{ "docId": "019dd923-622c-750b-8b98-98685acdea95", "docSlug": "11e962264b36", "documentTitle": "Carvana Co. (CVNA)", "authorId": "54_Spruce_Point_Capital", "authorName": null, "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-03-01 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 82, "pageCount": 98, "prevPage": 81, "nextPage": 83, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 1, "notes": "Uses a Q&A format to contrast management's vague responses with the activist's skepticism.", "elementsJson": [ "headline_text", "paragraph", "callout_box" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-98685acdea95/82", "deckHref": "/decks/019dd923-622c-750b-8b98-98685acdea95", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-98685acdea95.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-98685acdea95#slide-82", "components": [ { "bbox": { "h": 0.12, "w": 0.16, "x": 0.83, "y": 0.43 }, "kind": "callout", "text": "Can these really be \"attractive\" terms on subprime auto receivables purchased at a premium? Who could be willing to buy these loans?", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1b238fba-16a8-4df2-9dfe-a68862e5e858", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.42, "x": 0.15, "y": 0.32 }, "kind": "callout", "text": "Carvana 101 – Explainer on Recent Refinancing Transactions", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a474ebb1-bedd-4ea0-beff-d2b81df865c6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.16, "x": 0.83, "y": 0.73 }, "kind": "callout", "text": "Continued unwillingness to disclose the identity of its financial backers despite questions from investors", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e5b59423-37c0-46aa-9c5e-68c45f38ded8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.77, "x": 0.02, "y": 0.66 }, "kind": "paragraph", "text": "Q. Investor question: Who is the senior debt provider in your refinancing transactions? A. The senior debt provider in our Q3 and Q4 refinancing transactions is an asset manager with over $100 billion in assets under management. The senior debt provider is not a related party. We are not able to name the senior debt provider due to confidentiality terms in our agreement. Moreover, we would likely not name the partner absent those terms due to the factors described above.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2236c76c-cf51-4e22-b07e-6181c3a52961", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.96, "x": 0.02, "y": 0.16 }, "kind": "paragraph", "text": "Given the puzzling economics of Carvana’s subprime auto loan sales and its heavy dependence on these sales for gross profit, we believe that management should be more transparent about the identity of the new trust’s lender: who would realistically be willing to pay a premium for subprime auto loans? Indeed, investors appear to have asking about its identity since the refinancing was first announced. Yet management continues to be coy about the trust’s source of funding.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "424f5a04-1e7e-46d3-a459-505018e7a8d0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.23, "w": 0.77, "x": 0.02, "y": 0.37 }, "kind": "paragraph", "text": "Who initiated the refinancing transaction? As part of our long-term financing plan, we are frequently in contact with financial institutions who have an interest in funding consumer auto loans. In the case of our Q3 and Q4 refinancing transactions, we identified a large asset manager interested in offering senior debt financing on a fixed pool of loans at terms that were significantly better than those available to the forward flow trust. We approached the certificate purchaser in the forward flow trust to determine whether they would be interested in purchasing certificates in a new trust with better senior debt financing and higher yielding certificates, and the certificate purchaser agreed.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b9dacf85-2f44-4d79-86cb-af4cc6805c3c", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "We are not able to name the senior debt provider due to confidentiality terms in our agreement. Moreover, we would likely not name the partner absent those terms due to the factors described above. — Carvana Management", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-64d2-7657-bbda-edf3c6807171", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.31, "y": 0.03 }, "kind": "title", "text": "Management Refuses To Reveal Identity Of Uneconomical Buyers Despite Investor Questioning", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a0f1d2a8-f0a8-4a41-ab78-3be325011509", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "8e238e89-d40c-4c9b-9266-75d45fe425e9", "evidence": "Contrasting management's Q&A response with the activist's critical commentary.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }