisition is a key strategic step in SoFi’s path to obtaining a national bank charter”, so we can reasonably assume that SoFi believed that the acquisition would expedite the bank charter process. The same press release also states that the completion of the transaction is “anticipated before the end of 2021”. SoFi also submitted a CRA strategic plan as part of their bank charter application. That document states that the “The Bank elects to have its CRA performance evaluated under the Strategic Plan option, with a proposed period of November 1, 2021 (or upon consummation of the Bank) to December 31, 2024.” This also indicates that SoFi is prepared to begin banking operations starting in 2021. Based on the Square and LendingClub timelines, and SoFi’s own press release and CRA plan, it is probably safe to assume that the bank charter approval could come any time between now and spring of 2022.\nBreadcrumb Trail to Bank Charter Approval\nNow we get into the fun speculation stuff. Please note again that there is still a chance this all falls apart and that the OCC does not grant a bank charter. In that case, SoFi stock still has an analyst target of $25. This section is mostly just for fun, so take everything here with a grain of salt. However, if you like to play connect the dots, here are some interesting tidbits you probably want to be aware of. If this is a little too speculative for you, please just skip to the next section.\nConvertible Note Offering Bears a Suspicious Resemblance\nIf you go back to that GPB acquisition press release, you find this statement: “If successfully granted a national bank charter by the OCC and Federal Reserve pursuant to its change of control application, SoFi plans to contribute $750 million in capital and pursue its national, digital business plan while maintaining GPB’s community bank business and footprint, including GPB’s current three physical branches.” SoFi planned to raise $750 M in capital to expand banking if they are granted the bank charter. On September 29, 2020, SoFi offered convertible senior notes to raise exactly $750M. The offering was later expanded to $1.1B. It is an interesting coincidence that the senior note offering raised the exact amount that SoFi said they would raise if granted a bank charter.\nBanking Hires and Positions\nSoFi is made a very auspicious hire that showed up on LinkedIn sometime in mid-September. Meet Chad Borton, Harvard grad, former Bank President of USAA and currently employed as the President of “SoFi Bank at SoFi”.\nSource: LinkedIn\nHe was included on the SoFi website Management Team page on October 5, although there has been a fairly conspicuous lack of fanfare surrounding his hire as there was no corresponding press release or other announcement. There has not even been mention of it on SoFi’s official twitter account. Besides hiring a new President of SoFi Bank, there have been numerous hires and job listings for roles that would only be necessary if they become a national bank, such as a Angela Smedley, a Senior Compliance Officer, CRA Officer. Only a nationally chartered bank is regulated by the Community Reinvestment Act (CRA), so this position would be superfluous otherwise. Or this current listing for a Bank FP&A Senior Associate. That job listing says outright in the job description that “SoFi Bank is currently in formation and will establish a nationwide fully digital bank with a member-centric approach that provides relevant, fairly priced products throughout life stages and events.”\nIs the Bank Charter Priced In?\nAfter the recent price movements in the SoFi stock, I am more convinced than ever that the bank charter is not priced in. Here is the SOFI daily chart from the last 3 months:\nSource: TradingView with my own annotations\nYou’ll notice that on September 22 and October 11, the stock had jumps of 11% and 13.5%, respectively. Those were each caused by an analyst initiating coverage of SoFi stock with a \"Buy\" rating. Absolutely nothing at all changed about the underlying fundamentals of the SoFi business, but simply because a Jeffries analyst and a Morgan Stanley analyst recommended the stock as a “buy”. This stock has run up close to 40% in a month on the back of two analyst ratings. If analyst ratings can move the stock this much, think of how much something that materially improves everything about the company can move it.\nWhat Happened to LendingClub’s stock price after obtaining their bank charter?\nWe can also compare what happened to LendingClub’s stock price. As mentioned previously, LendingClub received their charter approval on December 30, 2020 and their share price closed that day at $8.37. The share price jumped 26% the next day and was up 37% total a week later. What has truly been astounding however, has been their incredible growth since then spurred by record earnings due to their increased margins. Although they received bank charter approval on December 30, they started operations as a fully bank on February 1, 2021. That makes Q2 2021 their first earnings after receiving charter approval. LC announced blowout earnings driven by greater margins in their lending business and raised future guidance and the stock price blew up 48% overnight. At time of writing, Q3 2021 earnings were just announced yesterday and again the stock skyrocketed going up 33% overnight. In all, since the bank charter was announced, the stock is now up 403% since the approval announcement, as you can see in the one year chart below.\nSource: TradingView with my own annotations\nHow about Varo Bank’s Valuation with a charter?\nAnother data point is Varo Bank. Varo is not a publicly traded company. However, their various funding rounds do give them a valuation. This headline pretty much says it all:\nSource: CNBC\nRevenue has tripled and the valuation has gone up 3.6x since they acquired their charter (I know the headline says it tripled, but 700M to 2.5B is actually 3.6x).\nSquare is the Odd Fintech Out\nSquare is the odd company out here, but that is for good reason. Both LendingClub and Varo operate as consumer banks and lending is a large segment of their business. Their business models make full use of the bank charter. Square, on the other hand, does not have any consumer lending products at all. They do offer business loans, but it is a very small part of their company. In fact, when you read their press release about obtaining their charter, it kind of makes you wonder why they went to the trouble of getting it in the first place. According to their press release, “We do not expect the bank to have a material impact on Square’s consolidated balance sheet, total net revenue, gross profit, or Adjusted EBITDA in 2021.”\nWhat is Wall Street’s Opinion on the Bank Charter Being Priced In?\nWall Street analysts agree that the bank charter is not priced in. John Hecht of Jeffries specifically said that his $25 price target did not include the bank charter and that the charter would add about 30% in incremental adjusted EBITDA relative to his current base case estimates. Betsy Grasec of Morgan Stanley, who also initiated coverage with a $25 price target, has a bull case price target of $34. The difference between the two cases is that SoFi obtains its bank charter by early 2022.\nSoFi Future Expectations\nSo LendingClub’s market cap had increased 4.8x in 10 months and Varo Bank’s evaluation went up 3.6x in 13 months after receiving charters. It’s also worth noting that LendingClub had already run up from about $5 at the beginning of November to over $8 at the end of December prior to the charter approval. Wall Street also believes there is significant upside with the bank charter.\nI think it is reasonable to assume that SoFi gets a good short-term bump when the approval goes through. SoFi has had a good run recently, but I think it is clear that there is a lot of upside left to capture. If buy ratings can result in double-digit gains, I think a 10-20% jump on the news can be expected. However, I think the bigger gains will be realized over the next two to three earnings reports that occur after the bank charter approval. I expect SoFi to crush analyst estimates and consistently raise future guidance over those quarters as the true impact of the bank charter hits membership growth numbers, revenue, and earnings. If the bank charter comes through this year, I think a conservative and achievable price target for the end of 2022 is $40-$45.\nThe most important thing to me that people do not always seem to discuss about the charter is that it fundamentally improves the underlying business long term. This isn’t a catalyst that results in a one-time bump in revenue. This will positively affect every core product SoFi offers, make the ecosystem even stickier, and accelerate member growth (it even positively affects Galileo, although I did not have time to cover that in this article). This change will still be felt 5 and 10 years down the road as SoFi moves from a growth story to a successful fintech bank. SoFi is my highest conviction stock and I believe it will widely outperform the market over the coming 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one","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/376395279","repostId":"2129808947","repostType":4,"isVote":1,"tweetType":1,"viewCount":370,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":849727950,"gmtCreate":1635778649608,"gmtModify":1635778649669,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"looking forward of it","listText":"looking forward of it","text":"looking forward of it","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/849727950","repostId":"1121970113","repostType":4,"repost":{"id":"1121970113","pubTimestamp":1635777543,"share":"https://www.laohu8.com/m/news/1121970113?lang=&edition=full","pubTime":"2021-11-01 22:39","market":"us","language":"en","title":"SoFi Technologies: The Bank Charter Will Change Everything","url":"https://stock-news.laohu8.com/highlight/detail?id=1121970113","media":"Seeking Alpha","summary":"Summary\n\nThe bank charter is SoFi's biggest catalyst and will have measurable effects on its margins","content":"<p><b>Summary</b></p>\n<ul>\n <li>The bank charter is SoFi's biggest catalyst and will have measurable effects on its margins, membership, and marketing.</li>\n <li>Analysis of the timeline of previous fintechs who have received bank charters suggests that the bank charter approval should be in the near future (within ~6 months).</li>\n <li>Other fintechs' valuations have exploded after receiving a national bank charter and SoFi will follow suit.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/be5f0375691db5a55bbdccb1c7d4f9f1\" tg-width=\"1536\" tg-height=\"1170\" width=\"100%\" height=\"auto\"><span>georgeclerk/E+ via Getty Images</span></p>\n<p>SoFi Technologies (SOFI) is finally seeing a return to a reasonable value after its unwarranted price drop following Q2 earnings. At the time, I highlighted that&nbsp;the price drop gave investors a tremendous opportunity to open a position or average down. Since the publication of that article, the stock price has increased more than 40%. That is an excellent return, but there is still huge upside to investing in this major growth fintech. SoFi’s growth story is only getting started. SoFi’s biggest catalyst is obtaining a national bank charter, and this article will explain why a bank charter will accelerate their already impressive growth.</p>\n<p><b>Introduction to the Bank Charter</b></p>\n<p>SoFi investors cannot seem to stop talking about the bank charter or trying to decipher when it will be approved. Despite the excitement surrounding this catalyst, I do not think that everyone understands the whole picture of what the bank charter can and will do for SoFi. As a chemical engineer, I am a numbers guy at heart. I’m the type of person that gets excited about putting together spreadsheets and numerical analysis and breakdowns. I will cover how I think the stock price will react to bank charter news and of what we know surrounding the timeline for approval below. However, one of the things that I most enjoy about investing is that it is a blend of analytical analysis and human emotion. The narrative of a stock often has a significant effect on its share price because there is a large human element involved and humans are not emotionless automatons. I want to start with that narrative, breaking down charter’s effects on three different parts of their business: Margins, Marketing, and Members.</p>\n<p><b>Bank Charter's EffectsMargins</b></p>\n<p>The effect on SoFi’s margins is the easiest to quantify. Owning a bank charter allows SoFi to use their deposits to finance their own loans. Lending is SoFi’s biggest source of revenue and profits. Right now, they have to borrow money from third-party banks to finance the majority of their loans. These third-party banks charge somewhere around 2-2.5% interest (200-250 basis points) to use their money. As soon as SoFi obtains a bank charter, they can use the deposits from their members to finance those loans. That means their cost of capital goes from 2% to what they pay their SoFi Money members in interest (currently 0.25%, but more on that later). This improves their margins. Additionally, answering to and being regulated by a single entity (the OCC) is easier than being independently regulated by 50 individual states (which is what SoFi currently has to do). This cuts down on administrative costs. Most people are familiar with the following slide from their investor slide deck, but it is worth putting here again.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/119616a3edb8d0ebe95b81b2035ae3d8\" tg-width=\"640\" tg-height=\"360\" width=\"100%\" height=\"auto\"><span>Source: SoFi Investor Presentation</span></p>\n<p>EBITDA is a measure of earnings. The dark blue bars are their earnings without the bank charter, and the light blue bars are incremental earnings they get because of their expanded margins. So in simple terms, between now and 2025, the bank charter is worth about $1B in profit margin between now and 2025 with current revenue. Profitability, free cash flow, cash on hand, and a whole host of important financial parameters will get a big boost with the bank charter.</p>\n<p><b>Marketing</b></p>\n<p>The second key aspect about the bank charter is that it allows SoFi to have more effective marketing. A national bank charter gives them legitimacy. SoFi Money deposits are already FDIC insured, but that is through partner banks. As one of the first Fintech companies with a bank charter, SoFi will have a cachet and credibility that will help them stand out from their peers. That credibility and legitimacy is all well and good, but when people are making a financial decision, the most important factor is usually how it affects their wallets.</p>\n<p><b>Personal Loans</b></p>\n<p>When you type “personal loan” into Google, the first website that pops up (after the paid advertisements) is Bankrate's website and it looks like this:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/dbb8aec2a4f3327da227b1942cf93687\" tg-width=\"640\" tg-height=\"701\" width=\"100%\" height=\"auto\"><span>Source: Bankrate</span></p>\n<p>You’ll notice that SoFi is among the top results. Their product offering ties for the lowest APR, most flexible terms, and max loan amount. What would happen if they could drop their APR by 0.25% or 0.5%? Anthony Noto gave an&nbsp;interview&nbsp;about the effects of the bank charter. Speaking specifically about loans, he said “my cost goes from two percent to fifteen [basis points]. I could give that all back to you in a lower interest rate on that loan, or I can give you a higher interest rate on your deposits, or I could drop it to the bottom line. So we’ll do a combination of those things.” In other words, there are three things ways that SoFi can use their lower cost of capital. They can use it to lower the APR on the loans they offer, they can give a higher interest rate to SoFi Money accounts, or they can use it to improve their margins,. According to Noto, they plan to do all three. SoFi already has such low costs that they are tied for being the lowest cost provider with their current cost of capital. After the bank charter, SoFi can simultaneously drop their APR to attract more customers while expanding their margins. If you are looking for a personal loan and you find that bankrate page, but now SoFi’s APR is 4.75% or 4.5%, that is almost certainly going to be the first link you click. SoFi will have gained another member into their sticky system.</p>\n<p><b>Student Loan Refinancing</b></p>\n<p>Let’s try the same exercise with the phrase “student loan refinance”. Again, after scrolling past the paid advertisement results, the first result is a NerdWallet page where you will find the following graphic:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/635b349a2dd5ef591acbf1cdf8e7e937\" tg-width=\"640\" tg-height=\"510\" width=\"100%\" height=\"auto\"><span>Source: NerdWallet</span></p>\n<p>Again, SoFi’s offering is tied for the lowest rate available. If they use a portion of their lowered cost basis to offer even better rates, they will hoover up an even greater portion of the student loan refinance market.</p>\n<p><b>SoFi Money</b></p>\n<p>The second option that Anthony Noto mentioned was that SoFi can give you a higher interest rate on your deposits. This is in reference to a SoFi Money account, which is similar to a checking account. Currently, SoFi offers 0.25% interest on the balance in the SoFi Money account. Because SoFi is not a nationally chartered bank, they have to send your deposit to a third-party FDIC-insured bank. Once SoFi has their bank charter, they are free to give their members whatever interest rate they choose. The best high-yield savings accounts on the market right now give 0.5-0.6% APY:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/bc09da4ea8f9c7b30ddfe1d37bb0a677\" tg-width=\"640\" tg-height=\"550\" width=\"100%\" height=\"auto\"><span>Source: NerdWallet</span></p>\n<p>SoFi can easily disrupt this market by offering a better product and a better interest rate. As I mentioned before, SoFi Money is akin to a checking account. It is liquid and you can spend the money in the account with a debit card or withdraw funds from an ATM. These high-yield savings accounts do not have that same liquidity. To access the money, you first have to initialize a transfer to a checking account, which typically takes 3-5 days. Banks do this on purpose to increase friction between you and your money in these higher yield accounts so that you move it less frequently. Anthony Noto is on the record as saying that this practice is not necessary in the modern banking world. SoFi will be able to offer an account that gives you the flexibility of a checking account with an interest rate that surpasses high-yield savings accounts. I believe they will do so to incentivize their members to move all their money into a SoFi Money account. Remember, the greater the total value of their deposits, the better their lending margins will be.</p>\n<p>A bank charter allows SoFi to offer best-in-class products for student loans, personal loans, checking accounts, and savings accounts. Their home mortgage loans and home refinancing products will also become even more competitive. Marketing becomes much easier when your product sells itself. Additionally, each new member and each existing member will be adding more to the bottom line than ever before.</p>\n<p><b>Members</b></p>\n<p>The bank charter also makes things better for existing and new members. This will make their product offerings even stickier than they already are. Right now, SoFi has to sweep the deposits from SoFi Money, SoFi Invest, and their other financial products into partner bank accounts. It is frustrating, for example, that moving cash from your Money account to your Invest account takes 2-3 days. This is because they have to move it from an outside bank’s brokerage account to a different bank’s deposit account. A lot of internal friction between their account, investment, credit card, and other products will be removed when they can hold their own deposits, making for a seamless and better user experience.</p>\n<p>Additionally, existing members will also get the benefits discussed in the marketing section above. This means better rates on personal loans, student loan refinancing, mortgages, and more interest for their deposits. If you are already a member and you see that SoFi has best-in-class loan offerings, it makes it much easier to stay in the SoFi ecosystem for that loan. Cross-selling is a key feature of their long-term strategy, and having more competitive products makes it easier and more attractive for members to stay with SoFi for all their financial needs. I, for example, have my emergency fund in a high-yield savings account but would gladly move it all to SoFi Money if they had slightly higher interest rates.</p>\n<p><b>Bank Charter Timeline</b></p>\n<p>I am not Nostrodomos nor do I claim to know the inner workings of the Office of the Comptroller of the Currency (OCC). I have no idea when the bank charter will be approved. However, there are some definitive dates that we do know and that we can compare with previous fintechs who have been granted a bank charter. Also, there are some fun breadcrumbs that SoFi seems to be leaving that indicate that the process is moving forward.</p>\n<p><b>Previous Fintech Timelines</b></p>\n<p>Varo, Square (SQ), and LendingClub (LC) are the three fintech companies that have received bank charters. There are two type of charter applications. The first is a de novo application, which is the creation of a new bank. The second is a change of control application, which is where one bank acquires another bank that already has a national bank charter and takes over their charter. Varo and Square went through the de novo process whereas Lending Club went through the change of control process through their acquisition of Radius Bank. The timelines were as follows:</p>\n<p>Varo – Received&nbsp;preliminary approval&nbsp;on September 4, 2018 and&nbsp;final approval&nbsp;on July 31, 2020, a period of almost 23 months. Varo was the first fintech to receive a bank charter.</p>\n<p>Square – Receive&nbsp;dpreliminary approval&nbsp;on March 18, 2020 and&nbsp;final approval&nbsp;on March 1, 2021, a period of about 11 months.</p>\n<p>LendingClub –Announced the acquisition&nbsp;of Radius bank on February 18, 2020, filed for the change of control on April 27, 2020, and received&nbsp;final approval&nbsp;on December 30, 2020, a period of about 10 months.</p>\n<p><b>SoFi Bank Charter Timeline</b></p>\n<p>SoFi’s application started as a de novo application and they received&nbsp;conditional approval of their bank charter application&nbsp;on October 27, 2020. However, on March 9, 2021,SoFi announced an agreement&nbsp;to acquire Golden Pacific Bancorp and changed their de novo application to a change of control application. The linked press release states that “The proposed acquisition is a key strategic step in SoFi’s path to obtaining a national bank charter”, so we can reasonably assume that SoFi believed that the acquisition would expedite the bank charter process. The same press release also states that the completion of the transaction is “anticipated before the end of 2021”. SoFi also submitted a&nbsp;CRA strategic plan&nbsp;as part of their bank charter application. That document states that the “The Bank elects to have its CRA performance evaluated under the Strategic Plan option, with a proposed period of November 1, 2021 (or upon consummation of the Bank) to December 31, 2024.” This also indicates that SoFi is prepared to begin banking operations starting in 2021. Based on the Square and LendingClub timelines, and SoFi’s own press release and CRA plan, it is probably safe to assume that the bank charter approval could come any time between now and spring of 2022.</p>\n<p><b>Breadcrumb Trail to Bank Charter Approval</b></p>\n<p>Now we get into the fun speculation stuff. Please note again that there is still a chance this all falls apart and that the OCC does not grant a bank charter. In that case, SoFi stock still has an analyst target of $25. This section is mostly just for fun, so take everything here with a grain of salt. However, if you like to play connect the dots, here are some interesting tidbits you probably want to be aware of. If this is a little too speculative for you, please just skip to the next section.</p>\n<p><b>Convertible Note Offering Bears a Suspicious Resemblance</b></p>\n<p>If you go back to that GPB acquisition press release, you find this statement: “If successfully granted a national bank charter by the OCC and Federal Reserve pursuant to its change of control application, SoFi plans to contribute $750 million in capital and pursue its national, digital business plan while maintaining GPB’s community bank business and footprint, including GPB’s current three physical branches.” SoFi planned to raise $750 M in capital to expand banking if they are granted the bank charter. On September 29, 2020, SoFi offered convertible senior notes to raise exactly $750M. The offering was later expanded to $1.1B. It is an interesting coincidence that the senior note offering raised the exact amount that SoFi said they would raise if granted a bank charter.</p>\n<p><b>Banking Hires and Positions</b></p>\n<p>SoFi is made a very auspicious hire that showed up on LinkedIn sometime in mid-September. Meet Chad Borton, Harvard grad, former Bank President of USAA and currently employed as the President of “SoFi Bank at SoFi”.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9c32b6f73ee4e73ec8c102431d2cc8c0\" tg-width=\"640\" tg-height=\"496\" width=\"100%\" height=\"auto\"><span>Source: LinkedIn</span></p>\n<p>He was included on the SoFi website&nbsp;Management Team&nbsp;page on October 5, although there has been a fairly conspicuous lack of fanfare surrounding his hire as there was no corresponding press release or other announcement. There has not even been mention of it on SoFi’s official twitter account. Besides hiring a new President of SoFi Bank, there have been numerous hires and job listings for roles that would only be necessary if they become a national bank, such as a Angela Smedley, a&nbsp;Senior Compliance Officer, CRA Officer. Only a nationally chartered bank is regulated by the Community Reinvestment Act (CRA), so this position would be superfluous otherwise. Or this current listing for a&nbsp;Bank FP&amp;A Senior Associate. That job listing says outright in the job description that “SoFi Bank is currently in formation and will establish a nationwide fully digital bank with a member-centric approach that provides relevant, fairly priced products throughout life stages and events.”</p>\n<p>Is the Bank Charter Priced In?</p>\n<p>After the recent price movements in the SoFi stock, I am more convinced than ever that the bank charter is not priced in. Here is the SOFI daily chart from the last 3 months:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8af8403dd21b616e4c93e37aff8bf687\" tg-width=\"640\" tg-height=\"360\" width=\"100%\" height=\"auto\"><span>Source: TradingView with my own annotations</span></p>\n<p>You’ll notice that on September 22 and October 11, the stock had jumps of 11% and 13.5%, respectively. Those were each caused by an analyst initiating coverage of SoFi stock with a \"Buy\" rating. Absolutely nothing at all changed about the underlying fundamentals of the SoFi business, but simply because a Jeffries analyst and a Morgan Stanley analyst recommended the stock as a “buy”. This stock has run up close to 40% in a month on the back of two analyst ratings. If analyst ratings can move the stock this much, think of how much something that materially improves everything about the company can move it.</p>\n<p>What Happened to LendingClub’s stock price after obtaining their bank charter?</p>\n<p>We can also compare what happened to LendingClub’s stock price. As mentioned previously, LendingClub received their charter approval on December 30, 2020 and their share price closed that day at $8.37. The share price jumped 26% the next day and was up 37% total a week later. What has truly been astounding however, has been their incredible growth since then spurred by record earnings due to their increased margins. Although they received bank charter approval on December 30, they started operations as a fully bank on February 1, 2021. That makes Q2 2021 their first earnings after receiving charter approval. LC announced blowout earnings driven by greater margins in their lending business and raised future guidance and the stock price blew up 48% overnight. At time of writing, Q3 2021 earnings were just announced yesterday and again the stock skyrocketed going up 33% overnight. In all, since the bank charter was announced, the stock is now up 403% since the approval announcement, as you can see in the one year chart below.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/fcf43842e6ba7cb3c7389d17113dafc7\" tg-width=\"640\" tg-height=\"360\" width=\"100%\" height=\"auto\"><span>Source: TradingView with my own annotations</span></p>\n<p><b>How about Varo Bank’s Valuation with a charter?</b></p>\n<p>Another data point is Varo Bank. Varo is not a publicly traded company. However, their various funding rounds do give them a valuation. This headline pretty much says it all:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/3f9e57304041f5df213c374d43b21f38\" tg-width=\"640\" tg-height=\"1280\" width=\"100%\" height=\"auto\"><span>Source: CNBC</span></p>\n<p>Revenue has tripled and the valuation has gone up 3.6x since they acquired their charter (I know the headline says it tripled, but 700M to 2.5B is actually 3.6x).</p>\n<p><b>Square is the Odd Fintech Out</b></p>\n<p>Square is the odd company out here, but that is for good reason. Both LendingClub and Varo operate as consumer banks and lending is a large segment of their business. Their business models make full use of the bank charter. Square, on the other hand, does not have any consumer lending products at all. They do offer business loans, but it is a very small part of their company. In fact, when you read their&nbsp;press release&nbsp;about obtaining their charter, it kind of makes you wonder why they went to the trouble of getting it in the first place. According to their press release, “We do not expect the bank to have a material impact on Square’s consolidated balance sheet, total net revenue, gross profit, or Adjusted EBITDA in 2021.”</p>\n<p><b>What is Wall Street’s Opinion on the Bank Charter Being Priced In?</b></p>\n<p>Wall Street analysts agree that the bank charter is not priced in. John Hecht of Jeffries&nbsp;specifically said&nbsp;that his $25 price target did not include the bank charter and that the charter would add about 30% in incremental adjusted EBITDA relative to his current base case estimates. Betsy Grasec of Morgan Stanley, who also initiated coverage with a $25 price target, has a bull case price target of $34. The difference between the two cases is that&nbsp;SoFi obtains its bank charter by early 2022.</p>\n<p><b>SoFi Future Expectations</b></p>\n<p>So LendingClub’s market cap had increased 4.8x in 10 months and Varo Bank’s evaluation went up 3.6x in 13 months after receiving charters. It’s also worth noting that LendingClub had already run up from about $5 at the beginning of November to over $8 at the end of December prior to the charter approval. Wall Street also believes there is significant upside with the bank charter.</p>\n<p>I think it is reasonable to assume that SoFi gets a good short-term bump when the approval goes through. SoFi has had a good run recently, but I think it is clear that there is a lot of upside left to capture. If buy ratings can result in double-digit gains, I think a 10-20% jump on the news can be expected. However, I think the bigger gains will be realized over the next two to three earnings reports that occur after the bank charter approval. I expect SoFi to crush analyst estimates and consistently raise future guidance over those quarters as the true impact of the bank charter hits membership growth numbers, revenue, and earnings. If the bank charter comes through this year, I think a conservative and achievable price target for the end of 2022 is $40-$45.</p>\n<p>The most important thing to me that people do not always seem to discuss about the charter is that it fundamentally improves the underlying business long term. This isn’t a catalyst that results in a one-time bump in revenue. This will positively affect every core product SoFi offers, make the ecosystem even stickier, and accelerate member growth (it even positively affects Galileo, although I did not have time to cover that in this article). This change will still be felt 5 and 10 years down the road as SoFi moves from a growth story to a successful fintech bank. SoFi is my highest conviction stock and I believe it will widely outperform the market over the coming years.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>SoFi Technologies: The Bank Charter Will Change Everything</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSoFi Technologies: The Bank Charter Will Change Everything\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-01 22:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4464001-sofi-technologies-the-bank-charter-will-change-everything><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nThe bank charter is SoFi's biggest catalyst and will have measurable effects on its margins, membership, and marketing.\nAnalysis of the timeline of previous fintechs who have received bank ...</p>\n\n<a href=\"https://seekingalpha.com/article/4464001-sofi-technologies-the-bank-charter-will-change-everything\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SOFI":"SoFi Technologies Inc."},"source_url":"https://seekingalpha.com/article/4464001-sofi-technologies-the-bank-charter-will-change-everything","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1121970113","content_text":"Summary\n\nThe bank charter is SoFi's biggest catalyst and will have measurable effects on its margins, membership, and marketing.\nAnalysis of the timeline of previous fintechs who have received bank charters suggests that the bank charter approval should be in the near future (within ~6 months).\nOther fintechs' valuations have exploded after receiving a national bank charter and SoFi will follow suit.\n\ngeorgeclerk/E+ via Getty Images\nSoFi Technologies (SOFI) is finally seeing a return to a reasonable value after its unwarranted price drop following Q2 earnings. At the time, I highlighted that the price drop gave investors a tremendous opportunity to open a position or average down. Since the publication of that article, the stock price has increased more than 40%. That is an excellent return, but there is still huge upside to investing in this major growth fintech. SoFi’s growth story is only getting started. SoFi’s biggest catalyst is obtaining a national bank charter, and this article will explain why a bank charter will accelerate their already impressive growth.\nIntroduction to the Bank Charter\nSoFi investors cannot seem to stop talking about the bank charter or trying to decipher when it will be approved. Despite the excitement surrounding this catalyst, I do not think that everyone understands the whole picture of what the bank charter can and will do for SoFi. As a chemical engineer, I am a numbers guy at heart. I’m the type of person that gets excited about putting together spreadsheets and numerical analysis and breakdowns. I will cover how I think the stock price will react to bank charter news and of what we know surrounding the timeline for approval below. However, one of the things that I most enjoy about investing is that it is a blend of analytical analysis and human emotion. The narrative of a stock often has a significant effect on its share price because there is a large human element involved and humans are not emotionless automatons. I want to start with that narrative, breaking down charter’s effects on three different parts of their business: Margins, Marketing, and Members.\nBank Charter's EffectsMargins\nThe effect on SoFi’s margins is the easiest to quantify. Owning a bank charter allows SoFi to use their deposits to finance their own loans. Lending is SoFi’s biggest source of revenue and profits. Right now, they have to borrow money from third-party banks to finance the majority of their loans. These third-party banks charge somewhere around 2-2.5% interest (200-250 basis points) to use their money. As soon as SoFi obtains a bank charter, they can use the deposits from their members to finance those loans. That means their cost of capital goes from 2% to what they pay their SoFi Money members in interest (currently 0.25%, but more on that later). This improves their margins. Additionally, answering to and being regulated by a single entity (the OCC) is easier than being independently regulated by 50 individual states (which is what SoFi currently has to do). This cuts down on administrative costs. Most people are familiar with the following slide from their investor slide deck, but it is worth putting here again.\nSource: SoFi Investor Presentation\nEBITDA is a measure of earnings. The dark blue bars are their earnings without the bank charter, and the light blue bars are incremental earnings they get because of their expanded margins. So in simple terms, between now and 2025, the bank charter is worth about $1B in profit margin between now and 2025 with current revenue. Profitability, free cash flow, cash on hand, and a whole host of important financial parameters will get a big boost with the bank charter.\nMarketing\nThe second key aspect about the bank charter is that it allows SoFi to have more effective marketing. A national bank charter gives them legitimacy. SoFi Money deposits are already FDIC insured, but that is through partner banks. As one of the first Fintech companies with a bank charter, SoFi will have a cachet and credibility that will help them stand out from their peers. That credibility and legitimacy is all well and good, but when people are making a financial decision, the most important factor is usually how it affects their wallets.\nPersonal Loans\nWhen you type “personal loan” into Google, the first website that pops up (after the paid advertisements) is Bankrate's website and it looks like this:\nSource: Bankrate\nYou’ll notice that SoFi is among the top results. Their product offering ties for the lowest APR, most flexible terms, and max loan amount. What would happen if they could drop their APR by 0.25% or 0.5%? Anthony Noto gave an interview about the effects of the bank charter. Speaking specifically about loans, he said “my cost goes from two percent to fifteen [basis points]. I could give that all back to you in a lower interest rate on that loan, or I can give you a higher interest rate on your deposits, or I could drop it to the bottom line. So we’ll do a combination of those things.” In other words, there are three things ways that SoFi can use their lower cost of capital. They can use it to lower the APR on the loans they offer, they can give a higher interest rate to SoFi Money accounts, or they can use it to improve their margins,. According to Noto, they plan to do all three. SoFi already has such low costs that they are tied for being the lowest cost provider with their current cost of capital. After the bank charter, SoFi can simultaneously drop their APR to attract more customers while expanding their margins. If you are looking for a personal loan and you find that bankrate page, but now SoFi’s APR is 4.75% or 4.5%, that is almost certainly going to be the first link you click. SoFi will have gained another member into their sticky system.\nStudent Loan Refinancing\nLet’s try the same exercise with the phrase “student loan refinance”. Again, after scrolling past the paid advertisement results, the first result is a NerdWallet page where you will find the following graphic:\nSource: NerdWallet\nAgain, SoFi’s offering is tied for the lowest rate available. If they use a portion of their lowered cost basis to offer even better rates, they will hoover up an even greater portion of the student loan refinance market.\nSoFi Money\nThe second option that Anthony Noto mentioned was that SoFi can give you a higher interest rate on your deposits. This is in reference to a SoFi Money account, which is similar to a checking account. Currently, SoFi offers 0.25% interest on the balance in the SoFi Money account. Because SoFi is not a nationally chartered bank, they have to send your deposit to a third-party FDIC-insured bank. Once SoFi has their bank charter, they are free to give their members whatever interest rate they choose. The best high-yield savings accounts on the market right now give 0.5-0.6% APY:\nSource: NerdWallet\nSoFi can easily disrupt this market by offering a better product and a better interest rate. As I mentioned before, SoFi Money is akin to a checking account. It is liquid and you can spend the money in the account with a debit card or withdraw funds from an ATM. These high-yield savings accounts do not have that same liquidity. To access the money, you first have to initialize a transfer to a checking account, which typically takes 3-5 days. Banks do this on purpose to increase friction between you and your money in these higher yield accounts so that you move it less frequently. Anthony Noto is on the record as saying that this practice is not necessary in the modern banking world. SoFi will be able to offer an account that gives you the flexibility of a checking account with an interest rate that surpasses high-yield savings accounts. I believe they will do so to incentivize their members to move all their money into a SoFi Money account. Remember, the greater the total value of their deposits, the better their lending margins will be.\nA bank charter allows SoFi to offer best-in-class products for student loans, personal loans, checking accounts, and savings accounts. Their home mortgage loans and home refinancing products will also become even more competitive. Marketing becomes much easier when your product sells itself. Additionally, each new member and each existing member will be adding more to the bottom line than ever before.\nMembers\nThe bank charter also makes things better for existing and new members. This will make their product offerings even stickier than they already are. Right now, SoFi has to sweep the deposits from SoFi Money, SoFi Invest, and their other financial products into partner bank accounts. It is frustrating, for example, that moving cash from your Money account to your Invest account takes 2-3 days. This is because they have to move it from an outside bank’s brokerage account to a different bank’s deposit account. A lot of internal friction between their account, investment, credit card, and other products will be removed when they can hold their own deposits, making for a seamless and better user experience.\nAdditionally, existing members will also get the benefits discussed in the marketing section above. This means better rates on personal loans, student loan refinancing, mortgages, and more interest for their deposits. If you are already a member and you see that SoFi has best-in-class loan offerings, it makes it much easier to stay in the SoFi ecosystem for that loan. Cross-selling is a key feature of their long-term strategy, and having more competitive products makes it easier and more attractive for members to stay with SoFi for all their financial needs. I, for example, have my emergency fund in a high-yield savings account but would gladly move it all to SoFi Money if they had slightly higher interest rates.\nBank Charter Timeline\nI am not Nostrodomos nor do I claim to know the inner workings of the Office of the Comptroller of the Currency (OCC). I have no idea when the bank charter will be approved. However, there are some definitive dates that we do know and that we can compare with previous fintechs who have been granted a bank charter. Also, there are some fun breadcrumbs that SoFi seems to be leaving that indicate that the process is moving forward.\nPrevious Fintech Timelines\nVaro, Square (SQ), and LendingClub (LC) are the three fintech companies that have received bank charters. There are two type of charter applications. The first is a de novo application, which is the creation of a new bank. The second is a change of control application, which is where one bank acquires another bank that already has a national bank charter and takes over their charter. Varo and Square went through the de novo process whereas Lending Club went through the change of control process through their acquisition of Radius Bank. The timelines were as follows:\nVaro – Received preliminary approval on September 4, 2018 and final approval on July 31, 2020, a period of almost 23 months. Varo was the first fintech to receive a bank charter.\nSquare – Receive dpreliminary approval on March 18, 2020 and final approval on March 1, 2021, a period of about 11 months.\nLendingClub –Announced the acquisition of Radius bank on February 18, 2020, filed for the change of control on April 27, 2020, and received final approval on December 30, 2020, a period of about 10 months.\nSoFi Bank Charter Timeline\nSoFi’s application started as a de novo application and they received conditional approval of their bank charter application on October 27, 2020. However, on March 9, 2021,SoFi announced an agreement to acquire Golden Pacific Bancorp and changed their de novo application to a change of control application. The linked press release states that “The proposed acquisition is a key strategic step in SoFi’s path to obtaining a national bank charter”, so we can reasonably assume that SoFi believed that the acquisition would expedite the bank charter process. The same press release also states that the completion of the transaction is “anticipated before the end of 2021”. SoFi also submitted a CRA strategic plan as part of their bank charter application. That document states that the “The Bank elects to have its CRA performance evaluated under the Strategic Plan option, with a proposed period of November 1, 2021 (or upon consummation of the Bank) to December 31, 2024.” This also indicates that SoFi is prepared to begin banking operations starting in 2021. Based on the Square and LendingClub timelines, and SoFi’s own press release and CRA plan, it is probably safe to assume that the bank charter approval could come any time between now and spring of 2022.\nBreadcrumb Trail to Bank Charter Approval\nNow we get into the fun speculation stuff. Please note again that there is still a chance this all falls apart and that the OCC does not grant a bank charter. In that case, SoFi stock still has an analyst target of $25. This section is mostly just for fun, so take everything here with a grain of salt. However, if you like to play connect the dots, here are some interesting tidbits you probably want to be aware of. If this is a little too speculative for you, please just skip to the next section.\nConvertible Note Offering Bears a Suspicious Resemblance\nIf you go back to that GPB acquisition press release, you find this statement: “If successfully granted a national bank charter by the OCC and Federal Reserve pursuant to its change of control application, SoFi plans to contribute $750 million in capital and pursue its national, digital business plan while maintaining GPB’s community bank business and footprint, including GPB’s current three physical branches.” SoFi planned to raise $750 M in capital to expand banking if they are granted the bank charter. On September 29, 2020, SoFi offered convertible senior notes to raise exactly $750M. The offering was later expanded to $1.1B. It is an interesting coincidence that the senior note offering raised the exact amount that SoFi said they would raise if granted a bank charter.\nBanking Hires and Positions\nSoFi is made a very auspicious hire that showed up on LinkedIn sometime in mid-September. Meet Chad Borton, Harvard grad, former Bank President of USAA and currently employed as the President of “SoFi Bank at SoFi”.\nSource: LinkedIn\nHe was included on the SoFi website Management Team page on October 5, although there has been a fairly conspicuous lack of fanfare surrounding his hire as there was no corresponding press release or other announcement. There has not even been mention of it on SoFi’s official twitter account. Besides hiring a new President of SoFi Bank, there have been numerous hires and job listings for roles that would only be necessary if they become a national bank, such as a Angela Smedley, a Senior Compliance Officer, CRA Officer. Only a nationally chartered bank is regulated by the Community Reinvestment Act (CRA), so this position would be superfluous otherwise. Or this current listing for a Bank FP&A Senior Associate. That job listing says outright in the job description that “SoFi Bank is currently in formation and will establish a nationwide fully digital bank with a member-centric approach that provides relevant, fairly priced products throughout life stages and events.”\nIs the Bank Charter Priced In?\nAfter the recent price movements in the SoFi stock, I am more convinced than ever that the bank charter is not priced in. Here is the SOFI daily chart from the last 3 months:\nSource: TradingView with my own annotations\nYou’ll notice that on September 22 and October 11, the stock had jumps of 11% and 13.5%, respectively. Those were each caused by an analyst initiating coverage of SoFi stock with a \"Buy\" rating. Absolutely nothing at all changed about the underlying fundamentals of the SoFi business, but simply because a Jeffries analyst and a Morgan Stanley analyst recommended the stock as a “buy”. This stock has run up close to 40% in a month on the back of two analyst ratings. If analyst ratings can move the stock this much, think of how much something that materially improves everything about the company can move it.\nWhat Happened to LendingClub’s stock price after obtaining their bank charter?\nWe can also compare what happened to LendingClub’s stock price. As mentioned previously, LendingClub received their charter approval on December 30, 2020 and their share price closed that day at $8.37. The share price jumped 26% the next day and was up 37% total a week later. What has truly been astounding however, has been their incredible growth since then spurred by record earnings due to their increased margins. Although they received bank charter approval on December 30, they started operations as a fully bank on February 1, 2021. That makes Q2 2021 their first earnings after receiving charter approval. LC announced blowout earnings driven by greater margins in their lending business and raised future guidance and the stock price blew up 48% overnight. At time of writing, Q3 2021 earnings were just announced yesterday and again the stock skyrocketed going up 33% overnight. In all, since the bank charter was announced, the stock is now up 403% since the approval announcement, as you can see in the one year chart below.\nSource: TradingView with my own annotations\nHow about Varo Bank’s Valuation with a charter?\nAnother data point is Varo Bank. Varo is not a publicly traded company. However, their various funding rounds do give them a valuation. This headline pretty much says it all:\nSource: CNBC\nRevenue has tripled and the valuation has gone up 3.6x since they acquired their charter (I know the headline says it tripled, but 700M to 2.5B is actually 3.6x).\nSquare is the Odd Fintech Out\nSquare is the odd company out here, but that is for good reason. Both LendingClub and Varo operate as consumer banks and lending is a large segment of their business. Their business models make full use of the bank charter. Square, on the other hand, does not have any consumer lending products at all. They do offer business loans, but it is a very small part of their company. In fact, when you read their press release about obtaining their charter, it kind of makes you wonder why they went to the trouble of getting it in the first place. According to their press release, “We do not expect the bank to have a material impact on Square’s consolidated balance sheet, total net revenue, gross profit, or Adjusted EBITDA in 2021.”\nWhat is Wall Street’s Opinion on the Bank Charter Being Priced In?\nWall Street analysts agree that the bank charter is not priced in. John Hecht of Jeffries specifically said that his $25 price target did not include the bank charter and that the charter would add about 30% in incremental adjusted EBITDA relative to his current base case estimates. Betsy Grasec of Morgan Stanley, who also initiated coverage with a $25 price target, has a bull case price target of $34. The difference between the two cases is that SoFi obtains its bank charter by early 2022.\nSoFi Future Expectations\nSo LendingClub’s market cap had increased 4.8x in 10 months and Varo Bank’s evaluation went up 3.6x in 13 months after receiving charters. It’s also worth noting that LendingClub had already run up from about $5 at the beginning of November to over $8 at the end of December prior to the charter approval. Wall Street also believes there is significant upside with the bank charter.\nI think it is reasonable to assume that SoFi gets a good short-term bump when the approval goes through. SoFi has had a good run recently, but I think it is clear that there is a lot of upside left to capture. If buy ratings can result in double-digit gains, I think a 10-20% jump on the news can be expected. However, I think the bigger gains will be realized over the next two to three earnings reports that occur after the bank charter approval. I expect SoFi to crush analyst estimates and consistently raise future guidance over those quarters as the true impact of the bank charter hits membership growth numbers, revenue, and earnings. If the bank charter comes through this year, I think a conservative and achievable price target for the end of 2022 is $40-$45.\nThe most important thing to me that people do not always seem to discuss about the charter is that it fundamentally improves the underlying business long term. This isn’t a catalyst that results in a one-time bump in revenue. This will positively affect every core product SoFi offers, make the ecosystem even stickier, and accelerate member growth (it even positively affects Galileo, although I did not have time to cover that in this article). This change will still be felt 5 and 10 years down the road as SoFi moves from a growth story to a successful fintech bank. SoFi is my highest conviction stock and I believe it will widely outperform the market over the coming years.","news_type":1},"isVote":1,"tweetType":1,"viewCount":887,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":178866333,"gmtCreate":1626797950122,"gmtModify":1631886682095,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"well,done","listText":"well,done","text":"well,done","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/178866333","repostId":"2152657163","repostType":4,"isVote":1,"tweetType":1,"viewCount":146,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":120859397,"gmtCreate":1624319557719,"gmtModify":1631883985847,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"Nice one","listText":"Nice one","text":"Nice one","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/120859397","repostId":"1167650307","repostType":4,"isVote":1,"tweetType":1,"viewCount":121,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":370340008,"gmtCreate":1618556409004,"gmtModify":1631884062905,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"Nice one and pls keep it up","listText":"Nice one and pls keep it up","text":"Nice one and pls keep it up","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/370340008","repostId":"1184470866","repostType":4,"repost":{"id":"1184470866","pubTimestamp":1618530196,"share":"https://www.laohu8.com/m/news/1184470866?lang=&edition=full","pubTime":"2021-04-16 07:43","market":"us","language":"en","title":"Dow jumps 300 points to top 34,000 for the first time amid blowout economic data","url":"https://stock-news.laohu8.com/highlight/detail?id=1184470866","media":"CNBC","summary":"U.S. stocks climbed to record levels on Thursday after key companies reported strong earnings and fr","content":"<div>\n<p>U.S. stocks climbed to record levels on Thursday after key companies reported strong earnings and fresh economic data pointed to a rebound in consumer spending and the jobs market.\nThe Dow Jones ...</p>\n\n<a href=\"https://www.cnbc.com/2021/04/14/stock-futures-inch-higher-after-sp-500-retreats-from-record.html\">Web Link</a>\n\n</div>\n","source":"cnbc_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Dow jumps 300 points to top 34,000 for the first time amid blowout economic data</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDow jumps 300 points to top 34,000 for the first time amid blowout economic data\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 07:43 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.cnbc.com/2021/04/14/stock-futures-inch-higher-after-sp-500-retreats-from-record.html><strong>CNBC</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks climbed to record levels on Thursday after key companies reported strong earnings and fresh economic data pointed to a rebound in consumer spending and the jobs market.\nThe Dow Jones ...</p>\n\n<a href=\"https://www.cnbc.com/2021/04/14/stock-futures-inch-higher-after-sp-500-retreats-from-record.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".DJI":"道琼斯","NFLX":"奈飞",".IXIC":"NASDAQ Composite","AMZN":"亚马逊",".SPX":"S&P 500 Index","AAPL":"苹果","COIN":"Coinbase Global, Inc."},"source_url":"https://www.cnbc.com/2021/04/14/stock-futures-inch-higher-after-sp-500-retreats-from-record.html","is_english":true,"share_image_url":"https://static.laohu8.com/72bb72e1b84c09fca865c6dcb1bbcd16","article_id":"1184470866","content_text":"U.S. stocks climbed to record levels on Thursday after key companies reported strong earnings and fresh economic data pointed to a rebound in consumer spending and the jobs market.\nThe Dow Jones Industrial Average rose 305.10 points, or 0.9%, to a record close of 34,035.99, marking the first time the blue-chip benchmark has crossed the 34,000 milestone. The S&P 500 gained 1.1% to 4,170.42, also reaching a record high. The Nasdaq Composite advanced 1.3% to 14,038.76.\nTechnology shares rebounded as bond yields fell. The so-called FAANG stocks – Facebook, Amazon, Apple, Netflix and Alphabet – all climbed more than 1%. The 10-year Treasury yield dropped 8 basis points below 1.56%. Earlier in the year, higher rates caused investors to dump growth-oriented stocks.\nRetail sales surged 9.8% in March as additional stimulus sent consumer spending soaring, the Commerce Department reported Thursday. That number topped the Dow Jones estimate of a 6.1% gain.\nA separate report on Thursday showed that first-time filings for unemployment insurance dropped to the lowest level since March 2020. The Labor Department reported 576,000 new jobless claims for the week ended April 10. Economists polled by Dow Jones expected a total of 710,000.\n“Although 34,000 by itself is just another number, this is a monumental feat when you think back to where we were last year at this time,” said Ryan Detrick, chief market strategist at LPL Financial. “The speed and resiliency of this economic recovery is unlike anything we’ve ever seen and it helps to justify stocks at all-time highs.”\nShares of UnitedHealth, a Dow member, gained 3.8% after results topped the Street’s forecasts and the health insurer raised guidance for 2021.\nPepsi shares added 0.1% after the consumer snack and drink maker said sales last quarter rose nearly 7%, topping estimates.\nThe market has been grinding higher to reach new records in recent sessions amid the economic reopening and trillions of dollars in stimulus. The S&P 500 has gained 11% in 2021 with energy and financials up the most year to date.\n“I am incredibly bullish on the markets, and you are right to be worried about our deficits,” Larry Fink, BlackRock CEO, said in an interview on “Squawk Box.”“If we don’t have economic growth that is sustainable over the next 10 years — our deficits are going to matter and they are going to elevate interest rates ... I believe because of monetary stimulus, fiscal stimulus, cash on the sidelines, earnings, markets are okay. Markets are going to continue to be stronger.”\nShares of Citigroup erased earlier gains and fell 0.5% The bank posted results that beat analysts’ estimates for first-quarter profit with strong investment banking revenue and a bigger-than-expected release of loan-loss reserves.\nBank of America shares rose as earnings last quarter blew past the Street on booming trading and investment banking results as well the release of loan-loss reserves. The shares dipped 2.9%, however.\nNewly public crypto exchange Coinbase rolled over and closed the day down 1.7% in volatile trading. The stock got a boost earlier after it was revealed Ark Invest’s Cathie Wood loaded up on the first day of trading.\nOn Tuesday, the Food and Drug Administration called for a pause in administering J&J’s Covid-19 vaccine after six people in the U.S. developed a rare disorder involving blood clots. The announcement triggered a sell-off in reopening plays earlier in the week, but is not expected to have a material impact on the pace of the U.S. vaccine rollout.","news_type":1},"isVote":1,"tweetType":1,"viewCount":171,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":348213865,"gmtCreate":1617931491157,"gmtModify":1631891908017,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"Nice onnne","listText":"Nice onnne","text":"Nice onnne","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/348213865","repostId":"2126012847","repostType":4,"repost":{"id":"2126012847","pubTimestamp":1617919200,"share":"https://www.laohu8.com/m/news/2126012847?lang=&edition=full","pubTime":"2021-04-09 06:00","market":"sg","language":"en","title":"While You Were Sleeping: 5 stories you might have missed, April 9","url":"https://stock-news.laohu8.com/highlight/detail?id=2126012847","media":"The Straits Times","summary":"Biden introduces limited measures to tackle gun violence in the US\nPresident Joe Biden and his Attor","content":"<div>\n<p>Biden introduces limited measures to tackle gun violence in the US\nPresident Joe Biden and his Attorney-General Merrick Garland announced limited measures to tackle gun violence in the United States ...</p>\n\n<a href=\"http://www.straitstimes.com/world/while-you-were-sleeping-5-stories-you-might-have-missed-april-9-2\">Web Link</a>\n\n</div>\n","source":"straits_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>While You Were Sleeping: 5 stories you might have missed, April 9</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhile You Were Sleeping: 5 stories you might have missed, April 9\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-09 06:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=http://www.straitstimes.com/world/while-you-were-sleeping-5-stories-you-might-have-missed-april-9-2><strong>The Straits Times</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Biden introduces limited measures to tackle gun violence in the US\nPresident Joe Biden and his Attorney-General Merrick Garland announced limited measures to tackle gun violence in the United States ...</p>\n\n<a href=\"http://www.straitstimes.com/world/while-you-were-sleeping-5-stories-you-might-have-missed-april-9-2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"http://www.straitstimes.com/world/while-you-were-sleeping-5-stories-you-might-have-missed-april-9-2","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2126012847","content_text":"Biden introduces limited measures to tackle gun violence in the US\nPresident Joe Biden and his Attorney-General Merrick Garland announced limited measures to tackle gun violence in the United States on Thursday in what the White House described as a first step to curb mass shootings, community bloodshed and suicides.\nThe new measures include plans for the Justice Department to crack down on self-assembled “ghost guns” and make “stabilising braces” - which effectively turn pistols into rifles – subject to registration under the National Firearms Act.\nBiden said he will ask the Bureau of Alcohol, Tobacco, Firearms and Explosives to release an annual report on firearms trafficking in the United States, and make it easier for states to adopt “red flag” laws that aim to prevent individuals deemed to present a danger to themselves or others from owning guns.\nBiden also outlined more ambitious goals that he needs the support of Congress to accomplish, including reintroducing a ban on assault weapons, lifting an exemption on lawsuits against gun manufacturers, and passing a nationwide red flag law.\nEx-NFL player kills five people, then turns gun on himself\nA former professional football player shot and killed a prominent South Carolina doctor, his wife, two grandchildren and another man before taking his own life at his home a short distance away, authorities said on Thursday.\nPhillip Adams, 32, who left the National Football League more than five years ago, was found dead hours after the killings of five people on Wednesday at the home of Dr Robert Lesslie in suburban Rock Hill, South Carolina, York County Sheriff Kevin Tolson said.\nInvestigators were at a loss to offer a motive for the shooting spree that broke out in the quiet community about 48km south of Charlotte, North Carolina.\nAmazon unionisation drive losing by 2-1 margin in early vote results\nAmazon union vote count set to begin\nAn early tally on Thursday of votes in Amazon.com’s closely watched union election in Alabama showed workers voting against forming the first union in the United States by more than a 2-1 margin.\nOf the 3,215 ballots received, at least 600 votes were against unionising and more than 250 votes were for the Bessemer, Alabama, warehouse to form a union.\nThe National Labour Relations Board (NLRB), the agency overseeing the election, held a video call and set up multiple cameras so participants and media could watch its regulators count the votes.\nSony, Netflix agree deal to stream new Spider-Man, other films\nNetflix, Sony ink deal on streaming blockbusters\nStreaming service Netflix reached a deal to offer new Spider-Man movies and other films from Sony Pictures to US customers after they play in theatres, the companies said on Thursday.\nThe five-year arrangement will begin with the 2022 slate of movies, which is scheduled to include Marvel film Morbius, best-selling book adaptation Where The Crawdads Sing and Brad Pitt thriller Bullet Train.\nFuture releases are expected to include new installments in the Spider-Man, Venom, Jumanji and Bad Boys franchises.\nGolf: Defending Masters champion Johnson five back after poor finish\nA wild finish left Dustin Johnson five shots behind the leaders on Thursday as the defending Masters champion faced much fiercer conditions at Augusta National compared to the toothless layout he triumphed on five months ago.\nThis Masters has a much more familiar look as it is back in its traditional April slot as the year’s first major while fans were welcomed back, albeit in limited numbers and with protocols in place to reduce the risk of Covid-19 transmission.\nJapan’s Hideki Matsuyama, bolstered by an eagle at the par-five eighth, and Brian Harman fired three-under-par 69s to share the first-round clubhouse lead.","news_type":1},"isVote":1,"tweetType":1,"viewCount":227,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":343732379,"gmtCreate":1617754703491,"gmtModify":1631891908028,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/343732379","repostId":"1101907559","repostType":4,"repost":{"id":"1101907559","pubTimestamp":1617672655,"share":"https://www.laohu8.com/m/news/1101907559?lang=&edition=full","pubTime":"2021-04-06 09:30","market":"us","language":"en","title":"Opinion: Financial crises get triggered about every 10 years — Archegos might be right on time","url":"https://stock-news.laohu8.com/highlight/detail?id=1101907559","media":"marketwatch","summary":"No one, for now, can say for sure that the so-called family office’s billions in investment losses won’t spread.Financial crises are never quite the same. During the late 1980s, nearly a third of the nation’s savings and loan associations failed, ending with a taxpayer bailout — in 2021 terms — of about $265 billion.In 1997-1998, financial crises in Asia and Russia led to the near meltdown of the largest hedge fund in the U.S. —Long-Term Capital Management. Its reach and operating practices were","content":"<blockquote>\n <b>No one, for now, can say for sure that the so-called family office’s billions in investment losses won’t spread.</b>\n</blockquote>\n<p>Financial crises are never quite the same. During the late 1980s, nearly a third of the nation’s savings and loan associations failed, ending with a taxpayer bailout — in 2021 terms — of about $265 billion.</p>\n<p>In 1997-1998, financial crises in Asia and Russia led to the near meltdown of the largest hedge fund in the U.S. —Long-Term Capital Management(LTCM). Its reach and operating practices were such that Federal Reserve Chairman Alan Greenspan said that when LTCM failed, “he had never seen anything in his lifetime that compared to the terror” he felt. LTCM was deemed “too big to fail,” and he engineered a bailout by 14 major U.S. financial institutions.</p>\n<p>Exactly a decade later, too much leverage by some of those very institutions, and the bursting of a U.S. real estate bubble, led to the near collapse of the U.S. financial system. Once again, big banks were deemed too big to fail and taxpayers came to the rescue.</p>\n<p>The trend? Every 10 years or so, and they all look different.&nbsp;Are we in the early stages of a new crisis now, with the blowup at the family office Archegos Capital Management LP?</p>\n<p>A family office, for the uninitiated, is a private wealth management vehicle for the ultra-wealthy. Here’s what I mean by ultra-wealthy: Consulting firm EY estimates there are some 10,000 family offices globally, but manage, says a separate estimate by market research firm Campden Research, nearly $6 trillion. That $6 trillion is likely far higher now given that it’s based on 2019 data.</p>\n<p><b>Unregulated money managers</b></p>\n<p>Here’s the potential danger. Family offices generally aren’t regulated. The 1940 Investment Advisers Act says firms with 15 clients or fewer don’t have to register with the Securities and Exchange Commission. What this means is that trillions of dollars are in play and no one can really say who’s running the money, what it’s invested in, how much leverage is being used, and what kind of counterparty risk may exist. (Counterparty risk is the probability that one party involved in a financial transaction could default on a contractual obligation to someone else.)</p>\n<p>This appears to be the case with Archegos. The firm bet heavily on certain Chinese stocks, including e-commerce player&nbsp;Vipshop Holdings&nbsp;Ltd.VIPS,-1.19%,U.S.-listed Chinese tutoring company&nbsp;GSX Techedu&nbsp;Inc.GSX,-10.63%and U.S. media companiesViacomCBS&nbsp;Inc.VIAC,-3.90%and&nbsp;Discovery&nbsp;Inc.DISCA,-3.86%,among others. Share prices have tumbled lately, sparking large sales — some $30 billion — by Archegos.</p>\n<p>The problem is that only about a third of that, or $10 billion, was its own money. We now know that Archegos worked with some of the biggest names on Wall Street, including&nbsp;Credit Suisse Group AGCS,+1.59%,UBS Group AGUBS,+1.01%,Goldman Sachs Group Inc.GS,-1.25%,&nbsp;Morgan StanleyMS,-0.28%,Deutsche Bank AGDB,+0.74%and Nomura Holdings Inc.&nbsp;NMR,+1.87%.</p>\n<p>But since family offices are largely allowed to operate unregulated, who’s to say how much money is really involved here and what the extent of market risk is? My colleague Mark DeCambre&nbsp;reported last week that Archegos’ true exposures to bad trades could actuallybe closer to $100 billion.</p>\n<p><b>Danger of counterparty risk</b></p>\n<p>This is where counterparty risk comes in. As Archegos’ bets went south, the above banks — looking at losses of their own — hit the firm with margin calls. Deutsche quickly dumped about $4 billion in holdings, while Goldman and Morgan Stanley are also said to have unwound their positions, perhaps limiting their downside.</p>\n<p>So is this a financial crisis? It doesn’t appear to be. Even so, the Securities and Exchange Commission has opened a preliminary investigation into Archegos and its founder, Bill Hwang.</p>\n<p>One peer, Tom Lee, the research chief of Fundstrat Global Advisors, calls Hwang one of the “top 10 of the best investment minds” he knows.</p>\n<p>But federal regulators may have a lesser opinion. In 2012, Hwang’s former hedge fund, Tiger Asia Management, pleaded guilty and paid more than $60 million in penalties after it was accused of trading on illegal tips about Chinese banks. The SEC banned Hwang from managing money on behalf of clients — essentially booting him from the hedge fund industry. So Hwang opened Archegos, and again, family offices aren’t generally aren’t regulated.</p>\n<p><b>Yellen on the case</b></p>\n<p>This issue is on Treasury Secretary Janet Yellen’s radar. She said last week that greater oversight of these private corners of the financial industry is needed. The Financial Stability Oversight Council (FSOC), which she oversees, has revived a task force to help agencies better “share data, identify risks and work to strengthen our financial system.”</p>\n<p>Most financial crises end up with American taxpayers getting stuck with the tab. Gains belong to the risk-takers. But losses — they belong to us. To paraphrase Abe Lincoln, family offices — a multi-trillion dollar industry largely allowed to operate in the shadows in a global financial system that is more intertwined than ever — are of the super-wealthy, by the super-wealthy and for the super-wealthy. And no one else.</p>\n<p>The Archegos collapse may or may not be the beginning of yet another financial crisis. But who’s to say what thousands of other family offices are doing with their trillions, and whether similar problems could blow up?</p>","source":"lsy1603348471595","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Opinion: Financial crises get triggered about every 10 years — Archegos might be right on time</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nOpinion: Financial crises get triggered about every 10 years — Archegos might be right on time\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-06 09:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/financial-crises-happen-about-every-10-years-which-makes-the-archegos-meltdown-unnerving-11617634942?mod=home-page><strong>marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>No one, for now, can say for sure that the so-called family office’s billions in investment losses won’t spread.\n\nFinancial crises are never quite the same. During the late 1980s, nearly a third of ...</p>\n\n<a href=\"https://www.marketwatch.com/story/financial-crises-happen-about-every-10-years-which-makes-the-archegos-meltdown-unnerving-11617634942?mod=home-page\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SPY":"标普500ETF",".SPX":"S&P 500 Index",".DJI":"道琼斯",".IXIC":"NASDAQ Composite"},"source_url":"https://www.marketwatch.com/story/financial-crises-happen-about-every-10-years-which-makes-the-archegos-meltdown-unnerving-11617634942?mod=home-page","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1101907559","content_text":"No one, for now, can say for sure that the so-called family office’s billions in investment losses won’t spread.\n\nFinancial crises are never quite the same. During the late 1980s, nearly a third of the nation’s savings and loan associations failed, ending with a taxpayer bailout — in 2021 terms — of about $265 billion.\nIn 1997-1998, financial crises in Asia and Russia led to the near meltdown of the largest hedge fund in the U.S. —Long-Term Capital Management(LTCM). Its reach and operating practices were such that Federal Reserve Chairman Alan Greenspan said that when LTCM failed, “he had never seen anything in his lifetime that compared to the terror” he felt. LTCM was deemed “too big to fail,” and he engineered a bailout by 14 major U.S. financial institutions.\nExactly a decade later, too much leverage by some of those very institutions, and the bursting of a U.S. real estate bubble, led to the near collapse of the U.S. financial system. Once again, big banks were deemed too big to fail and taxpayers came to the rescue.\nThe trend? Every 10 years or so, and they all look different. Are we in the early stages of a new crisis now, with the blowup at the family office Archegos Capital Management LP?\nA family office, for the uninitiated, is a private wealth management vehicle for the ultra-wealthy. Here’s what I mean by ultra-wealthy: Consulting firm EY estimates there are some 10,000 family offices globally, but manage, says a separate estimate by market research firm Campden Research, nearly $6 trillion. That $6 trillion is likely far higher now given that it’s based on 2019 data.\nUnregulated money managers\nHere’s the potential danger. Family offices generally aren’t regulated. The 1940 Investment Advisers Act says firms with 15 clients or fewer don’t have to register with the Securities and Exchange Commission. What this means is that trillions of dollars are in play and no one can really say who’s running the money, what it’s invested in, how much leverage is being used, and what kind of counterparty risk may exist. (Counterparty risk is the probability that one party involved in a financial transaction could default on a contractual obligation to someone else.)\nThis appears to be the case with Archegos. The firm bet heavily on certain Chinese stocks, including e-commerce player Vipshop Holdings Ltd.VIPS,-1.19%,U.S.-listed Chinese tutoring company GSX Techedu Inc.GSX,-10.63%and U.S. media companiesViacomCBS Inc.VIAC,-3.90%and Discovery Inc.DISCA,-3.86%,among others. Share prices have tumbled lately, sparking large sales — some $30 billion — by Archegos.\nThe problem is that only about a third of that, or $10 billion, was its own money. We now know that Archegos worked with some of the biggest names on Wall Street, including Credit Suisse Group AGCS,+1.59%,UBS Group AGUBS,+1.01%,Goldman Sachs Group Inc.GS,-1.25%, Morgan StanleyMS,-0.28%,Deutsche Bank AGDB,+0.74%and Nomura Holdings Inc. NMR,+1.87%.\nBut since family offices are largely allowed to operate unregulated, who’s to say how much money is really involved here and what the extent of market risk is? My colleague Mark DeCambre reported last week that Archegos’ true exposures to bad trades could actuallybe closer to $100 billion.\nDanger of counterparty risk\nThis is where counterparty risk comes in. As Archegos’ bets went south, the above banks — looking at losses of their own — hit the firm with margin calls. Deutsche quickly dumped about $4 billion in holdings, while Goldman and Morgan Stanley are also said to have unwound their positions, perhaps limiting their downside.\nSo is this a financial crisis? It doesn’t appear to be. Even so, the Securities and Exchange Commission has opened a preliminary investigation into Archegos and its founder, Bill Hwang.\nOne peer, Tom Lee, the research chief of Fundstrat Global Advisors, calls Hwang one of the “top 10 of the best investment minds” he knows.\nBut federal regulators may have a lesser opinion. In 2012, Hwang’s former hedge fund, Tiger Asia Management, pleaded guilty and paid more than $60 million in penalties after it was accused of trading on illegal tips about Chinese banks. The SEC banned Hwang from managing money on behalf of clients — essentially booting him from the hedge fund industry. So Hwang opened Archegos, and again, family offices aren’t generally aren’t regulated.\nYellen on the case\nThis issue is on Treasury Secretary Janet Yellen’s radar. She said last week that greater oversight of these private corners of the financial industry is needed. The Financial Stability Oversight Council (FSOC), which she oversees, has revived a task force to help agencies better “share data, identify risks and work to strengthen our financial system.”\nMost financial crises end up with American taxpayers getting stuck with the tab. Gains belong to the risk-takers. But losses — they belong to us. To paraphrase Abe Lincoln, family offices — a multi-trillion dollar industry largely allowed to operate in the shadows in a global financial system that is more intertwined than ever — are of the super-wealthy, by the super-wealthy and for the super-wealthy. And no one else.\nThe Archegos collapse may or may not be the beginning of yet another financial crisis. But who’s to say what thousands of other family offices are doing with their trillions, and whether similar problems could blow up?","news_type":1},"isVote":1,"tweetType":1,"viewCount":132,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":804906721,"gmtCreate":1627914484563,"gmtModify":1631886682029,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"well done","listText":"well done","text":"well done","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/804906721","repostId":"1155693481","repostType":4,"isVote":1,"tweetType":1,"viewCount":212,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":804908421,"gmtCreate":1627914444263,"gmtModify":1631883895471,"author":{"id":"3561715931247718","authorId":"3561715931247718","name":"LeonYeo","avatar":"https://static.tigerbbs.com/98f48b16c6f76520316a9d2bbb6a8506","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561715931247718","authorIdStr":"3561715931247718"},"themes":[],"htmlText":"nice one","listText":"nice one","text":"nice 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headlines, business news, financials and earnings ","home_visible":1,"media_name":"Tiger Newspress","id":"1079075236","head_image":"https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba"},"pubTimestamp":1617613431,"share":"https://www.laohu8.com/m/news/1103962313?lang=&edition=full","pubTime":"2021-04-05 17:03","market":"us","language":"en","title":"Tesla shares surged 6.5% in premarket trading","url":"https://stock-news.laohu8.com/highlight/detail?id=1103962313","media":"Tiger Newspress","summary":"Tesla shares surged 6.5% to $704.4 in premarket trading.Tesla delivered more than expected in the fi","content":"<p>Tesla shares surged 6.5%&nbsp;to&nbsp;$704.4 in premarket trading.</p><p>Tesla delivered more than expected in the first quarter, and several investment banks raised their target prices.</p><p><img src=\"https://static.tigerbbs.com/0177d428b3156542cecf3b3dabde867e\" tg-width=\"1302\" tg-height=\"833\" referrerpolicy=\"no-referrer\"></p><p>Tesla announced that it shipped 184,800 electric vehicles in 1Q, which exceeded the previous record of 180,570 units achieved in the fourth quarter of 2020. Moreover, 1Q vehicle shipments came in well above analysts’ expectations of 177,822 units.</p><p>Following the quarterly production and delivery numbers, Wedbush analyst&nbsp;Daniel Ives&nbsp;upgraded the stock to Buy from Hold and raised the price target to $1,000 (51.1% upside potential) from $950.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla shares surged 6.5% in premarket trading</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla shares surged 6.5% in premarket trading\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1079075236\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Tiger Newspress </p>\n<p class=\"h-time\">2021-04-05 17:03</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<p>Tesla shares surged 6.5%&nbsp;to&nbsp;$704.4 in premarket trading.</p><p>Tesla delivered more than expected in the first quarter, and several investment banks raised their target prices.</p><p><img src=\"https://static.tigerbbs.com/0177d428b3156542cecf3b3dabde867e\" tg-width=\"1302\" tg-height=\"833\" referrerpolicy=\"no-referrer\"></p><p>Tesla announced that it shipped 184,800 electric vehicles in 1Q, which exceeded the previous record of 180,570 units achieved in the fourth quarter of 2020. Moreover, 1Q vehicle shipments came in well above analysts’ expectations of 177,822 units.</p><p>Following the quarterly production and delivery numbers, Wedbush analyst&nbsp;Daniel Ives&nbsp;upgraded the stock to Buy from Hold and raised the price target to $1,000 (51.1% upside potential) from $950.</p>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1103962313","content_text":"Tesla shares surged 6.5% to $704.4 in premarket trading.Tesla delivered more than expected in the first quarter, and several investment banks raised their target prices.Tesla announced that it shipped 184,800 electric vehicles in 1Q, which exceeded the previous record of 180,570 units achieved in the fourth quarter of 2020. Moreover, 1Q vehicle shipments came in well above analysts’ expectations of 177,822 units.Following the quarterly production and delivery numbers, Wedbush analyst Daniel Ives upgraded the stock to Buy from Hold and raised the price target to $1,000 (51.1% upside potential) from $950.","news_type":1},"isVote":1,"tweetType":1,"viewCount":222,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}