A short report published on goeasy (GSY) has sent the stock down roughly 15%, resulting in a narrative tug of war between the sell-side and short seller. It’s long, but the crux of the thesis is simple: GSY is using accounting games to lower charge-offs…

… in what’s been a really challenging credit backdrop - even more unusual given GSY is a subprime lender. The company also changed its 180-day rule for charging off secured loans last year, resulting in a jump in its >150 days past due bucket.

The pushback to the report has largely been centered around GSY’s secured loan book, which has grown rapidly in recent years…

… on strong auto originations that in theory, reduce the risk of loss to the extent the asset beneath the loan can be recovered.

With GSY back below it’s long-term average book value multiple, it’s an interesting time to pick a side.