Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q3 2018 call → NOWe need answer only YES or NO. Need analyze transcript. Management conveys pricing gap? Let's examine. Question asks: Does management convey that company is currently charging LESS for what it sells than market would bear — prices/rates/fees/terms below value — and has begun/actively beginning to close gap while customers stay? Need identify in transcript. Management discusses loan yields, deposits, rates. Key quotes: "From an originations point of view, the company today in the fourth quarter is not originating any loans below 5.25%." That suggests raising minimum rate. Also "we did not increase any rates after the last Fed increase, but we are still experiencing between $50 million to $60 million inflow of core deposits at this time." Hmm. Also "we are proactively encouraging our customers to find another home and hanging onto our core customers" for multi-family. "We will be proactively encouraging our customers to find another home" meaning letting go low-yield loans. "We expect multi-family loans to end 2018 at about $3.3 billion and continue to head lower... down at least 20%." "We will grow C&I loans next year as well as consumer loans." "From a loan re-pricing characteristics, 85% of our C&I loans re-price immediately or within one year... multi-family only 13%." "We are not originating any loans below 5.25%." This is about raising rates on new loans. Is that a gap between price and value? Management says "we are not originating any loans below 5.25%" and "we expect to grow C&I loans next year at about 5.25%" and consumer loans yield 8-12%. Also "we currently have over $700 million of deposits with a cost of over 2.5%, and we expect to get those off our balance sheet." That's reducing high-cost deposits, not raising prices. Need see if management claims undercharging relative to value. They talk about "prepayment fees will stay low" and "we hit a trough on margin." They sold low-yielding securities and repaid borrowings. They are shifting mix to higher-yielding assets. But is that "charging less than market would bear"? They are not originating loans below 5.25% - that's a minimum rate. But is that because market supports higher? They don't explicitly say "we were undercharging" or "customers accept higher rates." They say "we are not originating any loans below 5.25%" as a strategy.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.