Editor's Note: Our Financials analyst Josh Steiner will send subscribers a full report outlining our high-conviction thesis. In the meantime, below is a brief summary written by Hedgeye CEO Keith McCullough earlier today.
As I look at the plethora of short selling opportunities for this stage of the economic cycle (super #LateCycle), the credit card space is one of the most exciting (yes, short selling Old Wall consensus excites me!).
Credit card lenders are notoriously cyclical stocks that should be avoided/shorted late in the cycle. The cycle is late. Credit is deteriorating. Rapid loan growth is obfuscating underlying performance, and seasonality headwinds will combine with cyclical pressures to make both the intermediate-term and longer-term outlook very challenging for the group.
Capital One (COF), Discover (DFS) and American Express (AXP) all have underappreciated risks. Tomorrow, Wednesday (9/28/16) at 1pm veteran Hedgeye Financials analyst Josh Steiner will host an institutional research call to discuss our outlook for the group.
Sell Green,
KM
