{
  "docId": "019dd923-622c-750b-8b98-98685acdea95",
  "docSlug": "11e962264b36",
  "documentTitle": "Carvana Co. (CVNA)",
  "authorId": "54_Spruce_Point_Capital",
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  "documentKindSlug": "activist-deck",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-03-01 00:00:00",
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  "pageNumber": 79,
  "pageCount": 98,
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  "slideType": "expose_contradiction",
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  "density": "overcrowded",
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  "notes": "Uses a 'Carvana 101' vs 'CVNA Q3 FY 2018 10-Q' structure to juxtapose management claims against official filings.",
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  "slideHref": "/slides/019dd923-622c-750b-8b98-98685acdea95/79",
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      "kind": "callout",
      "text": "Is this enough to justify a riskless 2% fee?",
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      "kind": "callout",
      "text": "A very odd disclosure. Is Carvana even permitted to engage in such transactions?",
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      "kind": "paragraph",
      "text": "In August 2018, the Company purchased finance receivables that it previously sold to a purchaser's trust under the 2017 Master Transfer Agreement for a price of approximately $253.0 million and immediately resold such finance receivables to another trust owned by the same purchaser for the same price under a new transfer agreement. The Company is not obligated to, nor does it have a right to, purchase or sell finance receivables it has previously sold under the 2017 Master Transfer Agreement. The transaction completed in August 2018 was entered into in connection with a refinancing by the purchaser and was entered into independently from the terms of the 2017 Master Transfer Agreement. The Company received a fee of approximately $4.0 million for arranging and participating in the transaction, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.",
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      "kind": "paragraph",
      "text": "Why doesn't the certificate purchaser arrange its own refinancing? Financial institutions who fund consumer auto loans typically do a substantial amount of due diligence on loan pools and their originators before funding. As originator of the loans sold under the MTA, Carvana is uniquely positioned to assist financial institutions, independent rating agencies, and other parties with due diligence, which may include a detailed review of data, technology, and operations.",
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      "kind": "paragraph",
      "text": "In its follow-up note, management claimed that it was “uniquely positioned” to conduct this refinancing as the originator of these loans... Why was this transaction conducted by Carvana for a ~2% fee instead? Further, in its Q3 FY18 10-Q, management states explicitly that the Company does not have the right to “purchase or sell finance receivables it has previously sold under the 2017 Master Transfer Agreement.” Why was Carvana able to conduct a transaction which its financial statements appear to prohibit in clear and unambiguous terms?",
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      "kind": "title",
      "text": "Questionable Justification For \"Monetization Of Finance Receivables\"",
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      "kind": "title",
      "text": "CVNA Q3 FY 2018 10-Q",
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      "kind": "title",
      "text": "Carvana 101 – Explainer on Recent Refinancing Transactions",
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      "evidence": "The deck presents concerns about Carvana's financing and business model, including potential risks and downsides.",
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      "structure": "The Future Disaster (Hypothetical) -> What Went Wrong -> The Prevention Plan",
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