Monday, November 26, 2018

A Current AIM Program Small Cap Equity Holding: Axos Financial, Inc. (AX) by: Brandon Shanklin. "Inorganic Bounce Back?"


Axos Financial, Inc. (AX, $30.24): “Inorganic Bounce Back?”
By: Brandon Shanklin, AIM Student at Marquette University


Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary:

Axos Financial, Inc. (NYSE:AX) engages in the provision of banking and financing services for single and multifamily residential properties, small-to-medium size businesses in target sectors, and selected specialty finance receivables.

• AX has completed 3 acquisitions in the past 7 months further diversifying their lending and funding.
o   Acquired WiseBanyan, Inc. on October 25th, 2018.
o   Acquired COR Clearing LLC on October 1st, 2018, pending for approval.
o   Acquired business and assets of bankruptcy trustee and fiduciary service business of EPIQ Systems Inc. on April 4th, 2018.

AX inorganically acquired $3 Billion of deposits from Nationwide Bank on August 4th, 2018, which could very much lead to lower interest costs and an addition of customers.

• Over the past year and a half there has been a 17% drop in institutional holdings, which may signal a loss in faith from institutions, but 73% of holding are still owned by institutional investors meaning there is still belief that AX is poised for long term growth.

• Introduced and integrated a new platform called Universal Digital Bank, which converts Axos’ platform to a single platform where they have full control of the data which introduces mass customization.

Key points:

In attempt to rebrand, Axos Financial, Inc. switched their name from Bank of The Internet (BOFI).  This attempt to rebrand and deliver a different assuring perception to its clients lead to Axos Financial, Inc. making a large amount of costly money moves as of late to improve production and operations.  This rebranding may not have been effective and did not taste well with clients as their stock price has dropped significantly since. 

In the last earnings call, CEO Greg Garrabrants said that “banking will distribute itself such as vertical software providers linked to banking services”, which comes after their Universal Digital Bank implementation. With this new introduction of Universal Digital Bank, or UDB, it will provide banking products and services from Axos and it’s clients through a single software system.  UDB was developed in-house instead of outsourcing to a third party company for development, making it a lengthy and expensive feat for AX.  This platform will give the company the ability for mass customization, automation, and increase cross-selling opportunities to clients. 

In August, Axos Financial acquired $3 billion in deposits from Nationwide. The deposits are made up of $1 billion in low-cost checking, savings, and money market accounts, along with $2 billion in higher-interest time deposits.  In October, Axos Financial furthered its business with Nationwide and signed a master relationship agreement which Axos will provide co-branded banking products and services to Nationwide clients and joint marketing of Axos banking products and services to existing Nationwide clients.  This is a strategic move for Axos as it should introduce them to new clients and more guidance from a strong brand like Nationwide.

Book value per share for AX has been increasing at an average growth rate of 8.15% and was reported at $14.59 in the past earnings report meaning Axos has been able to take a step in the right direction by utilizing their new acquisitions and take advantage of their big money moves and increase their equity through production. 

What has the stock done lately?

Since their rebranding attempt and name switch, Axos Financial stock is actually down -20.33% in the past three months.  Although this is alarming, it should not overshadow its 19.9% stock  growth overall in the past year.  In the past 6 months it reached its high at $44.38 and currently is at $30.24.  With the recent acquisitions, Axos must take advantage of its inorganic additions and improve production and in turn might give them a boost, if not thy will continue this downfall.

Past Year Performance: 

AX is on a current downward trend, but has increased 19.90% in value over the past year. The closing gap between AX’s market valuation and book value per share is slightly concerning as investors may be losing confidence in management and operations ability to implement and integrate affective strategies.



Source: FactSet

My Takeaway:

Axos attempt to rebrand started on a sour note to their clients and obviously the market, but with recent acquisitions and progress with Universal Digital Bank they are taking a big step in a positive direction. Even though it will take time to fully see the results and actual impact these acquisitions will, management is definitely taking the initiative to improve production and efficiency which is promising. These moves could lead to lower operational costs and interest costs, and higher productivity, but management must utilize it in the right way for its value to increase.


Source: FactSet



2 comments:

  1. Hello,

    welcome to technechhacks where problems are been solved,

    We deal with the total functioning of sites like


    + SOCIAL MEDIA (Facebook, twitter, Instagram, Snapchat etc.)

    + BANK ACCOUNTS.

    + ICLOUD.

    + CRIMINAL RECORDS.

    + SCHOOL GRADES.

    + CREDIT SCORES.

    + SPOUSES PHONES.

    + BINARY RECOVERY.

    + BTC MINING etc.


    Thus Beware of scammers because most persons are been scammed and they end up getting all solutions to their cyber bullies and attacks by US.

    I am Jason Williams one of the leading hack agents.

    PURPOSE IS TO GET YOUR JOBS DONE AT EXACTLY NEEDED TIME REQUESTED!!


    And our WORK SUCCESS IS 100%!!!



    I'm always available for you when you need help.

    Contact or write us on:

    technechhacks@gmail.com or
    intelcorehacks@gmail.com

    Thanks for your time.

    ReplyDelete
  2. I have been casting spells for many years and I have helped many people, I might be able to help you too. I am honest, and I genuinely care for all the clients who choose me to cast a spell for them.


    If you have any questions about Love, Money, curse, protection, bad luck, divorce, court cases, or about me please call or email me. I really want you to feel comfortable before moving forward with any spells, or other services. I will take the time to explain things to you and provide you with honest advice, to what is best for your situation. I will not pressure you into having a spell cast, I will leave that decision up to you, and when or if you decide to move forward, I might be able to help you.
    I will respect your Privacy. I will not seek to obtain any of your personal information beyond what you might voluntarily offer and all information you might give me including emails, phone numbers and photos will remain private and confidential.
    I perform my Rituals only at night between the hours of 0.00 - 0.59 (South African time) lasting 1 hour but of course, this depends on the nature of the ritual, some rituals might take hours and can also become necessary to be performed at specials places like; flowing streams, cemeteries and other places dictated by the gods.
    I do not want anyone to be under any illusions about my spells and its numerous rituals. Real and effective Voodoo is no child's play, it is expensive because, after the rituals, I will have to destroy all the materials involved by fire and the ashes scattered over a flowing stream or river.
    You will get what you seek.But please understand this might take a lot of time and that individual results may vary. contact +27663492930, greatogudugu@gmail.com

    Herbal cure for Following DISEASES,this is not scam is 100% Real.

    -HPV
    -DIABETES
    -PENIS ENLARGEMENT AND WEAK ERECTION
    -VIRGINA PROBLEM
    -WHOOPING COUGH
    - HEPATITIS B
    -FORDYCE SPOT
    -COLD SORE
    -ALS
    -LOWER RESPIRATORY INFECTION
    -LOW SPERM COUNT
    -MRSA(METHICILLIN-RESISTANT STAPHYLOCOCCUS AUREUS
    -ZIKA VIRUS
    -HIV
    -STROKE
    -IMPOTENCE
    -PILE
    -HYPERTENSION
    -LOW SPERM COUNT
    -MENOPAUSE DISEASE
    -ASTHMA
    -CANCER
    -BARENESS/INFERTILITY
    -PCOS
    -SHINGLES
    -VIRAL HEPATITIS/HEPATITIS B
    -FIBROID
    -ASTHMA
    -SICKLE CELL
    -TINNITUS
    -BARENESS/INFERTILITY
    -DIARRHEA and so on...

    ReplyDelete