Steve Eisman, known for his role in 'The Big Short,' is shorting Fair Isaac (FICO), citing the company's significant price increases that have upset lenders. Eisman believes that FICO's near-monopoly in credit scoring is being challenged by competitors like VantageScore, especially with Fannie Mae and Freddie Mac now accepting VantageScore for mortgage underwriting. Polymarket data reflects a similar outlook, with markets pricing in no recession or Federal Reserve easing.
Steve Eisman, famous for his role in 'The Big Short,' has revealed he is shorting Fair Isaac (FICO), the company behind the widely used FICO credit score. Eisman stated that FICO has increased its prices by approximately 500% over the years, causing dissatisfaction among lenders. He argues that the math has shifted against FICO as they face competition from VantageScore, which is priced lower. Federal housing regulators are now allowing Fannie Mae and Freddie Mac to accept VantageScore for mortgage underwriting, impacting FICO's most profitable channel.
Eisman also mentioned ServiceNow Inc as an example of breaking software pricing power. In related market activity, Polymarket's AI bubble contract was priced at 17% on $2.2 million volume, while the market for a U.S. recession by the end of 2026 is at 25%. The market anticipates zero Federal Reserve rate cuts in 2026, with a 57% probability.
Eisman's overall position is long on tech and banks, and he does not foresee systemic risk to the banking system from private credit. He views the recent rally as a continuation of the previous year's trend of AI capex and a K-shaped economy. Polymarket data aligns with Eisman's outlook, indicating no recession, no Federal Reserve easing, and no broad AI unwind. FICO is currently trading under $1,000, down over 40% this year.
Key Takeaways:
- Steve Eisman is shorting Fair Isaac (FICO) due to high prices and competition.
- VantageScore is challenging FICO's market position, with Fannie Mae and Freddie Mac now accepting it.
- Polymarket data suggests no recession or Federal Reserve easing in the near future.
- Eisman is long on tech and banks, seeing no systemic risk to the banking system.