Fair Isaac craters over 20%

Summary

The hosts discuss Fair Isaac's sharp stock decline following an FHFA announcement about including VantageScore alongside FICO scores for Fannie Mae and Freddie Mac. They argue that lower-cost competition could threaten Fair Isaac's mortgage credit-scoring pricing power and business outlook.

• Fair Isaac shares were described as falling roughly 26%–27% during the discussion.
• The hosts cited an intraday low near $595 and a subsequent price around $611.
• The FHFA initiative was described as consolidating mortgage pricing structures and including VantageScore alongside FICO.
• The hosts characterized VantageScore as a substantially cheaper alternative.
• They argued that competition could weaken Fair Isaac's ability to set credit-scoring fees.
• The hosts attributed the selloff to the policy news and questioned its longer-term implications for Fair Isaac.

1. 0:00

   Here's one that uh probably wishes um Bill Py was a friend of theirs instead of the director of Federal Housing and Finance Agency because what he did Pete uh Bill Py friend of Pete's friend of

2. 0:14

   mine um he did something that caused fair Isaac FICO FICO. We've all heard of it a FICO. What's your FICO score?

3. 0:24

   What's your FICO score? Well, he's saying that he's going to basically take Fanny May and Freddy Mack, consolidate their pricing structures, and basically include something known as the Vantage score alongside the list the existing

4. 0:41

   FICO score. Well, that poses a pretty big threat because these guys have basically had pretty much a clear field, Pete, to charge whatever they want for the mortgage providers um to say, "Oh, Pete's very creditworthy. John is not

5. 0:59

   creditw worthy, whatever they're doing." Well, um, now if all of a sudden you're getting something from Vantage Score for pennies instead of what FICO or fair Isaac was charging, this ain't good for fair Isaac. The stock was down 19, then

6. 1:15

   it was down 22. Now it's down 26%. Pete, >> you want to talk about getting slapped down and the news story is fully the reason for this whole thing obviously and they're not very happy about Bill Py is my guess. But John, it's it's absolutely amazing just to see, you know, how this thing got hit as hard as

7. 1:34

   it did. It got all the way down to 595.

8. 1:36

   It's now sitting around 611, like you said, down 27%. So, um, a simpler a simple way for the mortgage pricing to go into position. And these guys cannot be happy about what's going on and how they're getting slapped around. I you know this is one of those where you just

9. 1:55

   wonder how long of a future can they have given the fact of some of the rules being changed now. So uh you know I am sure that you're right when you said Bill Py is probably not uh great friends with these guys because of the action that they've taken. But it is something that you know a lot of people are talking about you know mortgages and the

10. 2:15

    rates and we you and I bring those up when we're talking about what are some of the things from a borrowing perspective. How does that change with the tenure and all the, you know, the the rest of the the different types of things that people are looking for? So, interesting. Absolutely. This thing getting beat up, um, it makes a heck of

11. 2:32

    a lot of sense. Are they very happy about it? Absolutely not.

Transcript from the show's YouTube captions; automatic captions may contain errors. Educational content, not investment advice.