Q: With goeasy’s stock under intense pressure, I’m looking at the ownership structure: David Ingram and Don Johnson control more than a fifth of the company and have been through multiple credit cycles as long-term holders. Given Don Johnson’s reputation for financial acumen and his deep roots in the industry, is it fair to interpret their lack of selling as a signal that the underlying book value remains intact? Or do you believe the LendCare charge-offs represent a structural shift that even veteran insider conviction can't offset?
5i Research Answer:
There has been such a dramatic shift that it is hard to argue that a structural shift has not occurred. The lack of selling is a net positive, but it could also simply be related to a blackout period, based on how bad the news was as well as the upcoming earnings in a week. So, while there is executive skill still left, we would not simply assume that a quick turn will happen here.