OPRT Position closure (09-Mar-2025)

I’m closing the position in Oportun, because the case became less asymmetrical.

• I was primarily betting on expenses going down (quite a likely event, which depends on the management’s ability and willingness). They have gone down, and are not expected to decrease further.

• Currently, the stock trades at 6x NTM P/E. If the company meets the guidance, the stock would probably trade and 6-10x P/E (30% average upside). However, I think that I don’t have an edge to bet on management meeting guidance, so 6x NTM P/E is enough for me, especially after a massive earnings beat, with several favorable one-offs, that the market has likely overreacted to.

• Apart from betting on multiple expansion, it is possible to bet on charge-offs decreasing further. However, this is more of a macro-bet, which I also don’t want to do.

• Lastly, management has a track record of destroying value, so I would joyfully take my money from them ASAP after a great quarter.

• To sum it up, I think the case has further upside, I just think that it became more of a macro-bet.