Vietnamese Garden

GreenSky Credit’s David Zalik Paves the Path Towards More Efficient Home Loans

David Zalik drives up in his black Mercedes convertible towards the parking garage of an aged low-rise office structure near Atlanta and takes off the baseball cap that protected his balding head from sun rays. “This here is a less glamorous variation of Willy Wonka and the Chocolate Factory, nobody goes here,” he informs me as we near the entrance.

With that, we were the first public witnesses to the large, irregularly shaped lower office where GreenSky, the United States third-most-valuable fin-tech business (after SoFi and Stripe), has been resting in obscurity for the last ten years.

It is Zalik who has the golden ticket. The past September, GreenSky obtained $50 million at a $3.6 billion appraisal in funding. The 43-year-old CEO and co-founder still possesses over half of the business, placing him well into the billionaire levels.

His intrigue beings in the hardly lit labyrinth of cubicles, the place where employees with headsets explain GreenSky’s simple-to-use mobile application to home remodeling constructors and contractors.

It is an odd consumer foundation for a fin-tech unicorn, however, Zalik found out that contractors were the gatekeepers of some of the greatest markets in the United States. Yet another number of the company’s phone reps are working to help homeowners catch up on their loans.

Getting money on time generally isn’t an issue, though. While GreenSky has the ability to quickly approve and acquire unsecured loans, it does this solely for borrowers with acceptable FICO scores, allowing a slew of other online loaners to chase the outliers.

However, GreenSky’s real secret is something you cannot witness. A model assigns much of the uncertainty and the work to other entities and returns from both ends of every deal. Those 17,000 contractors don’t just market the deals to homeowners but also pays GreenSky, typically, 6% of the credit amount. It is 14 deposit-rich banking partners such as Regions, SunTrust and Fifth Third (which recently produced the equity investment with Zalik’s business), that are the ones actually making the loans.

“We were inspired to create something where we controlled the transaction,” Zalik mentions.

Sahm Adrangi Finds Irregularities In An Advertising Firm

Kerrisdale Capital has taken a look at how certain advertising firms have made revenue over the years, and one that they’ve been highly skeptical of is QuinStreet. QuinStreet usually has made its revenue off of making different sales referrals to various insurance companies, or other professional services companies. But Kerrisdale CIO Sahm Adrangi has noted that the company has come under scrutiny for engaging in some questionable marketing leads for school ads targeted at military veterans, and now he says there may be traffic manipulation going on with some of its ads. While this practice in using certain platforms such as Swagbucks clickers to get ad clicks isn’t illegal, Adrangi does believe it affects the company’s bottom line. He put out a detailed report about it and has taken a short position on the company.

Sahm Adrangi has made most of his company’s revenue in shorting stocks of companies that he’s found to have unsustainable or questionable business practices. But in doing so, he’s had all research done on those companies from their management, financial strategies and where their bottom line comes from. The idea behind what Sahm Adrangi does is to bring more transparency to deceptive practices in different industries, and to give investors information that many mainstream media outlets have not. Along with shorting stocks in overvalued companies, Adrangi has also found companies undervalued that have later grown.

Sahm Adrangi has a distinguished resume in finance with a bachelor’s degree in economics from Yale. He began as an analyst in the credit division of Deutsche Bank and also part-time at Chanin Capital Partners. Adrangi also managed billions in assets at Longacre Management, a major hedge fund at the time. He founded Kerrisdale Capital in 2009 with less than $1 million, but today he manages over $170 million in the firm’s portfolio. Among the stocks he has shorted include several Chinese companies that were convicted of fraud by the SEC, and some insights into the ways that telecom companies like DISH Network and ViaSat that became of interest to shareholders. Adrangi has been interviewed several times on networks like Bloomberg and CNBC.