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Investment Q&A

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Q: Could you translate your answer to JR on GSY from " business speak " to " plain english " for me ? Specifically define what a " Charge off " is ? .....What the charge off was ? Why it is significant ? { the 14% number } .... Why are they expected to decline in 2027 ? ..... What a " breach of covenants " is ? And what are the breach of covenants are in GSY's case ? And why is this significant ? And what the the statement " it has signed agreements " to provide relief means ? ........ And what all this has to do with Lendcare ? .....Thanks for your terrific service ....

{ On the upside . thank you for your previous answer to me regarding position size . By cutting my position in half this has been a lot less painful } ...
Read Answer Asked by Garth on March 11, 2026
Q: Thanks for your comments today on GSY. Just a further concern.

We are seeing these negative events happening now. What happens to GSY's business if we go even deeper into an economic downturn ? One could argue that the economy isn't currently great now, however we've seen it get way worse in the past. GSY was down about 76% from highs (worst case) in the past. Since the Sep. '25 highs, we're closing in on that point here. Your comments on that scenario ?
Read Answer Asked by James on March 11, 2026
Q: Hi, I’m still trying to wrap my head around the big news today from GSY and what may have led to this unfortunate event over the last few years.

How was this ticking bomb hidden in the company and why did analysts and auditors not see this or raise questions further? Or were they ignored? Was management hiding certain facts or was this standard practice and policies of this industry which was allowed? Other than the short seller report late last year, did analysts not dig deep enough into their lending and financials? Who do you think is responsible for this disaster and were known issues building up and just kicked down the road until now? I pulled up the short report and the news from today and asked Gemini to compare the two, here is the summary I got. Thanks for any further comments!



Based on the bombshell news release from today (March 10, 2026), it appears that the short sellers were largely correct in their fundamental assessment of the company’s accounting and credit health.

While goeasy (GSY) spent months "categorically denying" the allegations of a short-seller "attack," today's update reveals that many of the specific "smoking guns" highlighted by Jehoshaphat Research have indeed materialized as significant financial problems.

Here is a breakdown of how the today's news validates the short sellers' original thesis:

1. The "Hidden Losses" are No Longer Hidden

Short Seller Claim: goeasy was masking $300 million in delayed credit losses.

Today's Reality: goeasy announced a massive $178 million "incremental charge-off" for Q4 2025 specifically related to the LendCare business, plus a $55 million write-down of interest and fees. This essentially admits that $233 million in value they were carrying on the books was uncollectible.

2. Validation of the "Accounting Wizardry" Allegation

Short Seller Claim: The company was using "accounting wizardry" and changing definitions to hide delinquencies.

Today's Reality: The company admitted to a "correction of a historical reporting practice" at LendCare. They revealed that customer payments were being recorded as "received" when they were actually still "in the process of being settled" (and some were never collected). This artificially lowered reported delinquency rates in 2024 and 2025—exactly what the short sellers alleged.

3. The Shift in Net Charge-Off (NCO) Rates

Short Seller Claim: Reported NCO rates were artificially low and the "true" rate was closer to 15%.

Today's Reality: goeasy has raised its expected 2025 NCO rate to 12.9% and warned that it will jump to the "mid-teens" in 2026. This is a massive departure from their previous guidance and aligns almost perfectly with the short sellers' projections.

4. Admission of Governance & Risk Failures

Short Seller Claim: The rapid growth in auto/powersports loans was a "time bomb" due to poor risk management.

Today's Reality: The new CFO, Felix Wu, stated that LendCare’s growth required "more robust operational infrastructure" and "enhanced credit risk management." The company is now drastically reducing originations in those categories—a move that effectively acknowledges the short seller's warning that this growth was low-quality and dangerous.

5. Drastic "Emergency" Measures

The severity of the situation is highlighted by the "6-Point Action Plan" goeasy announced today, which reads like a crisis management manual:

Dividend Suspension: Effective immediately, the dividend is cancelled.

Guidance Withdrawal: They have withdrawn all previous three-year financial forecasts.

Covenant Breeches: The company admits it will likely breech financial covenants with its lenders and is currently operating under an "accommodation agreement" (essentially a temporary truce with banks).

Conclusion

While the short sellers may not have been right about every single technicality, their core thesis—that goeasy was overstating its asset quality, understating its losses, and using aggressive accounting to mask a deteriorating subprime portfolio—has been vindicated by today’s news.

For investors, the transition from "Buy" ratings and denials to a total suspension of the dividend and a $233 million write-down marks a total collapse of management's previous narrative.
Read Answer Asked by Keith on March 11, 2026
Q: Do you see anything in the news report that could be considered fradulant or managment reporting anything improperly that could cause lawsuits (this will be for sure) and the stock to fall further? Maybe regulatory issues? Looking to possibly exit if there is further downside and risk to the company or hold, but I'm assuming this company will be the penalty box for awhile so there is opportunity cost while I can invest in other higher quality companies. Thanks!
Read Answer Asked by Keith on March 10, 2026
Q: Hello Team,
I saw and read with some apprehension the news as well as the questions asked by members and your answers earlier. Does it not justify the short seller's comments that were published about a few months ago and send GSY also in a tail spin? It had something to do with under reporting some automotive losses, if I remember correctly. In that case would you think it could even get worse and it may be time to take one's losses and leave a sinking ship?
Thanks,
Adel
Read Answer Asked by ADEL on March 10, 2026
Q: Comments on Goeasy pre-release adjustments to its loan portfolio, higher charge off rates etc. To me the amounts regarding car loan seemed manageable but then they are ending the share buy back program and cutting the dividend so management oblivious is taking very drastic action. Is this still investable? Would you take loss now or wait it out ? If improvements occur in 2027 as management forecasts how long do you think before stock recovers to say $125?
Read Answer Asked by Greg on March 10, 2026
Q: What is your top 5 Canadian buys in order at today's price for each
Small cap
Mid cap
Large cap

Thank you
Read Answer Asked by Jane on March 10, 2026
Q: This question is more of a question on my method of reasoning... I have three what I consider " speculative " positions in my RRIF . SLVO a 3.85% position, GDXY an 11.1% position and GSY which has fallen 40% in price and is now a 4.25% position .... The first two I feel qualified to monitor world events and see the signs of selling. I'm in at a $3000 price of gold and bought SLVO at the same time ..... GSY is what concerns me . My reasoning is that though GSY reports on March 25 it is PRL that will swing the scales on March 2 ... { please correct me if I am wrong on those dates } .... I see the following scenarios .....

1} PRL beats the numbers and is either flat or a modest rise . GSY does the same .

2} PRL doesn't beat the numbers and drags GSY down with it . As both are in the dog house I'm thinking a lot .....

3} GSY once dropping below $100 drops like a stone ....

From a risk reward point of view please critique my reasoning and if it might be prudent to get out of Dodge before March 2nd ?
Thanks for your terrific service ......
Read Answer Asked by Garth on March 02, 2026
Q: Hi 5I. I would like to consolidate this mixed bag into one or two holdings. Would you please rank them in order of "sell" to "keep".

Carl
Read Answer Asked by Carl on February 27, 2026
Q: Hi Guys

With all the bank earnings out, and the conference calls occurring, did you get a sense on how credit worthiness is doing? How were banks provisioning for loan losses? Thinking of Propel and Goeasy and whether they will get through this cycle just fine?

Thanks Stuart

Read Answer Asked by Stuart on February 27, 2026
Q: Hi Guys

I hold Stantec and WSP and looking to add to one. Looking out 5 years would you have a favorite today?

Thanks Stuart

Read Answer Asked by Stuart on February 27, 2026
Q: Hi Group in what order highest risk first please. (particularly worried tech stocks) and where we go from here??... buy, sell, hold..) plse give me you thought on sectors at most risk going fwd
Read Answer Asked by Terence on February 25, 2026
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