Fair Isaac ($FICO) podcast mentions
By the end of the week, news reports indicated that the parties were close to opening the strait, but nothing on nuclear materials at all. We shall see. But the market rallied back to all-time highs and oil prices declined below $80. Over the weekend, I posted a short note on Substack in which I stated that the reasons for the demise of the Situational Awareness hedge fund was the leverage, which was 4 times, and the fact that the longs and shorts were completely correlated. And I'd like to explain this correlation concept further because I did not make it clear. Imagine I'm long Goldman Sachs and short Fair Isaac, FICO. I'm long Goldman because I think the current strong investment banking cycle will last a long time. And I'm short FICO because I believe it is going to lose its consumer scoring monopoly. That's my thesis. Forget about whether you agree with these investment cases or not. The point here is that the two stocks have literally nothing to do with one another. The fundamentals of both companies are completely independent. The two positions are uncorrelated. If I could construct a long-short portfolio with positions like this, I'd have an uncorrelated long-short portfolio. Now imagine it's the early 1900s, and I believe that the automobile is going to conquer the world and replace the horse carriage. Then imagine that I construct a portfolio where I am long every public auto and auto parts company and I'm short every public horse carriage company. This portfolio is the exact opposite of Goldman and FICO. The longs and shorts are completely correlated. If autos go up, carriages must go down and vice versa. Now, what's the matter with that, you say? Isn't the thesis completely correct? Well, obviously in 2020 hindsight it is, and that is true. But over what period of time? Imagine there is a bad car accident that gets a lot of press. All of a sudden, people start to doubt the future of the automobile and our longs all go down and our shorts all go up. Every trade goes against us at the same time. That's what happened to situational awareness. The fund was long AI beneficiaries and short companies Leopold thought would get hurt by AI, like certain software companies. The longs and shorts were all correlated. In essence, it was all just one trade.
Steve Eisman · The Real Eisman Playbook · SpaceX Disappoints, AI's Free Cash Flow Shrinks, Meta Struggles | The Weekly Wrap · 2026-08-07And get this, the name of the organization is Fair Isaac.
Dave Ramsey · The Ramsey Show · Make Hard Decisions Now So Future You Can Win · 2026-08-06But earnings were down 30% versus last year. On the negative side, both orders down 9% year over year and revenue down 14% were a little shy of expectations. But I think most importantly, free cash flow was significantly stronger than expected as the company has begun to dial back land spend in favor of increased share repurchases, given the stock's discounted valuation. During the quarter, Meredith repurchased $100 million worth of stock, which is 2% of outstanding shares, and it has bought back 5% of outstanding shares since the beginning of the year. Moving on, Fair Isaac, a stock I've been short. The company reported. We've discussed this company at length in an interview with Kelsey Zhu of Autonomous. The short thesis is that FICO wields a monopoly in consumer scoring, but that the new VantageScore is going to take big market share in mortgages from FICO. It is still early in that process. Now, Mike, FICO reported earnings per share of $12.18 versus $8.57, which is 42% growth. The big EPS growth rate is largely due to FICO raising prices for years, and the EPS beat this quarter was also because of lower than expected expenses. Revenue of $674 million, which was up 26%, was actually a miss. The company also provided soft forward guidance. A company whose entire monopolistic business model is potentially under assault can show no signs of weakness. Missing on revenue and providing soft guidance is weakness, and the stock was down 17% on Thursday. And finally, Apple and Amazon reported Thursday night.
Steve Eisman · The Real Eisman Playbook · The AI Debate Gets More Complicated: Microsoft Has a Win, Meta Stumbles | The Weekly Wrap · 2026-07-31Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Thursday, July 30th, and I'm your host, Kim Kahn. Our top story so far: Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has sold a large portion of its stock portfolio to Ken Griffin's Citadel after suffering steep losses. Reports say the hedge fund rapidly unloaded its $16 billion public equity portfolio after taking heavy losses tied to concentrated AI-related positions. The fund's holdings included South Korean shipmaker SK Hynix and other stocks caught up in the broader retreat from AI-related shares. Situational is expected to continue operating, however, retaining significant private company investments, including an Anthropic stake valued at about $5 billion. The fund had grown rapidly over the past several months and generated a 439% return from the start of the year through the end of June, according to an investor letter. But it was also said to have been using substantial leverage. Founded about 2 years ago, Situational Awareness amassed more than $20 billion in assets under management, according to the Financial Times. Ashen Brenner became a prominent figure in Silicon Valley after publishing his 2024 essay, Situational Awareness, which argued that artificial intelligence would dramatically reshape society. Situational Awareness's largest disclosed holdings at the end of the first quarter included Nibius Group, SanDisk, Micron, and CoreWeave. In a twist, all four stocks are rallying sharply today, with SanDisk, Nibius, and CoreWeave up more than 20%, while Micron is higher by about 15%. Among other active stocks, Arm is rallying after posting solid Q1 results and issuing upbeat guidance. JPMorgan analyst Harlan Sur said the AGI merchant silicon CPU narrative continues to firm up just a few months after the Arm Everywhere event. Fair Isaac is tumbling after Q3 revenue missed consensus estimates. CEO William Lansing said elevated interest rates and ongoing affordability challenges continue to weigh on the mortgage market, keeping loan originations below historical norms. Electronic fixed-income trading platform Market Access is surging after agreeing to a buyout offer from Intercontinental Exchange at a 33% premium to its previous closing price. And Jersey Mike's Subs opened— how to put this— sub its IPO price. The stock debuted at $21 after pricing at $23, right in the middle of its expected range.
Kim Kahn · Wall Street Breakfast · High-flying AI fund forced to dump stocks · 2026-07-30Yeah, I mean, there are some of the S&P 500 companies that perform poorly that I really wasn't surprised about. Uh, like Intuit is, at the bottom of the list. I'm not— they should be worried about AI disruption fears. They make a lot of sense for this business on both the tax prep and the QuickBooks side of the business. One that really wasn't on my bingo card to fall 37% this year was FICO, or Fair Isaac Company, the company behind the dominant credit scoring system. Yes, they're a SaaS company, but just the dominance, the, the relationships they have, I thought were more of a moat than they've turned out to be. Uh, for the first time ever, we're really seeing serious competitive threats. Like mortgage lenders can now use the VantageScore, which is the number one competitor for the first time ever. And there are legitimate questions about how big of a moat their proprietary scoring system is, which has been a very well-kept secret over the years. If AI's capability of evaluating consumer credit risk improved to the point where it's not really needed anymore. So that's one that surprised me.
Speaker D · Motley Fool Hidden Gems Investing · The Challenges of the China Market · 2026-07-02there's not that much money in the world. Yeah, I know that much money doesn't exist. I want, I want it, I can have it. That's not a— that's a, that's a 4-year-old. No, you don't get to do that. You set a budget on your wedding. You're a grown woman and you get married and you do it for $20,000 and you start planning it this weekend. Okay, back to your question. Um, now, so your fiancé is correct that if you were to run a balance on your credit card and pay it on time, it will cause your credit score to increase. Because your credit score is based on— it's called— it's by an organization called Fair Isaac, and it's called your FICO score. And it's based on how you interact with debt. How much debt you have, the type of debt you have, and whether you pay your debt on time or not. New types of debt.
Dave Ramsey · The Ramsey Show · Financial Peace Is Built, Not Borrowed · 2026-06-30as some of you may know, I am very excited to share that on Friday, May 15, I'm launching the Real Eisman Playbook Premium, a members only subscription. I want to emphasize that Monday and Friday episodes will stay accessible at no cost on YouTube and all audio channels. There will be no change at all in the Real Eisman Playbook twice weekly free episodes. Premium is for our listeners and viewers who just want more. Premium members get a weekly bonus episode that will run the gamut from master classes to deep dive analysis of industry sectors and subsectors to mailbag episodes where I can answer many more questions. We will have a private community board where we can all connect and learn from each other. Also, all of the past and future episodes of the Real Eisman Playbook will be available ad free. I want to thank everyone who has already signed up for the mailing list on the Real Eisman Playbook and for those of you who have not yet signed up, see the link attached or go to my website therealisemanplaybook.com we will launch premium on May 15th with parts one and two of a two hour masterclass called A Conspiracy of Credit. Part three will be available Wednesday, May 20th. In this masterclass I discuss the intricacies of what is going on in the world of private credit and then connect private Credit to the great financial crisis of 2008 and explain the toxic mortgage bonds that Wall street manufactured during the gfc. The masterclass also includes a primer on how the fixed income world actually works. If you've ever wanted to really understand what happened in two not the movie version, the real version, this is it. Go to the link in the show notes and sign up for the mailing list. Members on the list will get first access when we launch on May 15th and they'll receive a special Founders offer. When you sign up, you will receive a confirmation email inviting you to join the Founders Club. The link is in the show Notes. Hi Steve Eisman here. So today we're going to explore a very interesting behind the scenes world, the world of Financial information services. And we're going to explore it with the analyst at Autonomous who covers the sector, Kelsey Zoo. We're going to deal with the controversy surrounding Fair Isaac fico, which is the credit score that all of us get when we want to take out a mortgage loan or a credit card loan or anything like that. FICO has raised prices enormously over the last several years. It has angered the entire mortgage industry because of it. And it's beginning to suffer, I think, the consequences. And we're going to go through that story in depth. After we talk about fico, we're going to take a step back and really talk to Kelsey about how she thinks about her group, what makes a good company, what makes a not such good company, what she thinks about the various companies that she covers. She, she covers fico, she covers the three credit bureaus. She covers a company called Verus, which provides information services to the insurance sector. She covers msci, which is in the asset management business. And she covers FactSet, which provides information services to the asset management and investment banking businesses. We're going to be a real teaching moment to talk about how she thinks about the sector, how she thinks about the companies, what she looks for. And afterwards, I'll be back to talk about lessons learned. Hi, this is Steve Eisman and welcome to another episode of the Real Eisman Playbook. The origin of today's episode is that I've gotten tons of questions over the last six months about a company called Fair Isaac fico, which I'm not going to describe right this second because we're going to go into that in depth. A very controversial company. It's a monopoly. And today, to help examine FICO and to look at the rest of the financial information sector, we have Kelsey Zhu, who is the analyst at Autonomous and who's been covering this sector for quite a number of years now. Kelsey, welcome.
Steve Eisman · The Real Eisman Playbook · FICO’s Monopoly is Fading & Consumers Are the Winners w/ Kelsey Zhu | The Real Eisman Playbook Ep 59 · 2026-05-11I appreciate that. So let's start very high level. Let's imagine we met at a cocktail party and I asked you what you do for a living and you told me, and I said, I've heard about this company, Fair Isaac, because it gives me a credit score and I've heard about it in the press. Just give me a high level about what's been going on with this company, Fair Isaac, over the last year. Very general. And then we're going to dig down.
Steve Eisman · The Real Eisman Playbook · FICO’s Monopoly is Fading & Consumers Are the Winners w/ Kelsey Zhu | The Real Eisman Playbook Ep 59 · 2026-05-11So fico, the company that I'm sure we're going to spend a lot of time talking about today, called Fair Isaac. Fair Isaac, you're right, has two main segments, the score business and the software business. The bulk of the controversy, which I'm sure we'll dig into today, is focused on the score segments. FICO is a company that sells credit scores and it's basically an algorithm that you overlay on top of credit data. So what are credit data? It's basically your payment history, your delinquency history, how many credit cards you have, how much debt you have outstanding, and so on and so forth. So it's a three digit score that help lenders gauge your credit worthiness.
Kelsey Zhu · The Real Eisman Playbook · FICO’s Monopoly is Fading & Consumers Are the Winners w/ Kelsey Zhu | The Real Eisman Playbook Ep 59 · 2026-05-11And we're back. That was a really great interview. Couple of takeaways. When it comes to Fair Isaac, the company management seems to think, or they are saying, whether they believe it or not, who knows, that they are not going to lose any market share share at all. And I just find that hard to believe because this is a company that has raised prices from 60 cents a pull in 2022 to $10 a pull. It's over 1000% increase in price. I think they have angered the entire lending market and they're going to lose market share. And that is not factored into the earnings of the company, although it is factored somewhat into the price of the stock, which has come down pretty hard. And we're going to watch this stock very carefully over the next several quarters to see if there's evidence of FICO losing market share. But Kelsey is of the view and she hasn't underperformed on the stock, that they are going to lose market share and that the estimates are simply way too high. When it comes to the companies that she covers. She thinks that the AI threat is overblown, that AI actually benefits these companies because it's going to reduce their costs. She likes companies like Verisk and MSCI more than others because she thinks that those are the most defensible moats out there. She likes some of the credit bureaus, but not others. All the credit bureaus are really treated the same when really they have a lot of different businesses. And FactSet is probably the most problematic company because its end users aren't really growing anymore. But again, she likes MSCI and she likes Verus the most because they probably have the biggest moats. Although she admits that when it comes to AI, the narrative is very negative for the entire sector, including because this is really part of the software sector. And my view is that we're not going to have any real clarity about the impact of AI for at least a year. Thanks for watching and we'll see you soon. This podcast is for informational purposes only and does not constitute investment advice. The host and guests may hold positions and stocks discussed. Opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial advisor before making any investment decisions.
Steve Eisman · The Real Eisman Playbook · FICO’s Monopoly is Fading & Consumers Are the Winners w/ Kelsey Zhu | The Real Eisman Playbook Ep 59 · 2026-05-11company we haven't spoken about before. This is a 65 billion market cap company that largely supplies aftermarket or replacement parts for commercial and military aircraft. If you will recall, GE Aerospace reported strong numbers last week as airlines need GE jet engines for their new planes. They also need aftermarket parts as well. Transdigm reported earnings per share of 985 versus 911 and a beat. Revenue was also a beat and the company raised guidance for the second quarter and the stock was up 4% on the print. This is a very good company. KKR first quarter earnings per share of $1.39 versus $1.15 and versus expectations of $1.26. Solid results driven by better management fees and a $28 billion worth of broad based fundraising. Despite the challenging exit backdrop, KKR returned 20 billion of capital in the quarter and despite all the negative noise surrounding software, I have to say there was not much to negatively pick out in these results. Apollo in my view, Apollo actually had a mixed quarter 1Q 26 of $1.94 versus the street of $1.88 and versus $1.82 last year, so only 7% earnings per share growth. Now Apollo has two major sources of income, fee related income, what people call FRE and spread related income. Sre. Apollo owns a large insurance company, Athene, whose income is largely from net interest income or SRE spread related income. SRE is very very sensitive to movements in interest rates. So for the quarter fre was up 30% year over year, which is good. However, sre was down 13% year over year, which is bad largely because of a higher cost of funds. So all in all a mixed quarter. But the company reported Wednesday morning and the market was up strong that day, so the stock did fine. At the same time and in a move to provide transparency to opaque credit markets, Apollo said that by September. It would provide daily pricing for all all of its investment grade corporate fixed income, direct lending and asset backed finance assets. This is an important differentiator for Apollo, I have to say. We will see if any of the competitors follow. I would point out that the entire private credit private equity sector has had a rally as some of the private credit fears have faded. At least for now, these things tend to go in waves. I still believe that the major issue facing private equity and private credit is overexposure to software. And the essential problem is that public software stocks are down more than 50%, implying that the software companies of private equity purchased are also worth less than half of their investment. When those loans come due, private equity will be forced by the lenders to put up more equity or walk away. I'd also point out that of all the private equity private credit firms, Apollo probably has the least exposure to software. Moving on. Eaton this is an industrial company that provides electrification equipment to the industrial sector. It is perceived as a major beneficiary of AI because its equipment is needed to build out AI data centers. Prior to Tuesday the stock was up over 30% but it reported a quite of a disappointing quarter. Earnings per share of 281 was up only 3% versus last year. However its 2Q guidance was slightly below street expectations. That's a no no. Needless to say, the stock was down pretty good on Tuesday. Rockwell an industrial automation company. This is another industrial company that is perceived to be a beneficiary of AI, but unlike Eaton, Rockwell's results were strong. The company reported earnings per share of 330 versus 245 and versus the estimate of 288. So quite a strong beat. The company posted organic sales growth of 9% which Industrial World is very good. It raised 2026 revenue and EPS guidance and the stock was up 9% on this print Diamondback We've never spoken about this company before. This is a US oil and gas driller in the Permian Basin which is in West Texas. Earnings per share results are not important, but I'll mention them anyway. The company reported $4.23 versus 454 last year, so slightly down versus last year. What is important is that because of higher oil and gas prices, Diamondback increase its oil and gas production targets. EPS is expected to grow over 100% in the second quarter. Moving on PayPal now we get into the payment space and we've spoken about this company many times before and it is a problematic payments company. Apple and Google Pay have robbed PayPal of its importance and the company is trying to jumpstart revenue growth this quarter. Not good. The actual results were okay. Revenue of 8.35 billion was up 7% versus last year and was better than expectations. Earnings per share of $1.34 was up 1% versus last year but did beat the consensus. So so far not so bad but the guidance was really bad. The company projected a second quarter earnings per share decline of 9% as compared to the consensus of a 4% decline and the stock was down 8% on Tuesday and is down over 20% this year. Fiserv another payment company this is a legacy payment company that has been having problems as it loses market share to the newer companies. The stock collapsed last October as management was fired and new management reset growth and earnings expectations. Pre the collapse the stock was $120 a share. It is 57 now and is down 15% just this year. Everyone likes a turnaround story, me included, but Fiserv is showing no signs of that yet. It reported 1Q earnings per share of $1.79 versus 214, down 16% versus last year and more importantly Organic Reven was a negative negative 4% versus the estimate of a negative 2%. Like PayPal, Fiserv is a problematic company in the payment space and there is no sign, no sign that things are getting better. The stock was down 9% on this earnings report on Tuesday. I've said it before, making money in the payment space is very difficult as competition is incredibly intense. The safest thing to do is is to own Visa or MasterCard because their network franchises remain impregnable. Shopify this is another iconic software company that provides its customers an entire e commerce solution from front end website to marketing to payments. It's been a great stock until the recent AI software fears and like every other software stock it is down this year, the company reported and the results were very mixed and guidance was poor. Revenue totaled $3.2 billion up 34% versus a year ago and a beat. Net income of $360 million was up 59% but was a miss versus expectations of $419 million. The guidance pointed to slowing revenue growth and 2Q revenue below expectations given the horrendous software narrative. Needless to say, Shopify was down over 15% on Tuesday and is down over 30% this year. Moving on to tech, Arista Networks reported Tuesday Tuesday night. Actually Arista is Cisco's chief competitor and a major beneficiary of the build out of AI prior to Tuesday night, the stock was up 30% this year alone and up over 70% over the last year. The company reported earnings per share of $0.87, up 34% versus last year and a beat. Revenue also beat by a bit. It guided 2Q revenue to 2.8 billion versus the estimate of 2.79 billion. So really just in line given how much the stock is up, the results in the guidance were not enough for investors and the stock went down after hours. AMD, the semiconductor company and another big AI data center beneficiary also reported Tuesday night. AMD is a competitor to Nvidia 1Q. Sales of 10.3 billion rose 38%. Impressive. EPS was $1.37 versus $1.28 expected and up 43% last year. Also impressive, it projected second quarter sales of 11.2 billion versus 10.5 billion expected. The stock has done very well this year and the second quarter projections were good enough for the stock to climb 15% after hours. Disney the most important statement I can make about Disney is that the stock price is where it was 10 years ago. I'll say it again, the most important statement to make about Disney is that the stock price is where it was 10 years ago. When looking at Disney earnings, there are three things to focus on the parks, the legacy media business and the new streaming businesses. Earnings per share was $1.57 versus the estimate of $1.51 and versus $1.45 last year. So they had 8% earnings growth which is okay. Revenue of 25.2 billion was up 6.5% which is also not bad despite the war news. The park segment posted 9.5 billion in revenue up 6.7% versus last year, which is quite impressive under the circumstances. Entertainment revenue 11.7 billion was up 9.7% as streaming growth plus some strong movies offset the continued decline in linear television and the stock was up on this news. By the way, this was an incredibly busy earnings week, so I'm just going to summarize a few consumer related companies that reported on Wednesday night and Thursday. Bottom line, consumer related stocks have winners and losers and housing related stocks are pretty much all problematic. McDonald's reported earnings per share of283.6% growth and a beat. Revenue also beat by a touch and same store sales growth was 3.8% which is pretty good. So McDonald's is navigating the tough consumer environment. Shake Shack is not. Shake Shack reported a break even quarter versus 14 cents last year and a miss revenue missed and the stock was down 30% on the news in housing, there were two reports on Wednesday night, Whirlpool and Zillow. Whirlpool results were a disaster. The company reported a loss of $0.56 versus $1.70 last year, a massive miss. It missed revenue as well. Worse, it slashed guidance to $3 to $3.50 from get this previous guidance of $6. Whirlpool blamed its problems on the war. The stock was down 12%. Zillow also reported its results were fine, but it guided 2Q EBITDA well below consensus on the call. The CFO said that the housing market has been effectively flat and the company is not planning for it to get better. Now let's turn to the mailbag. Our question is from Mert who asks hi Steve, My questions are how do you use the market valuation indicators such as Shiller PE and market cap to gdp? What do you think about the current Shiller PE of S and P being greater than 40.4 versus the all time historical average of 17.8 and Wilshire 5000 to GDP ratio being 228% versus the all time mean of 85%? What do these numbers tell us and how can we use them to inform our portfolio allocation decisions? These are great questions. My answer There is no question that by any traditional measurement the market is expensive. The Shiller pe, the market cap to GDP metric, or even just the plain current market multiple, they all point to the same thing, expensiveness. But there is a reason why the market looks expensive. Tech has become an increasing percentage of the market. Today infotech is 35% of the S and P, an all time high. If you add companies like Amazon, Google Meta and other tech related names like I said before, that are not in infotech you get to around 50%. If we just focus on infotech. In April 2016 it was 20% of the S&P. In April 2020 it was 25% and now it is 35%. Because they are growth stocks, tech stocks sell at higher multiples. Thus, as tech has become a higher percentage of the market by definition, the market multiple, no matter which metric you choose, has to increase. That's why I'm not overly concerned that the market looks expensive. As long as tech continues to perform, the market will be fine and the indices heavily weighted with tech will be fine as well. Stock picking in other sectors remains tricky. I would also add immediately all bets are off if a recession appears. This last Monday, May 4th we hosted an interview with Chris Farone, head strategist at Strategus and Todd Sohn, Head Chartist at Strategus. We discussed the recent rally in the market, what's working and what is not, and any and all pitfalls to avoid. So check it out. And this coming Monday, May 11th, we will host an interview with Kelsey Zhu, the Financial Information Services Analyst at watanamous. This interview is largely about the war over fico, a consumer credit scoring service we all use and pay for in order to get a mortgage, a new credit card or any other type of consumer loan. Have you noticed that the price of your FICO report went up? Did you know the price went up 1,500% over the last five years? Can you believe it? I can't. You've got to watch Kelsey explain the shenanigans. This is one for the history books. We spent much of the interview discussing the war between Fair, Isaac and the three credit bureaus over who is going to control consumer credit scoring. That work could change how consumers interact with all kinds of consumer lenders. In my experience, what FICO has done, raising scoring pricing by 1,500% over the last five years is one of the most egregious monopolistic acts I have ever seen and it has angered the entire lending ecosystem. So please tune in. Be sure to check out our website realisemanplaybook.com if you're enjoying these weekly wraps in our podcast, we kindly ask that you support the channel by subscribing to our YouTube channel and to our audio channels. The Real Eisman Playbook subscribing is the best way to help us expand this community to more like minded individuals such as yourselves. And we greatly appreciate your support. And that's the wrap. This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions and stocks discussed. Opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial advisor before making any investment decisions.
Steve Eisman · The Real Eisman Playbook · S&P Hits New Highs as Tech Earnings Crush Recession Fears | The Weekly Wrap · 2026-05-08How many discounts does USAA Auto insurance offer? Too many to say here. Multi Vehicle Discount Safe Driver Discount New Vehicle Discount Storage Discount how many discounts will you stack up? Tap the banner or visit usaa.com autodiscounts Restrictions apply since we're talking about private equity, let's start with Blue Owl which reported Thursday morning the Stock was up 10% on the print. Because the numbers were not a disaster and 19% of the float is short, I'd highlight two things. First, Owl reported a negative 40 basis point return for the quarter for direct lending. This is the area that investors are focused on and like arcc, the question is not about the current marks but who is going to refinance software loans when the equity is worth less than half. The other thing I'd flag is that Owl's equity based comp increased 21% quarter over quarter and 15% year over year to $196 million, coming in 50% above consensus estimates of $130 million. That's a lot of stock based comp to the management of a company whose Stock is down 39% just this year alone. One more thing on stock based comp the entire sector of alternative asset managers reports adjusted earnings by adding back stock based comp. Blue Owl too. But Blue Owl uses a ton of stock based comp to such a degree that under GAAP accounting the company is barely profitable. Next up is Domino's Pizza. While a recession does not seem imminent at all, never forget that we are living in a K shaped economy and that shows up in the results of companies like Domino's. On Monday Domino's reported and the stock was down 8%. The key metric the key metric for any retailer is same store sales. Unfortunately, Domino's same store sales were up only 0.9% versus the expected 2.3% and earnings per share were down 5% versus last year. When a pizza company shows weak same store sales, it implies that the middle and low end consumer is having a hard time. Remember, the market is amoral. Domino's earnings are telling us that the bottom of the cake consumers are in a deep recession. The fact that the market continues to trend up shows the disconnect between consumers and market movements. Buy the dip will be the mantra until proven otherwise. And as long as AI Cap X infrastructure spending pulls all the weight of GDP growth, the market seems generally willing to reflect the good news and discount the sad news. General Motors GM shows how well a stock can do when it is inexpensive and has a turnaround story. It's what I'm hoping for with Charter. In November 2023, GM's stock price was $27. It's now 78. What happened? The company started to perform. Let's Just look briefly at this quarter. GM reported its first first quarter results which saw beats across the board. The company continues to navigate a difficult electronic vehicle backdrop. Total revenue came in at 43.6 billion, slightly above the Street's estimate. Despite seeing a decline in its US automotive sales in the quarter of 10% year over year. Earnings per share came in at 370, well above the street of 260 and and versus 278 last year and the company raised guidance moving on Starbucks. This has been a turnaround story that stubbornly refused to turn around until perhaps this quarter. Starbucks reported its second straight quarter of traffic growth. EPS was $0.50 versus $0.42 expected and versus $0.41 last year. Revenue also beat same store. Sales growth rose an impressive 6.2% largely because of North America. It also raised its full year outlook impressive and the stock was up 5% after hours on Tuesday night and up over 8% by the end of day on Wednesday and flat at the end of day Thursday. Investors are finally rewarding the company's business changes. I think the takeaway is is that inflection points are hard to predict because real corporate changes take time to implement and catching any bottom or top at exactly the right moment is very difficult. Now let's talk about Visa. Yes it is a K shaped economy but overall consumer spending is still strong. At least that is what Visa's results indicate. Visa's net revenue was up 17% versus last year and that is the biggest percentage increase since 20. Earnings per share of 331 was a beat and versus an expectation of 310 and up an impressive 20% versus last year. The all important payment volume metric was up a strong 9%. Visa in my view gives as good a read on the consumer as any company in the world. For now the picture that has emerged is that the consumer is still spending but the middle and lower end consumers are having a hard time. Hence the weak results at Domino's Pizza. Full disclosure, I've owned Visa for years. FICO Fair Isaac this is a very controversial name and full disclosure. I have been short for several months. Two Mondays from now we will host a sell side analyst who covers this subsector and we will examine the FICO issues in depth. FICO reported Tuesday night the stock was up over 10% after hours Tuesday night but faded on Wednesday closing up only 3.4%. Now Fico beat and raised guidance on the call. Management also said that it does not expect to lose mortgage market share to Vantagescore. The score created by the three credit bureaus Losing or not losing mortgage market share to Vantage Score will determine the fate of this stock. Here's why I think management's prediction that it will not lose share could be terribly wrong. In the next few months, the fhfa, the regulator of Fannie and Freddie Mac, will give final approval to Fico's new score 10T and to VantageScore. Those are the two products that will compete head to head. FICO will charge for score 10 T $0.99 per loan application plus $65 per funded loan. The three credit bureaus will charge only $0.99 per loan application. For VantageScore, this is a tremendous pricing difference. Here's why. On average, lenders will fund approximately 30% of their mortgage applications. So for every 100 applications, FICO collects 99 cents times 100 plus 65 times 30, which is $99 plus $1,950 or $2,049 total. Vantage collects 99 cents times 100. That's it, or $99 total. So for every 100 loan applications, the pricing is $2,049 for FICO versus $99 for VantageScore. Now that's a quite an enormous pricing difference. As for timing, both FICO Score 10T and VantageScore are being pilot programmed this year with full implementation scheduled for 2027. The crazy part of this story is that FICO is a monopoly, but to generate its score, it pulls data from the three credit bureaus who are now its competitor. It's one thing to anger your competitors. It's another thing to anger your competitors by making money off their hard work when they are your suppliers. Moving on Bookings A very good company, but last week United Airlines and American Airlines lowered 2026 guidance because of the war. This week bookings reported and did the same thing. The actual reported results were fine with eps growth of 15%. However, for the June quarter, the company cut its revenue growth outlook to 4 to 6% versus the consensus of 11% and the stock was down on this report enphase this is a solar stock I have spoken about before. It sells solar microinverters and battery storage systems to consumers. The consumer solar side of the business has been in something of a depression for the past few years, as is evident from Enphase's stock price, which has declined from $335 at the end of 2022 to its current 33 every quarter. Investors hope that the business has bottomed and that revenue growth will resume. They were disappointed again. Earnings per share was $0.47 versus 68, a decline of 31%. The company guided second quarter revenue to 280 to 310 million, which is in line with expectations but provides no sign that business is improving. The stock lacks a thesis and without one, it's hard to see why the stock will move up. Wednesday night was a big night. Google, Microsoft, Amazon and Meta all reported on Thursday. Google was up 10%, Amazon was up 1%, Microsoft was down 4% and Meta was down 8.5%. Here's why Google just a really powerful quarter. Google's total revenue was 94.7 billion. I'm going to say that again for the quarter. Google's Total revenue was 94.7 billion billion versus 91.6 billion expected. Google's cloud computing revenue of 20 billion versus 18 billion expected saw a meaningful acceleration in growth and that's all you really need to know. Microsoft revenue was 54.5 billion versus 53.8 billion expected. That's good. Earnings per share was 427 versus 405 expected and versus 346 last year, which equates to a very impressive 23% growth. Also good. And most importantly, its cloud computing business. Azure saw 39% revenue growth versus 38% expected and the company gave strong guidance on the call. So why was the stock down? Well, the 39% Azure revenue growth was only 1% better than expected and I think some investors were looking for more on such data. Stocks move Amazon posted a nice beat on earnings per share of 278 versus $1.63. Expected revenue of 181.5 billion exceeded the estimate of 177.3 billion. Most importantly, Amazon Web Services cloud unit revenue rose 28% versus last year. That is better than last quarter's 24% and and better than the 26% estimate. On the call. The CEO said that the company now has over 225 billion in revenue commitments for Trainium, AWS's AI chip and that news really excited investors and the stock moved from being down after hours to up 1% on Thursday. Meta nothing wrong with the quarter. The company beat on most metrics. That was not the issue. Capex was the issue. Meta raised its 2026 capex outlook to 135 billion from 125 billion. And investors I guess have grown tired of Meta continuously upping its AI capex budget. Meta's problem is that even at 135 billion it is being outspent by Google, Microsoft and Amazon. Main Takeaway from the results of these Big four There is no slowdown in AI Capex on the horizon. AI Capex is what is driving GDP and a strong GDP drives the stock market. Moving on. Eli Lilly. I also have on this stock for years and there is no question about it. Lilly has won the diet drug wars. Lilly issued a blowout. A blowout. Quarter earnings per share of 855 versus 666 expected and versus 334 last year. Wow. Revenue was $19.8 billion versus $17.6 billion expected. Lilly raised revenue and EPS guidance for the year. Let's move on to two industrial names. The industrial sector has become bifurcated. Companies that are somehow AI related are doing well. Everything else is somewhat lagging. Last week we focused on GeV and its gas turbine story. This week let's look at Quanta and Caterpillar first. Quanta, full disclosure. I've owned this stock for years as well. It's the company that utilities use for construction and maintenance. It reported another great quarter. Earnings per share was 268 versus $1.78 last year and versus the estimate of only 208. So quite a big beat. And revenue of 7.87 billion was up 26% versus last year and better than the estimate of 7 billion. Powerful numbers because Quanta is a big beneficiary of the AI data construction boom which requires more electricity from utilities. Caterpillar. Now you might not think that Caterpillar is an AI related story, but it is all that data center construction requires equipment from companies like Cat. And Cat posted earnings per share of 554 versus 425 last year and versus the 463 estimate. So a very nice beat. And revenue of $17.4 billion was up 22% and beat the estimate by more than a billion. Most importantly, sales grew 38% in the construction industries unit, the division Most related to AI CapEx. And finally, Apple reported Thursday night it was a good quarter but not a great quarter. Earnings per share was 201 versus $1.65 last year. 22% growth and a beat versus expectations. Apple reported total revenue growth of 17% which was also a beat. The only negative, and it's not a small one, is that sales for iPhone missed estimates for the second time in three quarters. This last Monday we hosted an interview with Chris Edson, global head of originations at Apollo Global Management. The controversy surrounding private credit continues to dominate headlines and Chris has a front row seat as to what is really going on in the private credit, private equity sector and how Apollo is navigating these waters. It's a great interview and I think you will learn a lot, so check it out. This coming Monday we will post an interview with Chris Varrone, Head Strategist at Strategus, and Todd Sohn, Head Chartist at Strategus. We discuss the recent rally in the market, what's working and what is not, and any and all pitfalls to avoid. So please tune in. Be sure to check out our website realizementplaybook.com if you're enjoying these weekly wraps and our podcasts, we kindly ask that you support the channel by subscribing to our YouTube channel and to our audio channels. The Real Eisman Playbook subscribing is the best way to help us expand this community to more like minded individuals such as yourselves. And we greatly appreciate your support. And that's the wrap. This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions and stocks discussed. Opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial advisor before making any investment decisions.
Steve Eisman · The Real Eisman Playbook · Earnings Keep the Market Strong Despite Signs of Consumer Weakness | The Weekly Wrap · 2026-05-01Hi, Steve Eisman here on my weekly market wrap. I try to both teach and convey information as objectively as possible. I try to make clear what are the facts and what are my opinions. But in today's media, it's increasingly hard to figure out what are the facts and where the facts are being shaded by opinion. That's why when I look into news events, I first go to Ground News. Ground News is my solution for getting to the facts of important stories, but but also to see how left, right and center are seeking to convey the same exact story. Take for example the recent headline nearly 12 million expected to Lose Health Coverage Under Trump Budget Bill. Now that's a pretty provocative headline ripe for reporters and commentators to shade the truth. So I went to groundnews.com and clicked on that story headline there. I immediately saw four tabs, Left Side, Center, Right and Bias Comparison. When I clicked on left, a series of headlines appeared, all from left leaning media sources. When I clicked on the right tab, I saw headlines with an entirely different tone. The Bias Comparison tab showed Ground News own analysis of how all three political leanings, left, right and center conveyed the same exact story. I find the Ground News system enormously helpful because it allows me to easily separate the facts from opinions. I use Ground News and I recommend you try it out for yourself. Go to groundnews.comreal for a better way to stay informed, subscribe through my link for 40% off their unlimited access to worldwide coverage. That's groundnews.comreal groundnews.com real and if you don't mind, use this link to get the discount so they know I sent you. Zootopia 2 has come home to Disney. Let's go get ready for a new case. We're going to crack this case. Proof we're the greatest partners of all time. New friends, you are Gary the Snake and your last name? Desnake Dream Team New Habitats Zootopia has a secret reptile population. You can watch the record breaking phenomenon at home. You're clearly working at Zootopia 2, now available on Disney. Rated PG because of higher oil prices. The war is impacting the earnings of some companies. Is a recession on the horizon? We will look at this week's quarterly earnings. For this week, well over 100 companies reported across multiple industries. These results give us a big window into the health of the economy. The results at UnitedHealthcare, Elevance and Molina were mostly better than expected or at least met expectations. The industry is turning or at least appearing to turn. The negative reactions to ServiceNow and IBM show how precarious building a positive software narrative can be. I would tread very carefully Foreign. Hi, this is Steve Eisman and welcome to another episode of the Weekly Wrap. This is for the week ending Friday, April 24, but recorded Thursday night, April 23. I'm excited to share that in a few weeks we'll be announcing an additional feature to the Real Eisman Playbook alongside our existing Monday and Friday episodes. This is something we've been building behind the scenes and it's going to take things in a really exciting new direction. We'll be revealing more soon. Signing up for the mailing list grants access to a special founder's offer when the new project goes live. Visit realizemanplaybook.com to sign up for our mailing list, or visit the link in this episode's description on this week's wrap we will discuss 1 the war in Iran remains opaque. 2. Some revealing news in private credit 3. Is a recession on the horizon? We will look at this week's quarterly earnings for clues. It was a big big week for earnings season. We have a broad base of companies to discuss, from industrials to software and private equity. These results give us a big window into the health of the economy and four I discuss comments and questions from two viewers. So let's get started. First, the war in Iran. A conclusion to the war remained, as we all know, elusive. Vice President Vance was set to travel to Pakistan to negotiate, but that was put on hold as the various factions apparently in Iran keep issuing contradictory statements. President Trump announced that he would give the Iranians time to put together a proposal. In the meantime, the market mostly keeps rallying as it keeps assuming the war will soon be over. We shall see. In private credit world there was some bad news. Blackstone's flagship private credit fund called BCRED, which has 81 billion in assets and is the largest private credit fund in the industry, reported sales from new share issuances on April 1, which were approximately $230 million of gross inflows. Inflows nearly unchanged from March and down from 1 billion a month on average in 2025. That's not terrible. The performance news was not so good. Performance was flat in March, slightly better than the negative 40 basis points in February as write downs on select private loans and spread widening on loans totally totally offset portfolio yield during the quarter. Non accruals increased to 1.4% of fair value. FYI its portfolio value is driven by write downs of Medallia and Affordable Care which are currently marked at 60.3 cents on the dollar and 69.8 cents on the dollar, respectively. On warnings from companies the war is impacting the earnings of some companies because of higher oil prices. United Airlines cut cut its 2026 earnings outlook to a range of $7 to $11, down from its prior forecast of 12 to $14. And on Thursday, American Airlines cut its 2026 guidance as well. Now, last week we focused on the large banks that reported earnings and our focus was on credit quality. The banks reported benign credit data, thereby indicating that, at least for now, a recession is not on the horizon. This week, well over 100 companies reported across multiple industries and that provides an even broader picture of the economy. Now, I'm not going to discuss all the companies obviously, but my conclusion again, earnings results were mostly good and there was certainly no data that indicated that a recession is looming. Given that I've already mentioned private credit, let's start with the earnings of Blackstone, which reported Thursday morning. The stock moved lower on Thursday as investors weighed a beat on one key metric against falling returns within its massive private credit and real estate businesses. Distributable earnings rose 25% to $1.76 billion, or $1.36 a share, edging past the $1.34 a share that analysts had anticipated. So a 2 cent beat. No big deal. The metric represents the cash flow available to be paid as dividends to shareholders. Now, total revenue increased a pretty impressive 10% to $3.62 billion, and Blackstone finished the quarter with an amazing $1.3 trillion in assets under management, which is a 12% year over year increase. But and here's the big but returns fell across certain businesses even as Blackstone drew in $69 billion in new assets. Weak first quarter investment performance across credit and and real estate funds with opportunistic real estate at minus 90 basis points, core plus real estate at plus 80 basis points, liquid credit at minus 1.3%, private credit at 60 basis points and PE secondaries at only 70 basis points. I am sure that for at least Thursday, investors will focus on this list of weak performance metrics and that's why the stock was down. Now, before we move on to other earnings, I want to flag news on Fair Isaac, AKA fico. FICO is the backbone of the entire consumer lending industry. When a consumer applies for any kind of consumer loan, the lender, whoever that is, pulls a FICO score from Fair Isaac and that score is the largest determinant of whether the consumer gets the loan. FICO has had a monopoly on this process for decades. No longer. The fhfa, which is the regulator of Fannie and Freddie, announced this week that the GSEs will start accepting VantageScore loans from approved lenders immediately as an alternative to FICO, effectively concluding the era in which FICO Classic was the only approved score in GSC mortgage world. The updated loan level pricing adjustment will present a level playing field between FICO and VantageScore. Previously, FICO bulls argued that the pricing grids would favor the Classic FICO score and they are wrong. FICO stock has been under assault with the stock down over 40% this year. Full Disclosure I have been short FICO for a few months. I flag this story because in a few weeks we will post an interview with a sell side analyst who covers FICO and the credit bureaus and we are going to examine this story in great depth. Now let's move on to health insurance. It looks like that for now the industry is turning, or at least appearing to turn. The results at UnitedHealthcare, Elevance and Molina were mostly better than expected or at least met expectations, which is a big change for the better. With respect to unh, we have spoken about UNH for many months now and the company has been dealing with high medical costs as well as problems in its Optum division, a division that provides medical services to Medicare Advantage customers. The bull case for UNH, the case for a turnaround has been that UNH's traditional health insurance division is a short tailed business and that means that UNH has the ability to reprice fairly quickly. And it looks like that's what happened. This quarter UNH reported earnings per share of $7.23 versus $6.57 expected. So a nice beat. But I would just point out that earnings per share was flat versus last year. Revenue though was also a little bit better than expected. The EPS beat was largely driven by improvement in the medical loss ratio, otherwise known as MLR. Also, Optum Health margins, while still weak, were 5.4% versus expectations of 3.2%. Now, UNH still has major issues with respect to Optum Health. As we've discussed before, Optum is an aggressive coder and the new Medicare Advantage healthcare pricing system penalizes companies like Optum. But that's a negative story that may unfold more in the future. For now, investors will look at the improvement in the medical loss ratio and and hope for continued improvement. Investors love a turnaround story, especially where there is at least some evidence of a turnaround. That's why UNH has rallied so nicely, but investors have been disappointed in the turnaround stories of Starbucks and Nike. Investors keep hoping for evidence of a turnaround in those two companies, but that evidence remains elusive. Elevance also reported, but the results were not quite as positively received. Of UNHS earnings per share for the first quarter was a 5 growth beat but was largely driven by non recurring investment income. The company also added to claims reserves which should help 2027 earnings per share. Still, the consensus for 2026 remains for total EPS decline of 15% but not bad. Molina this is a medical insurance company mostly in the Medicaid space. Now during COVID the population of Medicaid participants exploded and the government is now pruning the rolls with the result that the remaining Medicaid participants are composed of sicker cohorts, thereby driving up the medical loss ratios of companies like Molina. Eventually the government has to raise prices, but it does not seem to be in any rush now. Molina reported this week 1Q earnings per share beat by a nice 45 cents, so $2.35 is what they earned versus the $90 consensus driven by an 80 basis points medical loss ratio beat, partially offset by somewhat higher SGA. Despite the beat, the company only affirmed 2026 earnings guidance, but they do expect to update full year guidance when they report second quarter. Now on the negative side, Medicaid membership attrition continued. Total Medicaid patients were 4.498 million in the quarter versus 4.568 million in the in the fourth quarter and continued attrition means a potentially higher future medical loss ratio. Molina, like other medical insurance companies, has had a bounce off of the bottom, but I would be careful with the Molina stock. Continued Medicaid attrition means that the remaining participants are part of sicker cohorts and that does not bode well for future earnings. Now the current estimate for Molina for 2026 is $5, which is down 54% versus last year. Investors are playing for a turnaround and a big jump in earnings in 2027. I'm just not yet convinced. Moving on to industrials, let's start with ge. Now GE has split into three companies, GE Aerospace, GE Vernova and GE Healthcare. This week we will be discussing GE Aerospace, which is similar as the old GE and GE Vernova symbol gev. First, GE GE manufactures jet engines largely for commercial airlines and that business tends to go in waves. There are periods where airlines are expanding and need more planes, followed by periods of retrenchment. We are in a period without question of expansion right now and that's why GE has been reporting good quarters and it did so again. Earnings per share was $1.86 versus $1.49 last year. 25% growth and a beat. Revenue beat as well and was up at a very impressive 29%. Most importantly, total orders of 23 billion were up, get this, 87%. Yes, the war is causing investors to worry about travel related companies, but so far airlines are not pulling back from buying new airplanes. Gev Full disclosure. I've owned this stock for a while. Before we discuss earnings, let me explain the basic story. GEV has three businesses. It manufactures gas turbines for utilities. It has an electrification equipment business and a wind turbine business. The wind business loses money. The key is the gas turbine and electrification equipment businesses and this is one of the best AI related stories out there. Prior to 2020, electrical production in the US was barely growing. Thereafter, because of re industrialization and the creation of AI data centers, electrical production is now growing around 3% per year. Now that may not sound like much, but 3% off of the huge electrical base of the United States, trust me, is an enormously large number. And we are constantly hearing about AI data centers and their need for electricity and how they are looking at nuclear and any other alternatives they can get their hands on now. Regardless, electrical production in the United States can only grow with the help of gas turbines. And gas turbines are manufactured by only three companies in the world, gev, Siemens and Mitsubishi. And that, in a NutShell, is the GeV story plus the benefits reaped by the Electrification equipment division. Now on to earnings study and play. Come together on a Windows 11 PC and for a limited time, college students get the best of both worlds. Get the Unreal College Deal Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game. Pass ultimate with a custom color Xbox wireless controller. Learn more@windows.com while supplies last ends June 30th terms at aka mscollegepc when you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit@ Indeed.com podcast. That's Indeed.com podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs GEV reported earnings per share of $3.30 versus $1.78 a beat and up a whopping 85% versus last year revenue beat as well. Even more Importantly, orders were 18.3 billion, up 71% year over year and the company also raised guidance. These are very powerful numbers. Now the one caveat is that the 2026 PE is get this 80 times. However, this is a very very long tail business. Orders taken today do not create revenue until years from now. It takes that long to manufacture gas turbines. Thus, given the growth in orders, the company has earnings visibility for many years. And because of the strong growth, the 2028 PE is 36 times, which seems more reasonable. Boeing this has been a very problematic company for years, but things seem to be moving in the right direction. The company reported a loss of $0.20 per share for the quarter versus a loss of $0.49 per share last year. The EPS estimate for 2026 is roughly zero. However, the stock rallied on this report because it reported lower than expected cash outflow of 1.45 billion and it also delivered the most aircraft in the first quarter since 2019, commercial aircraft deliveries rose to 143 planes. Moving on to Tesla, I have to say this is a funny stock. The investors who were short, and I'm not one of them, all point to how poorly the company is doing in its auto business. The investors who are long don't care and point to how well Tesla will do in the future in autonomous vehicles and robots. It's like the two sides are talking about entirely different companies. Anyway, Tesla did report and the results were not great. They weren't terrible either. On the positive side, Tesla's earnings per share of $0.41 beat the consensus of $0.34 and that's versus $0.27 last year. Revenue, however, missed. But like I said, the bulls don't care about current fundamentals at all. They are dreaming the dream. By the way, Tesla's 2026 PE is over 200 times. It's quite a dream. Now, prior to the Wednesday night conference call, the stock was up a few percent because of the earnings beat. But on the call Musk upped the capex. The company will spend this year on autonomous vehicles and robots to above 25 billion. Investors were not crazy about that and the stock ended the evening down a few percent. Now let's talk to one of our favorite topics. Software. Over the past two weeks the software group has bounced off the bottom as bargain hunters have bought software stocks. Hoping that the negative software narrative is overblown. Unfortunately, they did not get help from ServiceNow's earnings report. Now on the positive side, earnings per share for ServiceNow was $0.97 which is 20% growth which beat by a penny. And revenue of 3.77 billion beat expectations of 3.74 billion. So total revenue grew quite an amazing 22%. So far so good. However, the company said on the call that subscription revenue growth during the quarter quote saw an approximately 75 basis point headwind from delayed closings of several large on premise deals in the Middle east due to the ongoing conflict, unquote. Now Normally given the amazing 22% revenue growth, the subscription revenue delays would be just shrugged off. But given how precarious the narrative for software has become, there is no shrugging in software. The stock was down 13% after hours Wednesday. The software group was also not helped by IBM. IBM posted earnings per share of $1.91 and revenue of $15.9 billion, both better than expected. Software revenue increased 11% to $7.05 billion which was in line with estimates. But given the precarious nature of software these days, investors were hoping for more than an in line software revenue result and the stock was after hours Wednesday. The negative reactions to ServiceNow and IBM show how precarious building a positive software narrative can be. I know there are some of you out there who are looking to bottom fish here. I would tread very carefully Moving on to Home Builders first dhi, now home builders have been having a hard time. The year started with some Hope as the 10 year yield declined below 4%. However, with the inflationary pressures created by the war, the 10 year got as high as 4.4% thereby putting a real crimp into the all important spring selling season. DHI results however were not terrible. Closings came in modestly below guidance, but this was offset by slightly stronger gross margins. Company reported earnings per share of 224 versus 258 last year, so down 13%. But that was in line with expectations and the company maintained its earnings per share guidance for 2026 of down around 10% versus 2025. In absolute terms these results are not great. But expectations for the sector are so low that DHI and the group rallied on these numbers. The hope is that the war will end and interest rates will come down, meritage Homes reported. And here too the results were not great but not terrible. Earnings per share of 82 cents was down 51% versus last year. That's bad. But orders declined only 5% versus last year, which is less bad. On the positive front, free cash flow was stronger than expected as the company has begun to dial back land spend in favor of increased share repurchases given the stock's below tangible book value valuation. Meritage purchased 3% of shares outstanding during the quarter. Now, I recommended Meritage in January and so far it has not worked out because the war caused rates to climb pretty quickly. I still like the stock because the company continues to grow tangible book value and the stock is valued at less than tangible book value of $75. Finally, Pulteholm also reported and here too, the results were not great, but not a disaster. Earnings per share was $1.79, down 30% versus last year. But on the positive side, orders were actually up 3% versus last year. Clearly, higher interest rates have hurt the spring selling season for the entire group and now we turn to our two mailbags from two viewers. Our first question is from Kanan, who asks I've been an enthusiastic subscriber to the YouTube channel for a while and I have learned an enormous amount through it, especially about macroeconomic trends and influential market forces that often don't make the front pages of mainstream newspapers. You've made me smarter and more financially capable and I thank you for it. And I thank you for those kind comments. Financial news outlets have covered Hank Paulson's recent exhortation that the government make a plan for a collapse in the T note market, noting that a government debt crisis could be far more impactful than crises in other markets. I try to avoid alarmism, he says, but the legislation has ballooned our projected deficit and severely impacted lower and middle class consumers at a time when the White House foreign policy has also dealt blow after blow to America's global standing. Do you consider Paulson's warning well founded and if so, how might everyday investors and non investing consumers position themselves relative to it? Unquote? A very fair question. Ever since the great financial crisis there has been this weird competition to see who can predict the next financial calamity and the latest competition has been the focus around private credit. Here Hank Paulson is focusing on the federal deficit and the high levels of debt to GDP in the United States. The federal debt to GDP level is at an all time high of 125% and some people are worried, like Paulson, that investors will just stop buying U.S. treasuries. Now Hank Paulson is chiming in on this one. But first of all, what I would say is that with all due respect to former Secretary of the Treasury Paulson. He's not so great at predicting a crisis. On August 1, 2007, Paulson stated that the market impact of the US subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades. Looking back, that's about as bad a prediction as you can get. But everyone makes mistakes, so let's focus on this prediction. It's not like Paulson is the first to make such a prediction. People have been predicting the same thing about the impact of the deficit for 40 years. 40 years is a long time to predict a calamity. Two points here. First, Japan's debt to GDP ratio is 240%, almost double the United States. And Japan's debt markets function quite well. Second, the price of this risk is interest rates. If the market was worried about the deficit, truly, truly worried, then the 10 year treasury yield would be considerably higher. Instead, it's been in a range of 3.9 to 4.5% for the last several years. The commentators of this calamity never seemed to ask why their 40 year predictions have not occurred, and I think I have an answer for that. The global financial system functions on Treasuries. Banks park money overnight with each other through a multitrillion dollar global repo market that only uses short term Treasuries. When large institutions need to park significant money for any duration, they buy long term Treasuries. Why? Because there is no alternative, at least not yet. If and when there is a large liquid alternative to Treasuries, I will become more worried about the deficit. Our second comment comes from Boris. This is a long email about the current debate surrounding software and I have edited his comments down for the sake of brevity. I thought Boris comments were very interesting and he starts with the following thanks for the podcast. I've been listening for a while and I find it very useful. Quick background I'm a computer scientist, spent 10 years as a product manager at Google and he gave some more history as well and I wanted to share a practitioner perspective on the recent AI software sell off. I do have positions and some names mentioned Main Thesis he says AI made software development much cheaper and more accessible but people are over extrapolating what that changes. B2C software business to consumer software is usually not that complex. He says technically excluding the mega caps, the moats are elsewhere network effects marketplaces content brand in B2C AI coding unlocks a long tail of small products that were previously uneconomic. I'm already seeing many one person businesses, but most won't scale into public companies. Mega caps will likely benefit the most since user acquisition is the real bottleneck. My running joke is that the VC money for B2C startups is going straight into Google and Meta pockets. Then he turns to B2B software1 internalization, he says. There's a lot of talk about it and I think it's overstated. Key constraints total cost of ownership TCO building is easy, maintaining is not patching vulnerabilities, updating dependencies, remaining compliant with regulatory changes, doing user support Talent AI helps a lot, he says, but system design still matters. Many companies don't have people with sufficient skills and a required mindset. For example, many gyms use exercise.com to run their businesses and it's unlikely to be internalized. Risk no CIO wants core systems like payments processing being vibe coded Compliance in regulated industries. Software tools must pass audits and certification. Vendors amortize this cost across many customers. Internal builds don't Valid point though, he says, is that companies will require less seats due to automation, which undermines companies with per seat pricing. I wonder how it will change going forward, but we shall see, he says. Competition New entrants lower development costs, he says cut both ways. Everyone benefits. Not only newcomers, but incumbents can also ship faster, reduce development costs and expand margins. It's not obvious, he says, this lower development cost structurally favors challengers sales. This part is often missing in the discussion, he says. For most software companies, the largest cost is sales and marketing, not R&D.AI assisted coding doesn't really reduce sales costs, especially for large enterprise contracts. New entrants will face similar go to market expenses. Also, many large use cases are already captured by existing SaaS companies, so entry costs are structurally high. A couple of notes, he says on other things discussed in the podcast Agentic Systems they are very exciting for many reasons, but two issues are underweighted agents. Quality evaluation, tuning and testing is hard and requires specialized sets of skills. And their outputs are non deterministic, that is the same input produces different results. That's fascinating. That limits use in critical workflows, for example Financial systems. I see this as an additional automation layer, not a full SaaS replacement. And finally, he concludes on a small point on stock based compensation sbc, he says under gaap, SBC is expense at grant price, not market price. Example grant of 1000 RSUs at $100 vesting evenly over four years results in GAAP expense of $25,000 a year, even if the stock goes much higher in the meantime, economically the bigger issue for shareholders is dilution, not the accounting expense. Even there, grant sizes tend to adjust with stock price over time since they're typically tied to cash compensation levels. Most companies disclose total outstanding SBC in their annual report notes. Curious how you think about this, especially the sales versus R&D angle. And here are my takeaways. The large incumbents, I think they'll survive this AI assault. But and it's a big, big big but. Seed growth I think is going to slow and the raising of prices that this industry has enjoyed for decades will just become much, much much more difficult. So the long term bull case of software was always increasing seats and prices and I think a lot of that goes away or is questionable. As far as his comments on stock based compensation, I just disagree. Yes, the companies of course disclose the stock based comp. It is however a real cost. That is why GAAP accounting requires it to be expensed. The idea that you can pay someone in stock and not count that expense when you report earnings is to me just ridiculous. After all, all these companies deduct stock based compensation from their taxes. They treat it as a real expense. Then this last Monday, April 20th, we hosted an interview with Geoffrey Hirsch, author of the famous Stock Traders Almanac, a publication started by Jeffrey's father, Yale Hirsch, 60 years ago. In the interview we discuss training, insights and trends and how the market can be incredibly and consistently seasonal. This episode is part of the Real Eisman Playbook's evergreen series of interviews. They are chock full of useful and fascinating information and the conversations are lively for stock timers and charters. This episode with Geoffrey Hirsch is fun stuff, so check it out. This coming Monday we will post an interview with Chris Edson, Global Head of Loan originations at Apollo Global Management. The controversy surrounding private credit continues to swirl and dominate headlines and Chris has a front row seat as to what's really going on in the private credit private equity sector and how Apollo is navigating these waters. It's a great interview. I think you will learn a lot. I certainly did. So please tune in. Be sure to check out our website realizementplaybook.com if you're enjoying these weekly wraps. In our podcast, we kindly ask that you support the channel by subscribing to our YouTube channel and to our audio channels. The Real Eisman Playbook subscribing is the best way to help us expand this community to more like minded individuals such as yourselves, and we greatly appreciate your support. And that's the wrap. This podcast is for informational purposes only. And does not constitute investment advice. The hosts and guests may hold positions in stocks discussed opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial advisor before making any investment decisions. USAA knows dynamic duos can save the day like superheroes and Sidekicks or auto and home insurance. With usaa, you can bundle your auto and home and save up to 10%. Tap the banner to learn more and get a'@usaa.com bundle restrictions apply.
Steve Eisman · The Real Eisman Playbook · Is a Recession Coming_ What 100+ Companies Are Telling Us | The Weekly Wrap · 2026-04-24