“We saw some customers on the mortgage side who did come back to us after going to lower-cost products. And so I think those are really good indicators for us,” said Nima Ghamsari.
A nice analysis. Regarding your thoughts about management, I view the insider selling behavior of CEO Nima Ghamsari as a further negative. His sales from December 2021 through July 2022 are reducing his stake fairly modestly, but I'd prefer not to see a CEO selling into significant weakness. And there are some nuances to this selling that are worth further attention.
These are in fact forced sales. According to the filings disclosing the sales from December 2021 through July 2022, these sales are in connection with a loan secured by his stake. For example: "All the shares of Class B Common Stock were previously pledged as collateral to secure certain personal indebtedness of the Reporting Person under a loan. On July 31, 2023, the Reporting Person sold the shares pursuant to a Rule 10b5-1 trading plan and used the proceeds to reduce the outstanding amount under the loan. The Reporting Person will make further sales of shares from time to time and use the proceeds to further reduce the outstanding amount under the loan as required under the loan documentation." According to the latest proxy, as of March 31, 2023, all of his shares remained pledged as collateral.
This is poor governance - most public companies explicitely disallow insiders pledging shares as collateral. In addition, it creates a material overhang in that further forced sales of his large stake into weakness could drive shares down quite a bit. Finally, in my view it speaks to poor judgment on the part of Ghamsari. I recognize that founders may have limited opportunities to gain liquidity from their large stakes even after a company comes public, but pledging shares for a loan is not the only option, and it is a choice that can have a material negative impact on the shareholders and the company.
Fair points all around. I do think Nima and co aren't the most well tuned operators, hence the smaller position size. I can forgive some covid mania poor decisions if recent actions seem more reasonable, which appears to be the case. A shorter leash is definitely warranted here however if things don't go as planned.
Ghamsari having 73% voting control and being chairman is also not great. It's not like this is a tech juggernaut where the "visionary" founder control is defensible. Too much risk that he treats the company as his plaything. I recognize that you have sized accordingly, and I have no position. Enjoy reading your work (I am long CDLX) and have a background in insider behavior and governance and thought I'd share.
Please consider contacting @AndrewRangeley about appearing on an episode of his yet Another Value Podcast to discuss $BLND & $CVNA:
https://www.youtube.com/@yetanothervaluepodcast
He profiles investors who have eclectic stock picks.
Great, thanks
Blend Lab's Consumer Banking Suite compares with these competitors in functionality and cost fo ownership:
1/ Q2's Digital Banking Platform: https://www.q2.com/resource/2b01d48d-fdf4-42e5-bba999a3c962b44f?hsLang=en
2/ nCino Cloud Banking Platform: https://www.ncino.com/our-platform
3/ Alkami Digital Banking: https://www.alkami.com/digital-banking-solutions/
Who are Blend Lab's other competitors in the consumer banking space?
$MLNK is worth mentioning.
“We saw some customers on the mortgage side who did come back to us after going to lower-cost products. And so I think those are really good indicators for us,” said Nima Ghamsari.
https://x.com/NatMortgageNews/status/1660814054493937664?s=20
> What might be those "lower-cost products"?
Would it be nCino’s Mortgage Suite (formerly: SimpleNexus) ?
https://www.ncino.com/mortgage/us
FYI Blend wasn't a SPAC.
That should have been edited out, had it written wrong in one spot. Strange
A nice analysis. Regarding your thoughts about management, I view the insider selling behavior of CEO Nima Ghamsari as a further negative. His sales from December 2021 through July 2022 are reducing his stake fairly modestly, but I'd prefer not to see a CEO selling into significant weakness. And there are some nuances to this selling that are worth further attention.
These are in fact forced sales. According to the filings disclosing the sales from December 2021 through July 2022, these sales are in connection with a loan secured by his stake. For example: "All the shares of Class B Common Stock were previously pledged as collateral to secure certain personal indebtedness of the Reporting Person under a loan. On July 31, 2023, the Reporting Person sold the shares pursuant to a Rule 10b5-1 trading plan and used the proceeds to reduce the outstanding amount under the loan. The Reporting Person will make further sales of shares from time to time and use the proceeds to further reduce the outstanding amount under the loan as required under the loan documentation." According to the latest proxy, as of March 31, 2023, all of his shares remained pledged as collateral.
This is poor governance - most public companies explicitely disallow insiders pledging shares as collateral. In addition, it creates a material overhang in that further forced sales of his large stake into weakness could drive shares down quite a bit. Finally, in my view it speaks to poor judgment on the part of Ghamsari. I recognize that founders may have limited opportunities to gain liquidity from their large stakes even after a company comes public, but pledging shares for a loan is not the only option, and it is a choice that can have a material negative impact on the shareholders and the company.
Fair points all around. I do think Nima and co aren't the most well tuned operators, hence the smaller position size. I can forgive some covid mania poor decisions if recent actions seem more reasonable, which appears to be the case. A shorter leash is definitely warranted here however if things don't go as planned.
Ghamsari having 73% voting control and being chairman is also not great. It's not like this is a tech juggernaut where the "visionary" founder control is defensible. Too much risk that he treats the company as his plaything. I recognize that you have sized accordingly, and I have no position. Enjoy reading your work (I am long CDLX) and have a background in insider behavior and governance and thought I'd share.
You should take a serious look at Pagaya Tech