Fair Isaac Corp. (FICO) just got rocked—and not by market forces, but by a powerful voice in the mortgage machine. In a surprising sequence of public criticisms, Bill Pulte, Chairman of the Federal Housing Finance Agency (FHFA), has been leveling pointed and repeated online attacks at FICO’s pricing model.
Pulte, who essentially governs the U.S. mortgage market through his influence over Fannie Mae and Freddie Mac, has zeroed in on FICO’s aggressive price hikes over the last few years—accusing the company of exploiting its monopolistic position to the detriment of the broader ecosystem.
“Pulte… basically [is] calling out FICO specifically and really casting a lot of doubt and a long shadow over their pricing increases,” Hedgeye analyst Josh Steiner says in this clip from The Call @ Hedgeye.
"They're a monopoly and they don't want anyone to know they're a monopoly, because it obviously makes it very difficult for them to raise price."
FICO, best known for its credit-scoring model, cratered more than 30% before rebounding to a 20% five-day drawdown as of Wednesday afternoon.
Pulte has indicated that regulatory “decisions” are coming within the next 1–3 weeks, creating what Steiner calls “tremendous event risk” ahead for FICO. Even more ominously, a significant portion of FICO’s revenues (~40–45%) are tied directly to the mortgage market—which is currently feeling the pressure of rising 10- and 30-year Treasury yields. That backdrop, paired with Hedgeye’s current macroeconomic Quad forecasts, sets the stage for heightened volatility and sustained underperformance in the name.
Bottom line: FICO is a great business trapped in a terrible setup. It’s a monopoly under the microscope—exactly where it doesn’t want to be.
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