Was it complex? Like, at all? Yellow Brick Road clocked $3.5 million in losses for FY23, following a $2.5 million loss the year before.In August, Yellow Brick Road said the company was writing down $4.3 million in “trail commissions”, fuelled by rising interest rates. Those commissions dry up when customers who had been referred to lenders stop paying after going into arrears for 90 days, or re-finance to less lucrative loans.
What if – and stay with us here – active fund managers and institutional investors put up two little fingers in the sign of the cross because YBR was an interest rate-sensitive business with a corporate governance regime that would cause any fiduciary to break out in a stress rash? Did this boost YBR’s share price? Ha! Absolutely not. Every year, YBR’s stock wasn’t even in the same postcode as the strike price. It was an annual bonfire of stock options.