Axos Fights Back Against Short Seller's 'Evergreening' Allegations

Start generating passive income through real estate.

Own a piece of your favorite cities through diversified real estate investments in the country's top markets

*Terms and conditions apply. Visit Nada's website for more details.

Zinger Key Points
  • Axos Financial responds to Hindenburg Research's allegations, calling them misleading and false, emphasizing robust credit performance.
  • Axos highlights its CRE Specialty Lending portfolio's $5.22 billion in outstanding balances and 40% weighted average LTV.

Axos Financial, Inc. AX responded to Hindenburg Research’s short report, stating the short seller made a series of misleading, incomplete and false allegations.

The company said in a Tuesday SEC filing that its last earnings call provided a detailed credit update, and there have been no material changes in credit performance since then.

As disclosed in the investor presentation filed with the SEC on May 7, 2024, Axos’ largest commercial real estate portfolio, CRE Specialty Lending, had $5.22 billion in outstanding balances as of March 31, 2024, according to the company.

The company says that when collaborating with fund partners, it structures its credits to occupy the most senior secured position in these loans. This means that for Axos to incur any principal loss, the fund partners would first need to lose the entire principal value of their position.

As per the company, the fund partners assume a significant risk of loss before it does and this structure ensures robust collateral protection for Axos, even in adverse market conditions.

As of March 31, 2024, the weighted average LTV of the Axos CRE Specialty Portfolio is 40%.

On Tuesday, Hindenburg alleged that a former Axos credit review officer detailed the practice of loan “evergreening,” or providing loans to non-performing or doubtful borrowers to avoid recognizing problems, per litigation records.

Hindenburg said Axos’ seemingly favorable credit metrics suggest potential manipulation or distortion, with disclosed loan-to-value ratios in commercial real estate reported to be 17% lower than the median average of nine of its peers.

Investors can gain exposure to the stock via The Acquirers Fund ZIG and WisdomTree U.S. SmallCap Fund EES.

AX Price Action: AX shares were up 2.89% at $51.70 at the time of writing Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock.

Market News and Data brought to you by Benzinga APIs
Posted In: EquitiesMid CapNewsShort SellersLegalTop StoriesMarketsMoversReal EstateAI GeneratedBriefscommercial real estateHindenburg ResearchStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!